To realize benefits that aren’t achievable with less-than-truckload (LTL) shipping, shippers can instead work with logistics partners to develop retail consolidation programs.
Retail consolidation is a freight management strategy that merges shipments from various suppliers into a single, more efficiently utilized trailer load.
This process optimizes trailer space and efficiency when shipping to a retailer’s distribution center. It also helps lower transportation costs, enhances operational efficiency, simplifies the supply chain and minimizes environmental impact.
Here are five important reasons to incorporate retail consolidation into your transportation strategy.
1 Better Visibility and Fewer Shipment Headaches
Shipping LTL (Less Than Truckload) is a strategic option for freight transport, but it can be less efficient in routing compared to full truckload shipping. The per-unit shipping costs are often two to three times higher than for shipments moving in a full truckload. In addition, shipping a less than full truckload is environmentally wasteful.
A full truckload can be built by bringing together multiple LTL shipments. As an example, a single shipper’s 32,000-pound shipment may utilize 70% of a trailer’s capacity. This might seem like a “good enough” rate, but a retail and multi-client consolidation program can increase efficiency. By adding two 4,000-pound loads heading to the same destination from two additional shippers, that trailer’s utilization becomes nearly 90%.
This approach reduces the number of trucks on the road, cuts emissions, and lowers costs for all shippers on these particular shipments.
Moreover, as an LTL shipment moves and transfers between different trucks and multiple DCs, real-time visibility can also suffer. This creates multiple headaches for shippers and receivers, including higher inventory carrying costs, failures of special promotions, stockouts and empty retail shelves.
2 Lower Compliance Fines and Improved Retailer Relationships
Retailer compliance fines can be steep, ranging from 2% to 4% of the cost of goods sold by larger retailers. Furthermore, non-compliance can erode trust between suppliers and retailers which can lead to deprioritizing orders, lost shelf space, or discontinuing the relationship altogether.
The development of a successful retail consolidation program relies on the coordination of multiple suppliers, transportation providers and retailers. For that you need clean, accurate and complete data.
The right third-party partner can merge and manage the complex data involved in retail consolidation. A 3PL will coordinate the routing of multiple shipments from the DC to create a full truckload, then set achievable appointments with a retailer, eliminating or greatly reducing compliance fines.
As a result, product suppliers might see their relationships improve with mass retailers, potentially translating into a more positive image and improved product placements.
3 Lower Loss-and-Damage Claims Risk
For typical LTL shipments, such as a load of several pallets from the Midwest to the West Coast, there will be three to five transfer points. At each of these locations, the need to unload and load the shipment across docks (or into temporary storage) creates a new risk for loss and damage. Despite the best efforts of carriers to handle loads with care — and in compliance with shipper instructions — these transfers can result in unintended errors such as over stacking fragile loads.
By eliminating those reloads — and shipping straight from origin to destination — this risk is greatly reduced.
4 Reduced Carbon Emissions with Fewer Shipments
The pressure to support corporate environmental, social and governance (ESG) goals is rising across the supply chain. If your enterprise emphasizes metrics that account for the carbon footprint of the products you ship, the adoption of retail consolidation programs can have a positive impact.
By reducing the number of LTL shipments into consolidated truckloads, you will also be cutting the number of trucks used to ship your products. The efficiency of moving shipments in one thorough seamless truckload trip can reduce carbon emissions, compared with LTL.
This is another instance where the adoption of truckload shipping can level the playing field between smaller and larger competitors, even as it cuts supply chain costs. The inherent cost and sustainability benefits of retail consolidation can improve your competitive position.
5 Leveraged Scale of Retail Consolidation Programs
It’s natural that larger retailers seek partners who support their need for optimum efficiency in every aspect of their operations, including supply chains.
Most medium and small retail suppliers simply don’t have the scale nor the capability to develop TL programs on their own. In addition, a 3PL has cultivated relationship(s) with retailers that allow daily, high-level communication between both parties that small suppliers may not have been able to achieve. Thus, allowing the 3PL to maintain a complex, dynamic truckload delivery schedule on a consistent basis.
Large 3PLs have the volume, technology, and relationships that can benefit all their shipper customers. If you can be somewhat flexible with the planning and lead time necessary for TL shipping, you can leverage a 3PL’s ability to develop the scale needed for executing retail consolidation programs. Plus, a fully capable 3PL should use its resources, experience and sophisticated management systems to protect existing relationship with retailers and open new opportunities for growth.
ODW Logistics Delivers Retail Consolidation Success
ODW Logistics has a record of strong success helping shippers maximize their freight savings through our retail consolidation program. Our Columbus, OH consolidation center has 15 distribution centers, over five million square feet of warehouse space, and services dozens of mass retails including Walmart, Amazon, Target, Meijer, CVS, Kroger and Dollar General to name a few.
With its scale and experience, ODW is positioned to create the efficiency needed to deliver products directly to mass merchant distribution centers.
Client partners in our retail consolidation program have seen the following results:
- 20-30% reduction in freight costs compared to traditional LTL;
- 80-90% improvement in retail compliance scores; and
- Up to 30% reduction in GHG emissions as a result of fewer trucks on the road.
ODW is driven by its strong culture and focused on innovation with purpose-built logistics solutions. It collaborates with customers to incorporate their specific needs into retail consolidation programs that are designed to lower freight costs, improve speed to market, and improve retail compliance. With ODW, shippers large and small enjoy the benefits of retail consolidation and truckload shipping.
Resource Link: https://www.odwlogistics.com/services/transportation/retail-consolidation
