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What is consolidated shipping and how can it benefit exporters?

Consolidated shipping involves combining multiple small shipments into one larger container. Learn about consolidated shipping and its benefits for exporters.

When running a shipping company, it is common for shippers or freight forwarders to accommodate enough cargo in a ship to ensure optimal usage of the carrier. For an exporter selling goods that are not delicate or perishable, opting for a consolidated shipping option is feasible since it is a relatively less expensive option.

What is consolidated shipping?

Consolidated shipping is when a consolidator combines various individual shipments into one full container shipment. For example, Business A requires a quarter of a container space, while business B requires half the container space and Business C and D require an eighth each..such cases, the consolidator combines these individual cargos to fully fill the ship. The shipper gets preferred rates and once the cargo reaches its destination, they are de-consolidated into its original shipment sizes¹.

Consolidation service options

Some of the types of rubber that fall under the Rubber Board of India are³:

Air

Consolidated shipping via air means that the space on a cargo aircraft is shared by multiple shippers. Shipments are compiled on the same Master Airway Bill. However, each individual shipment will also have its own House Waybill. This ensures that cargo is organized and sorted easily. Air freight is one of the quickest ways to transport shipments to their destinations, but it also tends to be expensive.

Ocean

Consolidated shipping on ocean freight is usually shipped in 20 or 44 containers. LCL cargo (Less than a Container Load) is consolidated into one of these containers. Ocean freight is cheaper than air freight, but it takes much more time. This is a great way to ship regular orders that have a long shelf-life, large orders, low-value orders and goods that are bulky or large. Most international shipping is done via ocean freight.

Ground

When it comes to ground freight – trucks, trains and other wheeled vehicles, LCL shipments are referred to as LTL (Less than Truckload) shipments. Similar to the other types, various shipments are put together in one vehicle and transported to the common destination. This is also a relatively inexpensive method of shipment.

Benefits of consolidated shipping

There are three licenses issued by the Rubber Board: dealer’s license, processor’s license and manufacturer's license. These can be applied online on the official website.

Reduces shipping costs

Without consolidated shipping as an option, shippers would have to pay full price even if their goods only filled up half the container. Since multiple shipments are going to the same location and using the same resources, costs are divided among all the shippers.

Less chance of damage while handling

Consolidated shipments use a model of distribution that reduces handling requirements of individual consignments, especially when the consolidated shipments are within a container. This means that the chance of damage to goods is reduced.

Quick delivery to market

Shippers do not have to wait to get a full container load worth of orders. Instead, they can consolidate their shipments with other shippers and get their goods delivered to customers quickly.

Carrier-shipper relationships improve

The more often shippers use consolidators to ship their goods, the more contact they will maintain with the carriers. This helps establish robust relationships with carriers, consolidators and shippers.

Happy customers

The entire process of consolidation and deconsolidation essentially allows shippers to get their goods to consumers faster. This leads to customer satisfaction, which ultimately leads to better profits².

Challenges and risks associated with consolidated shipping

While the advantages are significant and build a powerful case for shippers to opt for consolidated shipment methods, there are a few risks involved too³.

• In some cases, shippers may need to find resources to consolidate shipments – whether that means finding crates to put their goods in or following prescribed packaging methods.
• If there are multiple pickup and delivery points, there are chances that your cargo will have to be loaded and unloaded many times. Consolidated shipment is safe when all the goods have a common loading and unloading point. This is usually the case with ocean and air cargo, but land cargo is likely to have multiple touchpoints.
• Communication can become an issue if shippers, consolidators and carriers do not have a strong relationship. Poor transparency and even lack of knowledge can lead to a poor experience for parties involved. This can be overcome by relying on trusted consolidators and carriers.
• A delay in consolidation or deconsolidation for one shipper can cause a ripple effect and impact all the shippers. This means that delivery might be delayed.

Things to keep in mind when choosing consolidated shipping

Some of the important factors to consider while choosing a mode and methods of shipping are:
· Time sensitivity
· Business goals
· Weight and classification of goods
· Climate of origin and destination country

For most international shipments, consolidated shipping is a smart and efficient option. The key aspects are ensuring that shippers have everything organized at their end like packaging, safety, labelling, etc.

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Frequently Asked Questions

Are consolidated shipments a good option?

Yes, consolidated shipments are a good option since they generally lead to fast and safe delivery.

What are the three shipment consolidation methods?

The three shipment consolidation methods are time-based consolidation, quantity-based consolidation and a hybrid method called time-quantity consolidation.

Is consolidated shipping faster?

Generally, it can be faster than waiting for shippers to have full containers ready. However, shippers may experience delays caused by other shippers.

How do you do shipment consolidation?

Shipment consolidation means that various shippers put their goods together to fill the freight capacity with smaller shipments that are being sent to a common destination.

What is the meaning of shipment deconsolidation?

This process of taking consolidated shipments and putting them back into their original individual shipments is called shipment deconsolidation.

What is the consolidation fee?

Consolidators – middlemen who plan and handle shared freight space with various shippers and carriers charge an additional fee above the freight charge, which is called the consolidation fee.

Published on February 26, 2023.

Sources:
1. https://www.chrobinson.com/en-in/resources/blog/freight-consolidation-bridging-gap-ltl-full-truckload-2/
2. https://www.eurosender.com/blog/en/consolidated-shipment/\
3. https://www.container-xchange.com/blog/freight-consolidation/
4. https://guidedimports.com/blog/what-does-lcl-mean/
5. https://www.container-xchange.com/blog/freight-consolidation/#:~:text=Because%20there%20are%20multiple%20companies,the%20loading%20process%20is%20faster.
6. https://blog.mihlfeld.com/the-pros-and-cons-of-freight-consolidation#:~:text=Among%20the%20most%20difficult%20challenges,is%20a%20valuable%20customer%20lost.
7. https://ca.indeed.com/career-advice/career-development/consolidated-shipping

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