For many businesses, shipping is one of the most frustrating costs. Depending on the type of business, logistics can in some instances be responsible for up to 40%+ of expense, and little direction is given on best practices for lowering freight spend.
While solutions for freight rates and lower costs will differ depending on the industry, type of business, and a variety of other factors, shippers can almost always save money through consolidation practices. Here are some tried and true tips on saving on freight spend through consolidating your freight.
Freight Consolidation: Definition & When It’s Appropriate
Freight consolidation involves consolidating multiple units/pallets/boxes/etc. into one larger shipment, as opposed to moving the units individually. Amazon does an excellent job at consolidating parcel shipments for customers by sourcing multiple items from orders, consolidating them in a single box, and shipping them to the customer in one piece.
This same concept can be applied on a larger scale for shippers. While the amount of product you ship will relate to your overall logistics costs, a more correlated element is the frequency at which you ship your products. The more shipments you move, the more expensive your freight is overall.
Consolidation Savings: Stop Shipping LCL
For those who are shipping their products via LCL, there are a variety of ways to begin saving money on shipping. Shipping an equivalent amount of LCL shipments via FCL methods can greatly reduce logistics expense. Depending on the type of business you run, the below solutions may or may not apply. However, leveraging every possible solution to move more freight via FCL will help you to mitigate shipping costs and improve your company’s logistics efficiency.
Here are some tips on how you can begin consolidating your freight to lower your shipping costs:
Bigger Purchase Orders
For businesses that are seeking growth, the most obvious way to fill an entire container is, well… purchase more inventory! Obviously, the more you purchase, the less frequent you need to do so. In the case of most eCommerce businesses, this is a perfectly viable option. Less frequent orders of greater quantities give you more control over your product’s movement, lowers risk for damage, and lowers your shipping-cost-per-unit.
Collaborating with Other Buyers
For those who don’t have the option to purchase additional goods, either due to costs or the perishable nature of their cargo, opting in to collaborate with other buyers for a consolidated shipment is a great idea.
Collaborating with other buyers to consolidate cargo (otherwise known as buyer consolidation) involves either: 1) consolidating cargo from multiple suppliers into an FCL container before it sets sail, or 2) consolidate multiple buyers cargo at the destination port to be moved via FTL inland transit. In either case, this shipping method will lower overall shipping costs and reduce risk for damage to goods.
Stashing Inventory Until Needed
No one likes to maintain high levels of inventory, but in the case of saving on shipping costs, it may be necessary. Stashing inventory relates closely to the first point of making larger purchase orders. If dishing out the extra cash for a larger shipment isn’t a viable option, stashing inventory is another great way to save on shipping.
The goal here is to reduce the frequency of purchase orders in order to accumulate a larger need for inventory. When the time comes, everything can be ordered at once and consolidated into a single FCL container.
We understand – freight spend is frustrating. The cost alone of moving your goods via LCL methods is spendy, and with the added risk of damage and hidden costs, expenses can get out of hand. However, through effectively managing purchase orders and buyer consolidation, you can drive costs down and mitigate your risks of cargo damage.
If you are curious as to how you can begin lowering shipping costs through consolidation and FCL methods, reach out to one of our team members! We are happy to help you and your team excel in your logistics practices!