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Freight Deconsolidation in an Era of Overseas Manufacturing

Friday, November 6th, 2015

There’s no disputing the fact that, for better or worse, overseas manufacturing plays a big part in today’s economy. According to the United States Census Bureau, as of September 2015, $358 billion worth of goods arrived at our ports in 2015, and that’s just from China! As more and more companies turn to global outsourcing, ocean container transportation is becoming an important consideration in their supply chain. Unfortunately, while ocean containers are an efficient way to transport a shipment, they can be a major headache for the receiving party – how to get individual orders to the right place at the right time, and do it cost-effectively. If this is a dilemma your company finds itself facing, you might want to consider a service known as freight deconsolidation.

As opposed to consolidation, another freight forwarding service in which several smaller shipments are assembled and shipped together in order to take advantage of bulk rates, freight deconsolidation consists of breaking a single large shipment, or multiple larger ones typically arriving in a container, into several smaller shipments. Deconsolidating the contents of the container at the port/warehouse of bulk arrival affords the freight owner the time and space to take stock of the order they received so strategic decisions can be made about how to best re-organize the contents into individual shipments to be forwarded to their next destination. Deconsolidation also keeps the ocean containers close to the port of entry, avoiding costly delays in returning them.

Once a shipment has left its origin country’s shores, it starts a journey that can take weeks to cross the ocean and clear customs. In today’s commerce, when online ordering can change inventory needs literally within minutes, many businesses, especially retailers and apparel makers, are turning to deconsolidation at the port warehouse. This allows them to bypass their own centrally located inland distribution centers in order to ship directly to retail stores and outlets. Other companies view deconsolidation as a way to optimize the flow of goods to their own distribution centers.

Some manufacturers and parts distributors are using deconsolidation to postpone inland shipments until they have had a chance to assess current inventory needs that may have changed in the time it took for the container to reach port. They can then pinpoint actual need before sorting and aggregating the orders. While in most cases orders are cross-docked and shipped out immediately, situations can arise that call for delaying a portion until a later date. In this case, the freight owners see the deconsolidation facility as a temporary supplemental warehouse. Some choose to make this a permanent arrangement, storing safety stock to meet unanticipated future demands.

Freight deconsolidation doesn’t work for everyone, but if it works for your business, it can be can be a great equalizer, reducing both inventory carrying expenses and freight costs while speeding up deliveries. And if you partner with the right freight warehouse, you’ll stay ahead of the game.

Commercial Warehousing