Consolidation could help solve e-Commerce headache

As e-Commerce
gains momentum,
a freight
consolidation
programme could be a
major game changer in
the profitability of retail
distribution channels.
That’s the view of
senior vice president of
transportation management
at global logistics company
OHL, Jeff McDermott,
who explains that a freight
consolidation programme
– also known as multicustomer
consolidation –
builds more volume destined
for the same retailer
distribution centre (DC).
This lowers costs, reduces
the kilometres travelled,
and improves transit time
compared to traditional less
than truckload (LTL) or
parcel services.
“Retailers are becoming
more stringent and order
sizes are getting smaller
which means suppliers
are seeing an increase in
their cost per kilogram
on top of these stringent
requirements,” says
McDermott. “Adding
these packages to a
truck already headed to
a retailer’s DC can help
shippers reduce these
costs.”
Furthermore, with
lead times getting shorter
due to retailers being
more reactive to changes
in product demand,
shippers have less time
to consolidate their
own freight. “A freight
consolidation service,
which occurs across
multiple shippers going into
a retailer, allows volumes
to build up quicker,” he
comments, adding that
this helps shippers to stay
compliant with “mustarrive-
by dates” all while
ensuring a lower cost.
“Since the freight is traveling
direct to the retailer’s DC,
instead of through multiple
LTL or parcel sort stations, the
transit times are also reduced.”
Increasing consumer
demands for free shipping
often lead retailers to put
the pressure on shippers to
reduce their freight costs.
Many shippers do not have
the regular volumes to ship
full truckloads on a regular
basis which means they have
to pay high LTC rates without
passing the additional cost
onto the customer.
McDermott explains that
freight consolidation services
offer rates below traditional
LTL rates as shippers are
paying for only a portion of
the truckload.
“On top of that, shippers
can significantly reduce
their carbon footprint,
as a freight consolidation
programme typically
means fewer miles travelled
as shippers are sharing a
single full truckload trip
direct to a distribution
centre,” says McDermott.