Outbound shipment consolidation is the process of combining a selection of small shipments into a larger load. The large load is then shipped to a location near the combined shipments’ delivery destinations, where it is separated back into individual shipments and distributed to the customers. Managing delivery in this way can reduce overall shipping charges in operations where many small parcel shipments are handled each day.
Outbound shipping consolidation can be applied to a variety of delivery scenarios to help shippers reduce freight costs while increasing customer service. Options include:
Postal Pre-Sorting – Outbound consolidation of packages for the USPS or USPS consolidator
This scenario applies to companies that are shipping a high volume of packages per day across many different areas via the USPS or a USPS consolidation service such as DHL Global Mail. Normally, the postal carrier picks up the packages, hauls them to the local sortation center to be sorted and consolidated for delivery to the closest bulk mail center for their ultimate destination. In this option:
- The shipper, rather than the postal carrier, pre-sorts its packages into larger boxes or gaylords designated for a bulk mail center at a specific region in the U.S.
- The postal carrier simply picks up the pre-sorted gaylords and ships them directly to the bulk mail center near their destinations.
- As a result of eliminating the sorting step, the postal service will usually offer a discounted rate to the shipper. This more efficient process can also save at least a day in delivery time to the customer.
Direct Ship – Outbound consolidation of packages for parcel carriers to a specific hub location
This scenario applies to companies using parcel carriers such UPS, FedEx or DHL to ship a high volume of parcel shipments to one or more U.S. regions which are multiple carrier zones away. For example, an apparel company in New Jersey may be shipping high volumes into Southern California. During shipping operations, the warehouse staff consolidates all packages going to southern California onto a group of pallets, gaylords or into the carrier trailer at their dock. The carrier picks up the consolidated packages and trucks them directly to the regional hub in southern California, where they are inducted into their system for local delivery.
- This consolidation option results in the packages getting to customers faster since they are skipping the initial sort and scan and instead being inducted into the carrier system at the remote hub.
- Normally this scenario does not result in freight savings as the carrier is still charging full freight charges.
Zone Skipping – Outbound consolidation of packages for parcel carriers to a specific hub location, but shipped with the origin of that hub
This scenario is almost identical to the scenario above and applies to shipments to a specific US region that are consolidated. The major differences are:
- The packages to be consolidated are shipped with the origin of the hub they are going TO and not where they initially shipped FROM.
- The shipping leg from the originating warehouse to the remote hub (Los Angeles in our example) is not handled by the parcel carrier, instead a truck is contracted for this haul, either LTL or TL depending on volume.
- This scenario results in improved delivery times AND reduced freight cost.
Note the zone skipping scenario is potentially one of the most effective freight cost-saving tools available, however, the evaluation and implementation is rather complicated and should be carefully administered. InfoShip®/Vx handles this seamlessly by segregating zone skip Zip Codes and allowing for unlimited zone skip Carrier Accounts.
International Outbound Consolidation – to the same destination country or area
In this scenario, the shipper consolidates all packages destined for a specific country or countries through the same clearance facility. For example, when shipping to any country in the EU when using FedEx IPD, the clearance facility is CDG (Charles de Gaul Airport in Paris, France). Therefore, all packages to EU countries would be consolidated into a combined shipment for delivery to that facility.
The advantage to this type of consolidation is that even though these packages may be going to different addresses (or even EU countries) they all clear customs as a SINGLE shipment, instead of individual shipments by ultimate destination. This increases customs clearance speed and can also reduce the duties and taxes levied by the importing country. Also, the freight charges are usually calculated on the entire shipment weight and dimensions rather than each individual package, which can result in a substantial freight savings.
Creative Logistics Solutions has helped many customers take advantage of outbound consolidation strategies and automate their shipping process with our InfoShip/Vx shipping software. Please feel free to contact us for a quick chat if you are looking to begin outbound consolidation.