U.S. Companies Consolidate

July 21st, 2014 - Importers look to reduce costs and inventory by sharing containers

At a time when U.S. businesses are increasingly sourcing goods and parts from overseas and looking to reduce costs, many are opting to share ocean freight containers with other companies instead of booking a single container.

"Importers sourcing goods from different countries in a region such as Asia can consolidate them into full ocean freight containers,” says Heidi Lindemann, head of corporate maritime procurement for Bolloré Logistics in Lyndhurst, U.S.. “This is an effective way of reducing freight costs and speeding up transport times.”

In a reflection of the growing demand, the number of U.S. clients opting for SDV’s Buyers Consolidation service has doubled to 50 over the past five years, according to Lindemann’s estimates.

Most U.S. companies are opting to consolidate loads in central China, at the port of Shanghai, in South Asia, at the port of Singapore, and in Northern Europe, at the port of Antwerp.

Destinations to the U.S., meanwhile, include the port of Long Beach in California, the port of New York and the Chicago rail ramp that allows the transfer of containers between rail and truck. The goods are then transported to the surrounding cities by road.

U.S. companies in sectors including automobiles, cosmetics and telecoms, as well as fashion retailers, are choosing consolidation. Warehouses in North Asia, South Asia and Northern Europe then collect, document and consolidate the cargo into full container loads.

Consolidating goods for shipment overseas is part of the larger trend of saving money by performing fewer logistics functions in the domestic U.S. market. Overseas facilities, especially in Asia, can often accomplish the same work for less money, says Lindemann.

In addition, companies have scaled back on inventory and are placing smaller orders with suppliers because U.S. consumers are spending less. Consolidating inventory overseas, rather than sending separate shipments from each supplier to a distribution center in the U.S., makes for more efficient management of these smaller orders and also helps companies better match supply to customer demand, Lindemann adds.

If a U.S. store, for example, requires small quantities of different products to refill its shelves, the overseas facility consolidates those orders in one container.

As well as saving costs and time, grouping goods into one container also reduces the chances of loss or damage. Another advantage is that it eases the administrative burden of managing a large number of overseas suppliers, making supplier management and tracking easier.

Consolidation works best in forty-foot containers, Lindemann notes, as this offers the best economies of scale and reduces the transport costs per item. The shipments can be made at regular intervals, including on a weekly or monthly basis depending on the volume of the goods.

Finally, container consolidation helps reduce transportation’s impact on the environment. “Companies that move goods in fewer, better-targeted shipments shrink their carbon footprint,” Lindemamn says.

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