Freight Consolidation

What it means

FedEx Freight's rules tariff (Item 115) defines consolidation as combining two or more LTL shipments at one point into a composite truckload or other unit of volume for transport to another point. The reverse step, distribution, is separating and delivering the freight from that composite load.^[1]

Consolidation is written into the federal definition of a surface freight forwarder: a company that assembles and consolidates shipments, performs break-bulk and distribution, and takes responsibility for the move from receipt to destination while using carriers for the actual transport.^[2] The FHWA glossary likewise notes that a freight forwarder frequently consolidates shipments from several shippers.^[3]

Consolidated freight shipping: how it works

1. Collect. Shipments from several suppliers or several plants are delivered or picked up to one consolidation point, such as a warehouse, cross-dock or container freight station. FedEx's tariff defines a CFS as a place where cargo is loaded into or unloaded from a container.^[1]
2. Hold and build. Freight is staged until there is enough going the same direction to fill a trailer or container, or until a scheduled departure.
3. Move as one load. The combined load travels as a single full truckload or full container instead of many separate LTL or partial shipments.
4. Break down. At the destination end the load is split again (deconsolidation, distribution or break-bulk) and each piece goes to its consignee.^[1]

The tradeoff is time and touches: freight may wait for other freight before it leaves, and every extra handling step is a chance for damage or a count discrepancy. Consolidation works best when the shipments share a lane and a delivery window.

What is retail consolidation?

Retail consolidation is consolidation aimed at a retailer's distribution network. C.H. Robinson, which runs such programs, describes them as combining orders from multiple suppliers or multiple shipping locations into single truckload shipments to make delivering to a retailer simpler. It says the model suits shippers whose retail volume moves as LTL, partials or underused truckloads, and that the program has to meet the retailer's standing appointments and on-time delivery requirements.^[4]

Each retailer sets its own vendor and routing rules, so a supplier joining a consolidation program should confirm with the retailer which consolidators, labels and appointment rules it accepts.

Consolidation in ocean freight

When a company books container space from an ocean carrier and resells it to smaller shippers, issuing its own bills of lading, it acts as a non-vessel-operating common carrier. Federal law defines an NVOCC as a common carrier that does not operate the vessels and is a shipper in its relationship with the ocean carrier.^[5] NVOCC services listed in FMC rules include buying transportation from a common carrier for resale, issuing bills of lading and coordinating movement between origin or destination and the vessel.^[6]

U.S.-based NVOCCs need an FMC license and proof of financial responsibility of $75,000; an ocean freight forwarder license requires $50,000.^[7] The ocean side of consolidation is covered in more depth in FCL vs. LCL.

Why it matters

Paying for several LTL shipments to the same region often costs more than one consolidated truckload, and every separate delivery is another appointment for the receiver to manage. Consolidating at a dock near the origin lets freight from several suppliers leave as one load. RapidShips cross-docks and consolidates inbound freight at its East Brunswick, NJ facility, serving the Port Newark–Elizabeth corridor.

Example

Illustrative only: five suppliers each ship 4 to 6 pallets to a warehouse in the same week, all bound for one customer distribution center. The warehouse receives and checks each delivery, holds the pallets, then loads all 26 onto one 53-ft trailer with a single delivery appointment, instead of five separate LTL deliveries arriving on different days.

Frequently asked questions