How freight consolidation cuts costs without cutting service

rethink inbound transportation cost savings

Logistics departments have become a key focus for organizations looking to lower costs. Buyers and receivers, especially at wholesale grocers, food service companies and discount stores, have been pressured to do more with less and manage more inbound transportation themselves.  When a buyer has an opportunity to save $200 by having a shipment picked up, it sounds like a no-brainer. But looking at all shipments as a whole, could actually be saving them much more. 

SINGLE SHIPMENT VS. CONSOLIDATION PROGRAM

Instead of concentrating on the cost savings of single shipment look at the cost savings of a freight consolidation program.  By combining small, widely scattered shipments into a single truckload, you can optimize capacity and save on individual shipments with low or no margins. 

A consolidation program essentially breaks down the move into two pieces: the gathering of smaller shipments at a pool point and the line haul from the pool point to the final destination.  To pick up, cross-dock and position products requires a higher skill set and therefore a higher cost.  With a consolidation program, you only pay a higher price to get shipments to the pool point, not across the entire move. Savings can then be realized by negotiating the cost of transporting the full truckload from the pool point to a distribution center. 

Challenges in moving to LTL Freight Consolidation

Building full truckloads of frozen and refrigerated shipments is tricky. Sifting through data, understanding the characteristics of each LTL shipment and determining which shipments to combine, can be simplified with the help of an experienced 3PL. 

Putting the plan in action can also be complicated.  Coordinating multiple carriers and ensuring proper cross docking is a 3PL’s specialty.  Taking advantage of their established infrastructure and expertise can help save time and money.  This is especially helpful in cold chain with a limited number of refrigerated LTL options.

Benefits of freight consolidation

Companies without a freight consolidation program are sending out trucks with empty space and leaving money on the table.  Those currently using multiple stop truckloads would have to add extra days and therefore extra expense to maximize capacity. Many times these shipments can be rolled into a program with additional LTL shipments to improve the bottom line.

Beyond lowering costs, freight consolidation also reduces the deliveries at your dock.  Receiving ten LTL shipments becomes receiving one truckload and a lot less hassle.

When it comes to inbound consolidation, the whole is greater than the sum of its parts. Looking at the full picture with the help of experts and technology can create a consolidation program that simplifies and saves.

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