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3PL Outsourcing, Freight Transportation

Barriers to Working with Freight Consolidation Services Companies

Larry Catanzaro | April 26, 2018

Here at KANE, we are big proponents of freight consolidation. So big that, when we thought of writing about possible barriers to consolidation in this week’s blog, we were worried that it might be too quick a read: “There are no barriers to working with freight consolidation services companies. Thank you for reading.” 

All kidding aside, we can think of a few companies for whom freight consolidation might not be a good fit. Read on to see if you’re one of them. 

NOTE: In our last blog post, we revisited freight consolidation basics. This included a look at how a load is built, as well as the significant financial advantages – up to 25% savings versus unconsolidated freight – that can result. While the advantages are numerous, they still may not apply to your specific situation.  

Freight consolidation may not be a good fit if…

You are unable to store with a 3PL or be close to one. 

freight consolidation services companiesMost freight consolidation programs originate in the shared warehouse of a 3PL. With public warehousing, your products are stored alongside those of other companies – many of whom ship to the same retailers that you do.  The 3PL enables you and your “neighbors” to share the ride by placing your LTL loads together in full truckloads that are destined for the same retailer. 

If you don’t store your products in a shared warehouse – and thus have no such neighbors with LTL loads – that could be a major barrier to utilizing a consolidation program. There are, however, freight consolidation services companies that will pick your load up en route – but this is only an effective option if you are located close to such a 3PL and/or its routes.

You have a very short time between when an order is placed to when it has to deliver. 

A big advantage of freight consolidation is that you don’t have to waste time waiting to build a full, cost-friendly truckload on your own. This wait time could jeopardize retailer RAD dates.  By having your 3PL consolidate your load with others from the same warehouse, your products will be on the move relatively quickly. However, “relatively” is the key word here.

While the time it takes a 3PL to build a consolidated load is going to be much faster than the time it would take you on your own, it still takes time. Because of this, load consolidation may not be a good fit for companies that ship every few days or routinely need to expedite loads. 

You are wary of “co-opetition.”

By combining your LTL load with those of your shared warehousing neighbors, you can enjoy the buying power of a larger entity while remaining (and paying as) a small component of that entity.

But what if your shared warehousing neighbors are competitors of yours?

To many companies, this “coopetition” falls into the category of no harm, no foul. You’re dealing only with your 3PL and not the other companies involved. You will have no visibility into the other companies’ loads, and they do not have visibility into yours. Let’s face it, products compete on store shelves, not in the back of a truck. But for some companies, any form of cooperation with direct competitors is undesirable. 

Consulting with freight consolidation services companies

If you’re on the fence about load consolidation for your organization, it may be a good idea to consult directly with a 3PL. After learning a bit about your shipping needs, most providers will be able to tell you if consolidation can be a beneficial component of your supply chain – or if there are barriers that make it impractical for your operation. 

Kane Is Able has an active freight consolidation program for grocery and CPG customers and we’re happy to assess the potential benefits of the strategy for your company, so contact us today