How Freight Consolidation Reduces Costs and Builds Value

How Freight Consolidation Reduces Costs and Builds Value

Read Time: 4 min.

Freight capacity has long been an issue for shippers, even before the COVID global health crisis. Throughout 2020, we faced uncertainty, volatile regulatory change, and many other factors that impacted the ability to deliver reliable services.

Consolidation freight management is the most obvious way to increase volume and lower costs, but it’s not as straightforward as it sounds. Applying best practices is essential to ensure success.

Assessing The Risks

Though consolidation is generally seen as the best way to lower costs, it can quickly turn the other way if mismanaged. For example, consolidating a load often results in more touchpoints. With each additional touchpoint, there is an increased margin of error, but if the consolidation is done strategically, it actually reduces those points and lowers the risk.

In other words, poor consolidation freight management practices result in poor freight allocation. Efficient consolidation requires higher volumes of smaller shipments. Whereas a single shipper might lack the volume needed to manage this process, partnering with another shipper might allow them both to access LTL rates at a significantly lower cost than parcel shipping.

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Advantages of Freight Consolidation

It’s a simple equation – when freight volumes rise, shipping costs go down. Combining shipments usually leads to greater value. Some of the advantages include:

  • Increased agility
  • Move freight faster
  • Less risk of damage
  • Supply chain unity
  • Avoid unnecessary risks
  • Increased carrier diversity
  • Reduced fuel consumption and emissions
  • Fewer carrier relationships
  • Stronger carrier relationships
  • Greater flexibility on timelines and production schedules
  • Build resilience against unexpected disruptions
  • Supports growth and expansion

Bottom line – despite the risks, freight consolidation gives you more flexibility and facilitates growth, even when facing an uncertain future.

Best Practices for Freight Consolidation Management

Making freight consolidation work for you comes down to a few best practices:

  • Integrate all supply chain systems to gain visibility
  • Use technology whenever possible to optimize loads
  • Use cross-docking or drop-shipping to avoid bringing freight to your facility
  • Implement a standardized but dynamic routing guide to increase compliance
  • Establish strong partnerships with reliable partners
  • Automate data collection and analytics
  • Evaluate shipment rates across all modes before consolidation
  • Work with a third-party logistics (3PL) provider to manage your freight
  • Trust your 3PL to consolidate and deconsolidate

How DTS Helps

Shippers face myriad obstacles every day. In these uncertain times, agility is critical to ensure business success, and we must take every opportunity to improve reliability and reduce costs. Freight consolidation is an excellent way to accomplish these goals. However, to achieve maximum value from the practice, it’s essential to work with a logistics provider who has the experience, relationships, and industry insight to facilitate your needs.

DTS World Cargo works closely with you to ensure reliable, cost-effective freight consolidation, minimizing risk and giving you the peace of mind you need to maintain your focus, even in times of market volatility. Reach out today to request a quote or ask us how we can help you leverage the many benefits of freight consolidation.