Part 14 of 22 Ways To Reduce LTL Costs That Don’t Involve A Price Reduction – Consolidate Shipments
- Consolidate Shipments
My last article, part 13 of 22 ways to reduce LTL costs that don’t involve a price reduction, dealt with holding shipments at origin to build pickup density. That is a strategy which just about any shipper, even a small shipper, can use to build favor with carriers.
Let’s take a look at another tactic, one that unfortunately cannot work so well for the smaller LTL shippers as it does require a decent amount of freight volume to pull off.
For those shippers who move over a trailer of LTL per day, it is possible to find savings by bunding shipments together that are destined to a common destination area. For example, say you are shipping high-end furniture items out of Phoenix, AZ, and have a lot of customers in the New York City / New Jersey area. You might be able to consolidate multiple shipments headed to customers in that area into a single larger load, and induct that larger load into a regional carrier’s network for them to perform the delivery. This means of course you will need to find a carrier to move your larger consolidated load to the induction location. But that may just be an LTL carrier you are already using today.
In the parcel world they call this model “zone-skipping”. It allows you to find cheaper alternatives for the long linehaul portion of your moves, while still relying on a proven carrier to handle the ultimate deliveries. In a way, this is what LTL carriers are already doing with your freight. They pick up your shipments, take them back to their terminal, and co-mingle them with other shipments headed towards the same destination terminal. But by you adopting your own Consolidation program, you are betting that you can find cheaper, more effective linehaul options. And you probably can.
To effectively use consolidation programs, you may have to accept some sacrifices. For example, you may also need to employ a hold tactic to build up enough volumes during the week that make consolidations worth the effort. Your customers may not like the slower transits, but they should appreciate the lower transit costs. And today there seems to be a push back on assuming everything needs to be delivered as soon as possible. That’s getting to be a very expensive proposition when a scheduled delivery a few days later may be cheaper.
One other quick aspect to cover here is internal consolidations. I repeatedly see shippers who process LTL orders as they arrive. And some of their customers may place multiple orders in a day. That means shippers may be shipping multiple shipments to the same consignee, on the same day, with the same carrier. That is a great opportunity to “consolidate” these multiple orders into one larger shipment. So for starters, take a look at your own shipping data and see how often you ship out two shipments to the same customer on the same day. The results may surprise you.