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Think You Know Consolidation? Take Another Look

Think You Know Consolidation? Take Another Look

Consolidation

Some shippers dismiss freight consolidation as rigid, inefficient, and slow; others say it optimizes time and reduces touches. Who’s right?

Where you fall on this spectrum could depend on how long it’s been since you had your freight consolidated, and who did the consolidating for you.

To be fair, in the earliest days of freight consolidation (a.k.a. multi-customer consolidation or co-loading), shippers had some good reasons to be wary. Freight might sit in a warehouse until the consolidator had enough cargo to fill a full-sized van. In rare instances, freight might be moved around in the warehouse before loading and experience damage. Shippers weren’t always sure of pricing consistency for co-mingled freight. These issues took on new complications when shippers tried to work with each other, their carriers, and receivers to develop their own consolidation programs—and then, all too often, didn’t see the benefits they’d expected. All this left a bad taste in the mouths of shippers that persists today.

And that’s too bad; because in today’s market, they’re missing out on a pretty good story.

Today, “ship it and forget it” is ancient history. Shippers demand more visibility to what’s happening with their freight, and good carriers and providers answer the call. Freight consolidation programs are more creative, more customized to specific shipper and receiver needs, and more strategic now than at any point in the industry’s history.

Freight consolidation programs usually begin when a consolidator works with large customers that have frequent shipments. To this foundation network, the consolidator adds smaller customers. The network evolves until it includes strategically placed pool points that can handle freight for multiple shippers, to the advantage of all. The providers can plan ahead, arranging quick cargo pickups and adding speed and efficiency to the process.

As freight arrives at the strategic pool points, it is consolidated into full trucks. Often, “full truck” pricing is based on filling a van to 75 percent to 80 percent of its capacity, so freight doesn’t get trapped in the warehouse until a truck can be completely filled. While leveraging volumes can bring pricing advantages, pricing is tailored for each customer based on freight characteristics.

Besides this essential coordination, today’s consolidation network owes much of its gains in efficiency and savings to the visibility, automation, and tracking of a good transportation management system (TMS). The shipper uses the TMS to enter orders, and the provider picks up the order and transports it to the consolidation center, where the order size is verified. The TMS suggests optimization plans for trucks and the best routes for meeting the required arrival date (RAD). Delivery arrangements are made, the carrier is assigned, and the freight is moved to the receiver—with automated communications between the parties along the way. The TMS enables the shipper to see the status of their freight all the way through so they can answer internal questions, as well as the queries of customers.

So is your freight a good candidate for a freight consolidation program? It’s time to take another look.

Consolidation programs of this type are perfect for shippers whose freight is subject to strict deadlines. It fits well with companies that ship to large, high-volume receivers that have specific receiving requirements. Yet, many shippers still don’t even consider a consolidation program unless it’s suggested to them. But if you were offered a logistics option that optimizes time, reduces touches, and helps control costs, what would you say?

To learn more about C.H. Robinson’s Consolidation Program, watch our Consolidation video.