Understand the benefits and strategy behind air and ocean consolidation.
Air and ocean carriers don’t work with small volume shipments. Typically, most shippers looking to move between 1 and 10 pallets from one part of the world to another need to turn to a freight consolidator.
Consolidation is a common way that service providers can offer timely service that’s conducive to a shipper’s schedule. They consolidate shipments from several customers in order to fill an entire container that meets the airline and ocean carrier requirements. And perhaps the best benefit is that shippers only pay for the space they use.
No matter a company’s size—small or large—there are times when filling an entire air or ocean container isn’t possible and freight consolidation is the only option, but there are several other reasons freight consolidation may be the right choice:
Add consistency and reliability
Whether for air or ocean, most consolidation providers operate on set schedules. This level of reliability is great for shippers that need to meet specific deadlines, yet can’t wait to fill a full container.
Balance flexibility and control
Full-service international forwarders can often accommodate changes to freight or modes very late in the shipping process. This level of flexibility can help shippers stay in control of their consolidated shipments and react quickly to supply, demand, or market changes.
Improve freight safety
Skilled freight forwarders have standard procedures in place and use best practices to block and brace freight effectively. The added knowledge of these experts offers an additional level of freight safety to global supply chains.
There are many options for air and ocean freight consolidation
Many practices overlap between air and ocean consolidation, but making a decision between the two ultimately depends on the freight’s required service level and transit time. Keep in mind that global consolidation services tend to follow global demand and regional patterns of trade. Popular trade lanes will often have more consolidation options than others will. Forwarders can still accommodate consolidations to less popular locations, but may not have as much flexibility in those lanes.
Air freight consolidation
Virtually all air freight is consolidated. Airlines preference is for freight from freight forwarders or consolidators that has already been loaded onto a ULD—so loading the plane is fast and easy.
At a very basic level, shipping by air offers faster transit times at a higher cost than ocean. Faster shipping times mean products can get to market faster. In today’s competitive landscape, every day matters when delivering a product. But there are more options to explore when it comes to air consolidation. While faster than ocean, larger air freight consolidators typically offer different products—from economy to NFO (next flight out)—that deliver flexibility in transit times and pricing, depending on requirements.
Any freight that moves on a passenger aircraft rather than a cargo plane must also be screened by a certified cargo screening facility (CCSF), which can either be independently owned or run by the airline. Freight forwarders or consolidators without screening facilities must tender cargo loose to the airlines, requiring additional handling and screening by the airlines, a less secure option for air cargo.
Ocean freight consolidation
Freight forwarders typically utilise consolidation hubs and set sailing schedules for ocean shipping between major terminals. Ocean shipments can have direct terminal to terminal services with faster transit times or transhipment options that require additional handling and can be subject to delays in transit.
Many consolidators buy committed container space on the fastest vessel options, allowing them to have guaranteed capacity with the best transit times. This enables shippers to get the space they need when they need it—without sacrificing timelines.
Buyer’s consolidation (also known as vendor assembly)
Buyer’s consolidation is most applicable for large shippers with high volumes of freight coming from multiple suppliers using a common port. It combines global freight into a single consolidated container for delivery direct to the consignee. This results in lower handling fees, freight costs, customs fees, and final delivery charges over multiple shipments moving separately on the same vessels.
This type of program leaves control with the customer. They can decide when orders ship and choose how they move. A successful buyer’s consolidation program requires a consolidator with the ability to coordinate deliveries from multiple suppliers and load consolidations in the same facility, allowing impeccable visibility to track every shipment detail from beginning to end.
Determining what commodities to consolidate
Freight for any industry that has a high level of inventory and a sense of urgency—especially companies whose inventory carrying costs may outweigh the transportation cost—is well qualified for consolidation. More specifically, commodities that work well as consolidated freight include:
- Packaged or crated merchandise on pallets and skids
- General merchandise
- Textiles and garments
- Technology, cell phones, cell phone accessories
- Automotive parts
While most types of freight can be consolidated, there are some commodities that do not make good candidates for consolidation:
- Fragile, bulk commodities, oversized
- Temperature controlled product
- Commodities especially prone to customs exams (e.g., cars, boats, and jet skis)
- Hazmat freight can be problematic on some routes (e.g., lithium batteries)
At first glance, it might not immediately make sense for uncrated, heavy pumps that have hydraulics with jagged edges to be a candidate for consolidation. Freight like this can still move in consolidations. However, it is likely the shipper will pay for all the space in the container if floor to ceiling is required.
A skilled freight forwarder will have the experience (and high volumes) to combine this type of dimensional, dense freight with lightweight cargo like pillows or mannequins—freight that’s small and light enough to be placed on top of heavy types of freight to truly maximise the use of the entire shipping container.
Consolidation can accommodate unexpected changes…with one caveat
Choosing the right consolidator for global freight is the most important aspect in handling disruptions and last minute changes. A quality freight forwarder distinguishes itself best not when everything is going well, but when things go wrong.
Often, reputable forwarders with experience in more than one type of transportation are best equipped to reduce unexpected supply chain failures and provide options if disruption does occur.
When interviewing potential freight forwarders, shippers should be sure to ask these four questions:
1. Do you run your own consolidations? A forwarder with low volumes is unlikely to be running their own consolidation program. Having high volumes is critical to the success of a global consolidation program. Forwarders with low shipment volumes will likely use many other providers to actually move cargo, causing some loss of control. Shippers should ensure potential service providers have enough density in targeted lanes to speed up the process—not slow it down.
2. Who screens air freight consolidations? Not all air forwarders can screen cargo on their own. It requires certified individuals to screen cargo, a secure area to hold freight between screening and loading, and investment in screening machines. All forwarders and airlines charge for screening; forwarders with screening capabilities can offer greater care in handling and more flexibility in consolidating.
3. What are your average transit times for consolidations in specific lanes? Forwarders may offer direct ocean consolidation only to a few destinations. Moving freight in those common, high volume lanes can be handled by many. If a shipper moves ocean freight in the many less-common lanes, they should look for a consolidator that has gateways and systems in place to handle and control these less-common lanes without sacrificing service and control.
4. Can you easily accommodate unexpected routeing changes for consolidated freight? This question is especially important for businesses that experience frequent routeing anomalies—the need for late cutoffs for freight, unexpected demand, or a need to expedite—to make sure the freight forwarder is flexible enough to accommodate such changes.
Consider options beyond the status quo
When it comes to global forwarding, the question is so much more than, “Should I use air or ocean service?” Instead, shippers around the world need to stay open to all shipping options within those modes—including consolidation.
By accommodating well-executed consolidation, an organisation can achieve significant cost savings and improve efficiency throughout the supply chain. Even if air or ocean consolidation isn’t right for an organisation today, the changing nature of our industry and company growth may make it the best option down the road.
Rick Mettetal, Vice President of Global Forwarding, C.H. Robinson