The Pros and Cons of Consolidation in the Shipping Container Industry

A prosperous trade business is based on all types of trade, big or small. For shipments that are small, containers are generally empty as the volume of goods cannot cover the entire shipping container. The leftover space in the container can be occupied by fitting in other shipments. Shippers with less-than-load (LCL) shipments can transport their goods by consolidation. Several small shipments for the same route are clubbed and organised for transit. The shipping carrier takes responsibility for consolidating shipments. It benefits the shippers with a relatively small load that does not fit the entire volume of any container and, thus, is instead transported as a part of various other cargo boxes. On the other hand, it takes a long delivery route, requires more management, and has certain associated risks. Let us learn more about the pros and cons of consolidation in the shipping industry.

What is meant by carrier consolidation in the shipping industry?

Shippers from different parts of the world transport vast amounts of goods daily. While some large shipments easily occupy the entire space, the LCL shipments cannot fill the container's volume and have room for more cargo. In such cases, shipping companies take additional freight to the same destination as the other cargo instead of stuffing containers with dunnage or other stuffing to fill the space. They can be easily loaded onto the left room in the containers. This method of loading more than one consignment into the shipping container is known as carrier consolidation in the shipping industry. It is primarily done in the cases of multiple small shipments so that they can be timely and economically delivered to their destination after being loaded in a single container.

What are the pros and cons of consolidation in the shipping industry?

Shippers and shipping companies very often hail freight consolidation due to its many advantages-

1. Economical solution- If not for consolidation, every small shipment would have to be put into separate shipping containers, which would cost more. The cost of leasing a container, transporting it, and performing clearances would eventually cost the shipper more than its shipment. Due to consolidation, the total cost is shared among various shippers.

2. Preserves quality- In the case of LTL shipment on a traditional route, the container goes through multiple stops. It is exposed to being shifted and relocated numerous times, increasing the chances of breakage, loss or cargo damage. Due to consolidation, the stops get eliminated, preserving the cargo quality upon reaching the destination.

3. Environmentally friendly- Transporting multiple small shipments through trucks increases fuel usage and more significant carbon emissions. Instead, when the shipments get consolidated, transportation takes place in only one truck, reducing the carbon footprint.

4. Faster delivery- The consolidation of LTL freight leads to streamlined transportation instead of the truck stopping at several pick-up and drop points. It helps streamline the transit time and hence, a faster delivery.

5. Reduced congestion- Consolidated freight shipment minimises port congestion or congestion at docks for loading the cargo onto trucks. Otherwise, multiple shipments would require loading the small shipments onto various modes of transport.

Consolidating goods is challenging, and shippers, consignees, and shipping carriers face specific issues while transporting. A few of the challenges causing disruptions in consolidation are-

1. Finding the suitable carrier- Managing multiple shipments is risky; only some shipping companies can take it. So shippers may need help with searching for credible carrier companies.

2. Management issues- Transparent communication, scheduling LCL shipment, and managing shippers and carriers simultaneously are tasks for carriers. Shipping carriers spend much time rescheduling and fixing schedules in the worst cases.

3. Reverse logistics- Carriers face the heat if cancelled mid-transit or if the consignees choose to return the shipment. It becomes a challenge for shippers to get their shipments back on time, and they suffer economically.

4. Cargo damage- The consolidated cargo gets manhandled at multiple points and therefore is exposed to the risks of getting damaged during transit. It causes financial issues and leads to the loss of crucial orders due to delay or cancellation of shipment caused by cargo damage.

These are a few pros and cons of consolidation in shipping that shippers and consignees need to be aware of before sending their LCL shipment over international borders.

LOTUS Containers helps international trade by offering buying and leasing services for shipping containers. As a shipping container service provider, we market all types of shipping containers globally.