Consolidated shipment

Consolidated shipment
See also

Consolidation shipment it is according to the Dictionary of International Trade the combining of less than truckload (LTL) shipments of cargo form a number of shippers at a centrally located point of origin by a freight consolidator, and transporting them as a single shipment to a destination point. Consolidation of cargo often results in reduced shipping rates [1]. Consolidation points is a terminal, container yard, loading dock or other physical location where the consolidation of freight takes place [2].

Transport implementation process

First step to movement goods in consignment assembly. When transacting business in the international trade, one should use Incoterms 2010 rules. Incoterms are international commercial terms. They define costs, risk and practical aspects of carriage of goods between the buyer and the seller. Applying these rules enables one to mitigate any misunderstandings resulting from a lack of precise knowledge of trade practices. A transaction means movement of goods and services between the seller and the buyer. What is more, these are all the actions undertaken in order to buy or sell goods [3]. Importers must take into consideration date of readiness for all his goods. Importing entity establishes cooperation with a logistics agency- forwarder- that will be responsible for transport planning. After providing all necessary information to the forwarder, such as type of cargo, weight, volume and contact details, the forwarder submits the so-called Booking to the agent. Freight forwarding companies cooperate with their agents, whose scope covers a specific area. Booking is otherwise declaring the goods for transport. It starts the agent operation on the freight consolidation facility. All goods that will be consolidated to one container are brought to this facility. After delivery the LCL shipment to the port, exporters receives Order routing, confirming organization of the transport by the agent. The correct end of this stage is loading consolidated shipment into the ship.

Benefits of consolidated shipments

There are many advantages behind consolidation shipments,they are summarized as follows [4] :

  • Cost reduction - Consolidated shipments can reduce the number of individual shipments and take advantage of lower cost transportation. At the destination, the consolidated shipment is separated back into the original individual shipments for delivery to consignees. A consolidation service will combine smaller shipments and then ship them together to achieve better freight rates and cargo security.
  • Reducing stocking locations- Consolidation is also used in the context of reducing the number of stocking locations (e.g., warehouses) and consolidating the "spend" on just a few suppliers for each commodity group.

References

Footnotes

  1. Hinkelman E.G., (2008)
  2. Hinkelman E.G., (2008)
  3. Kadłubska J., (2016)
  4. Wilson R., Hill A.V., Glazer H. (2013)

Author: Aldona Pająk