One of the most effective strategies for managing international and domestic logistics in the industrial sector is freight consolidation. This strategy involves combining multiple smaller shipments into a single, more cost-effective load. For inbound-to-manufacturing (I2M), particularly supply chains that cross international borders, freight consolidation can offer greater efficiency, reliability, and visibility.
Freight Consolidation in Global I2M
Most manufacturers rely on a diverse network of suppliers for goods and raw materials, often sourcing them from various regions worldwide. To facilitate the movement of these goods to their production facilities, they may utilize a range of shipping modes, including air, ocean, and land transportation. However, smaller manufacturing companies, which typically handle lower shipment volumes from specific suppliers or regions, may find that using less-than-container-load (LCL) or less-than-truckload (LTL) services can be both costly and inefficient.
Logistics providers who specialize in freight consolidation can effectively bridge this gap by leveraging their networks and the advantages of scale economies, which are typically only available to larger companies or those with higher volumes. They can help manufacturers streamline their logistics operations, reducing costs, enhancing transit times, and improving reliability.
Here’s how:
- Reducing Costs Through Better Utilization
Whether it’s international ocean freight or domestic trucking, carriers typically charge premiums for underutilized cargo space, resulting in higher per-unit shipping costs for smaller shipments. Freight consolidation enables shippers to combine multiple shipments into full container loads (FCL) or full truckloads (FTL), resulting in a significant reduction in the cost per kilogram, pallet, or cubic meter.
For instance, a manufacturer in North America sourcing components from several European suppliers can collaborate with a freight forwarder to consolidate these shipments into a single 40-foot container. Consolidation not only lowers the overall shipping cost, but also helps reduce customs clearance fees, documentation charges, and destination handling expenses.
- Improved Transit Times and Reliability
LCL and LTL shipments are often more susceptible to delays due to multiple handoffs and transshipment points. In contrast, consolidated freight can follow more direct route schedules. Freight forwarders who specialize in consolidation can often coordinate fixed sailing or trucking schedules, providing more predictable timelines that are crucial for manufacturers with lean inventories.
Additionally, logistics providers with consolidation hubs near ports or inland distribution centers can provide more control over inbound flows, enabling better planning for production runs. This reliability is essential for maintaining production efficiency and meeting customer demands.
- Enhanced Visibility and Coordination
Visibility is a key factor in creating supply chain resiliency. One of the most significant yet often overlooked benefits of freight consolidation is improved supply chain visibility. Consolidation enables multiple supplier shipments to be transported under a single master bill of lading or shipment plan, providing improved end-to-end tracking and centralized communication.
Achieving operational efficiency requires seamless coordination among international suppliers, customs brokers, local drayage providers, and the final manufacturing site. This level of managed visibility enables manufacturers to make informed decisions and adapt quickly when issues or supply chain disruptions arise.
- Streamlined Customs Clearance and Compliance
Accurate documentation and compliance with import/export regulations are crucial in international shipping. Consolidating freight streamlines the process by reducing the number of entries required, lowering brokerage fees, and simplifying the workflow for in-house logistics teams.
For example, in cross-border trade between the U.S., Mexico, and Canada—where customs processes and regulations vary—partnering with a freight forwarder that specializes in consolidation can streamline customs clearance and reduce compliance issues under agreements like USMCA and with ongoing regulatory changes. This efficiency not only saves time but also reduces the risk of costly delays and penalties at the border.
- Reduced Carbon Footprint
Sustainability is becoming a key factor in supply chain decision-making. Freight consolidation optimizes the efficiency of each shipment and reduces the environmental impact. Fewer partially filled containers or trucks result in fewer trips, less fuel consumption, and lower carbon emissions.
This approach aligns with the environmental, social, and governance (ESG) goals of many manufacturers and may also help meet customer expectations for reduced carbon footprints. By implementing greener logistics practices, these efforts can also enhance a manufacturer’s ability to meet industry standards or comply with sustainability regulations.
- Scalability Without Overhead
Freight consolidation offers a scalable logistics solution that supports growth without requiring additional overhead. It enables businesses to diversify their supplier networks, enter new international markets, or increase production without needing to build out their own warehousing or transportation infrastructure.
Third-party logistics providers (3PLs) and freight forwarders with comprehensive consolidation programs often offer additional value-added services, including warehousing, cross-docking, and final-mile delivery. The ability to use one provider streamlines the process, providing manufacturers with simplicity, flexibility, and agility.
Consolidation Across Inbound North American Trade Lanes
The benefits of freight consolidation are significantly enhanced when applied to the main trade corridors supporting North American manufacturing:
- Europe to North America (Air or Ocean): Establishing regular consolidation routes from key European gateways, such as Hamburg, Antwerp, or Milan, to airports or seaports in North America helps reduce transit variability and the risk of damage during handling.
- Asia to North America (Inbound Ocean Freight): Consolidation from suppliers to origin CFS (Container Freight Stations) allows for the bundling of LCL cargo into FCL containers. This approach not only optimizes ocean freight costs but also facilitates smoother deconsolidation at North American ports.
- Mexico to U.S./Canada (Cross-Border Trucking): Nearshoring trends have increased cross-border freight volume. By combining shipments from multiple suppliers through a consolidation facility or border warehouse, manufacturers can ensure cost-effective and compliant transport into North America.
- North America LTL to FTL Optimization: Regional consolidation hubs enable shippers to pool LTL shipments into full truckloads, resulting in efficient delivery to manufacturing plants. This strategy not only lowers domestic transportation costs but also accelerates delivery times, which is crucial for maintaining production schedules.
Partnering for Success with Consolidation
Freight consolidation is more than just a transportation strategy. It enables manufacturers to optimize their supply chains with operational efficiency. The key is to collaborate with an experienced logistics provider who understands the complexities of international sourcing, trade compliance, and multimodal transportation.
When selecting logistics providers, look for those that offer:
- Established networks and consolidation hubs in major origin and destination markets relevant to your supply chain
- Technology platforms that provide real-time visibility and control over shipments
- A partnership approach that aligns logistics strategies with your production and procurement needs.
For small and mid-sized manufacturers, freight consolidation can help optimize their global I2M supply chains with cost efficiency, predictability, and visibility.
TOC Logistics is a full-service global freight forwarder for inbound manufacturing to and from North America, focusing on key east-west routes with Europe and Asia. They are the international division within the ProTrans group of companies that also includes ProTrans Global in Germany, a strategic partner in Shanghai, and comprehensive logistics services across North America through ProTrans International. Contact our team today for complete end-to-end services, both internationally and domestically.