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Everything you need to know about freight consolidation service

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In maritime transport there are two types of cargoes. First we have the FCL (Full Container Load), in which the customer's goods travel inside a single container without sharing it as in the LCL (Less than a Container Load), in which the cargo occupies less space than a full container and therefore shares the same with cargo from other importers. Today we will focus on the latter, and the concept of consolidating cargo arises because of the need to order the goods of different customers in the container and someone must be in charge of executing it.

What is a freight consolidator?

Cargo consolidation is a logistics service, in which an operator other than the carrier, loads the goods on behalf of different customers, and under its own responsibility groups them into a container. These can share the same destination or route and are stacked in the most efficient way to optimize space as much as possible. 

For the end customer who is moving a small load it is convenient to take this service because a third party is coordinating with others in the same situation the process of accommodating the goods. It is here that another actor in the supply chain emerges: the Freight Forwarder, who acts as an intermediary between the exporter or importer and the companies that offer this type of service, so that the customer must manage the least amount of things and thus alleviate the process. 

When a shipper decides to consolidate shipments, the products are taken to a consolidation warehouse, usually the one that is closest to the largest amount of cargo to be shipped and then grouped into a container. It is not a simple process, since consolidating cargo requires a thorough knowledge of how the different types of goods being transported in the same place are treated and must be informed in advance. Examples are: the volume, weight, and packaging of the cargo. Also, it is important to know if it is stackable or not, because if it is not stackable, the consolidator will charge extra for the space that we cannot use on top of the cargo since every cubic meter counts and it is one of the main functions of this agent, to ensure the optimal occupation of space.

When to use the consolidation service?

These services are used when the importing or exporting customer does not have enough goods to fill a full container on its own. Consolidation companies can handle the cargo regardless of whether or not it is going to the same place, since the cargo can be transshipped until it reaches the final destination.

Also, using a consolidation service can be useful when you want to buy from several suppliers in different locations and have them shipped to the same warehouse so that they can be grouped together and arrive at their destination together. 

When perishable foods are involved, it is more complicated to use this service, since the products usually have specific handling needs. An example of this is that some require lower temperatures than others, so using a reefer container could be the solution. 

On the other hand, it is also not advisable to use this service when you want your cargo to be handled as little as possible. Because unlike an FCL container where all the goods belong to one person and the container is hardly opened, in LCL cargoes the movement between the cargoes of each customer is much greater. So security is reduced.

Five stages of a cargo consolidation

Consolidation is divided into five phases:

- First, the goods are received at the warehouse, where each shipment must come with an invoice and associated packing list.  
- Second, the products are checked, weighed, marked, packed and subjected to other operations at the warehouse, at the request of the customer or the carrier.
- Third, once the products are accepted, they are placed in a temporary warehouse until the full volume of goods is accepted. If new products are received, they are re-sorted, sorted and packed.
- Fourth, the warehouseman forms a batch with the products and issues the necessary documents. 
- The fifth and final step is that the products are loaded into a container and delivered to their final recipient, reaching deconsolidation when the transport documents and loads are ungrouped.

The deconsolidation process consists of ungrouping the packages that were consolidated in the same transport document from inside the import container. The different consignees are identified, presenting each individual shipment with its respective transport document son, to then be sent to its final destination. These operations are carried out in customs operation zones authorized for this purpose. Today, many ports have large consolidation warehouses. As for the transportation companies, they usually rent premises for warehouses and only the large carriers have their own warehouses. 

Advantages and disadvantages of consolidating cargo

Cargo consolidation is a crucial process in the supply chain, with the objective of optimizing distribution and streamlining international cargo movement processes.

Using this service has certain benefits such as:

- Transportation costs are minimized, this because rates are delivered by cargo volume and not by the full container. 

- You can buy from several suppliers in various locations and have those products shipped to a warehouse to be packed together and shipped at any time.

- By not having to fill a container, you can buy in smaller loads on a more frequent basis, generating more cash flow to work with.

- For some businesses, consolidating can help them keep the identity of the supplier a secret. This is not a priority and does not happen for all companies, but some do have the need. Supplier information can be protected when products are shipped from the warehouse to the customer to prevent them from working directly with the supplier. It protects the middleman and your entire business. 

- It allows a greater frequency of deliveries by the carrier, and this makes possible a greater arrival of stock in the trade, also benefiting the final consumer.
In the case of exports, it allows greater access to international trade by being able to send samples and thus generate greater confidence in potential customers.

There are more advantages than disadvantages of cargo consolidation, but one that could affect quite a lot is that, in the LCL type of shipment, delivery times are usually longer, since they must be consolidated at origin and then deconsolidated at destination along with other importers/exporters.

Introducing the new way to experience international freight forwarding

KLog.co is the leading technology company for international freight forwarding in Latin America, which through its digital platform has managed to deliver complete visibility and control of the import and export process for companies of all sizes and industries.

Through its innovative software it is possible to merge all the steps of the supply chain, having full management capacity and visibility of the transportation of goods, even if you have movements with other freight forwarders. Due to these technological solutions you can have a fully customized control center, centralizing all shipments and optimizing the supply chain. 

Today, KLog.co supports customers with operations throughout the region, with hundreds of agents around the world. Currently, its offices are located in Chile, Peru, Bolivia and Mexico, and are constantly working to continue expanding.

Learn more at KLog.co

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