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How to consolidate freight flows from several companies

Artur Alves | 27. Jun 2019
3 minutes read

You may wonder, why write a blog about a concept that already has been best practice in logistics for a long time?

All those involved in transport and logistics knows that cargo consolidation is a straight-forward and mature concept. It involves packaging or bundling of small shipments into one large shipment for distribution to the same end location. It can also mean combining cargo from one or multiple shipper into one shipping container. An underlying “condition” for this is that the goods must have a solid external form and, at the same time, it cannot be divided during transhipment.

By examining the latter statement “it cannot be divided during transhipment”, we are getting close to the topic of this blog.

 

Let's increase the fill rates

Fill rates in European Road transport is approximately 50%, and many trucks run empty. Consequently, the current consolidation in transport does not contribute to properly utilising transportation resources. This might be because “it cannot be divided during transhipment”, meaning that conventional consolidation is focused on pallets and not on the most widely used logistics unit today, which is the parcel.

In current trade, the number of shipments grows dramatically, but each shipment (or order) becomes smaller and smaller, especially due to the growth of e-commerce. The trend towards smaller and smaller shipments and transportation resources not well utilised has led to the concept of the Physical Internet. Here, parcels are moved effectively and efficiently through a network of terminals where all transportation resources are well utilised.

The terminals in the Physical Internet must be able to handle and bundle cargo from many (very many) shippers so that a truck or a container being used to move cargo between terminals, are full at all times. The cargo that is going to the same address is consolidated together. In the Physical Internet and other modern logistics operations, consolidation is no longer restricted to handling pallets. The focus is parcel, and all logistics units are “broken down” into individual parcels before being consolidated. The MIXMOVE Match solution manages such consolidation, and reconstruct operations in a large number of hubs around Europe.

 

So, how to consolidate cargo from several companies in the era of parcel distribution?

First of all, each parcel (and other logistics units) needs to have its own unique identity. Using the SSCC code from GS1 secures uniqueness.

Second, the terminal in which consolidation is to take place needs to receive information about the incoming goods. Finally, you need a management system that makes the consolidation process effective, which MIXMOVE Match can do.

It is used in single supplier networks to increase load factors (3M increased load factors from 45% to 90%) and in long hauls. In addition, it can be used in terminals for city distribution, where cargo from multiple shippers is collected in consolidation terminals before being moved to receivers in city centers. This will help reduce the number of vehicles needed for such movements inside cities.

 

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