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Supply Chain Challenges

Freight Consolidation in the Grocery Supply Chain

Alex Stark | September 17, 2015

The grocery supply chain is one of the most challenging from a cost perspective. Margins are paper thin, so every penny of freight cost savings helps.

grocery supply chain cartTrouble is you’re a smaller shipper and are forced to ship LTL because you can’t fill a trailer. LTL is more expensive, schedules are unpredictable, and sometimes it’s hard to make sense of the bills. But you have no choice, right?

Well, not necessarily.

By calling upon the matchmaking capabilities of a third party logistics provider (3PL), you can consolidate your shipments with other like suppliers to reduce the costs of both region-to-region and last mile distribution.

Share the ride in the grocery supply chain

Right now you share something in common with 3PLs that specialize in the grocery supply chain. You all ship to the same mass merchant and grocery DCs on a regular basis. What separates the 3PLs, however, is that they do it for dozens, maybe even hundreds, of other companies just like you. As a result, through freight consolidation, they can combine shipments from companies going to the same destinations to create lower cost full truckloads on the outbound.

Download the Free KANE eBook, LTL Secrets Revealed

This simple “share the ride” concept, while nothing new, is surprisingly underutilized. The key is finding a 3PL that has a grocery product focus and, therefore, has the best opportunity to introduce you to partners for mutual cost saving.

When You Switch from LTL, Here’s What You Gain

  • Lower costs. You pay only your portion of the price of a lower cost TL shipment. 
  • Predictable costs. Compared with LTL carriers, TL haulers are less likely to slap you with significant rate hikes from one year to the next.
  • Rates you can understand. Instead of using complex algorithms to determine how much they’ll charge to carry a given load, TL carriers base their rates simply on miles traveled and the weight of the load.
  • Access to advanced technology. Many LTL carriers can update you on the status of your load via electronic data interchange (EDI) or a similar technology. But if you don’t ship enough volume, the carrier might charge you extra to access that information.
  • Reduced inventory carrying costs. With consolidation, there’s no need to hold product until you accumulate enough to fill a trailer. Product moves through the grocery supply chain quickly and you can meet your retail customer’s demand for smaller, more frequent shipments.
  • Support green logistics goals. Consolidation means less trucks on the road, reduced fuel and reduced greenhouse gas emissions.
  • Less risk of loss, error or damage. The longer a load stays on the same truck, the greater the chance it will reach the consignee intact.

3PL Matchmaker Role Delivers Big Savings

Consolidation strategies combine freight from multiple 3PL customers to create direct, lower-cost truckload shipments. Look for a 3PL focused on the grocery supply chain that already handles products and retail customers similar to your own. And make sure they have the systems to automate the process of identifying consolidation opportunities.

Learn more by reading our KANE Viewpoint paper: LTL Secrets Revealed.