The Benefits of Consolidated Shipping
With tightening truck capacity, driver shortages, OTIF (On Time and In Full) fines, and sustainability goals on the increase, standard less-than-truckload (LTL) shipping can be costly and tough to utilize consistently.
Fortunately, effective programs such as a Retail Consolidation Service (RCS) can help to mitigate these types of pain points.
Tightening Capacity
According to the FreightWaves article, “Transportation capacity continues to tighten further in May”, “The latest reading on transportation capacity remained 'historically low' as the 'tightness that has been observed in the logistics industry over the last 10 months continued unbated in May 2021.’”
When asked about the availability of capacity one year from now, survey respondents said it would still be contracting. Forward-looking capacity expectations returned a reading of 46.8%, up 2.8 percentage points from April.”
The number of carriers rejecting loads under contract remains at nearly one out of four. Taken from FreightWaves SONAR, click here. Chart: SONAR: OTRI.USA[DC1]
The Pains of LTL Shipping
LTL shipping can result in wasted space and inefficient use of resources. Compared to a consolidated service, more stops and more people touching your product increases the probability of damages or mishandling. Longer transit times can cause delays in product delivery and may result in OTIF fees. When a load is completed utilizing an RCS program, it’s sealed and not broken until the load is in the retailer’s hands.
In most cases, LTL carriers will not appoint until the freight is at the destination terminal and scheduling appointments is becoming increasingly difficult. If there is a delay in transit, appointment availability can become greatly reduced. Also, because most LTL carriers consolidate on the back end, the freight may be added to a consolidating trailer that is set to deliver after the MABD (Must Arrive by Date).
RCS programs maintain all delivery appointments and schedule up to a week in advance of the MABD date. This allows for optimal availability and appointment documentation if the supplier needs it.
Retailers are asking shipments to be dropped off and left in trailers outside of the retailer. This can tie up equipment as it might not be unloaded for several days. Because most retailers are pushing for drops and staffing is a challenge, the amount of time retailers are holding equipment has significantly increased.
Some LTL carriers are deciding to stop working with retailers due to equipment being tied up. Also, with long unload times, some carriers refuse to deliver into certain retailers as they are unable to turn the equipment and assign the driver a new load that day. These problems are exacerbated by the continuing decline of available drivers. For example, this infographic from FreightWaves highlights several driver shortage statistics.
How the GEODIS RCS Program Alleviates Pain Points
The biggest focus point for the GEODIS RCS Program is consistency. Products are shipped directly from our warehouse to the retailer utilizing Tier 1 Technology and best practices to ensure your product gets to the shelf on time, and in full, nearly every time.
GEODIS has relationships with all the major retailers, allowing for a more consistent delivery schedule than what is available to LTL shipments. Because your product is combined on a truckload with other products going to the same destination, there are fewer trucks required to get your product to its final location.
Extremely tight capacity in the market, as well as the shortage of drivers, highlights the importance of limiting the number of trips required for delivery. We fully vet and utilize major national carriers that have working relationships with the retailers and understand the unloading habits before contracting.
Limiting the number of trucks on the road, as well as stop and start locations, allows for more succinct sustainability efforts. As highlighted in our previous article, GEODIS had $790K in fuel savings, 49K hours of reduced driver time, and more than 400 tons of CO2 reduction in 2020 through the RCS program.
To learn more about RCS trends and topics, please visit our website to view a recording of our recent webinar that covers:
- Current supply chain market trends and challenges
- Challenges of BIG BOX retailer compliance
- How consolidation alleviates pressure
- Sustainability alignment
- Earning shelf space
I trust you found the information provided in this post both informative and educational. For additional information, and to learn more about consolidated shipping, please email me directly.
Author: Evan Glick
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