What is a Buyer’s Consolidation?

by | Jan 31, 2019 | Freight Forwarder, LCL, Logistics

Container handling equipment for buyer's consolidation

Buyer’s Consolidations: Improving Landed Cost on LCL

 If you import and have multiple suppliers near a single origin port, your freight forwarder may have an opportunity to improve supply-chain efficiency by creating a buyer’s consolidation. If you aren’t already familiar with this strategy and how it’s different from less than container load (LCL) shipping, read on.

Understanding Buyer’s Consolidations

Your shipment is considered LCL when you do not have enough cargo to fill a container. In these cases, your cargo will be consolidated into a shared container with other importers’ goods. On arrival, the container will be delivered to a bonded container freight station (CFS) for unloading, or de-consolidation. However, when several of your suppliers in the same region have LCL shipments available around the same time, a buyer’s consolidation may be created.

 

How you Benefit

  1. The greatest advantage is reducing your landed cost. Since you would have a full container load (FCL), there would be no need to de-consolidate your cargo at a or CFS, thereby eliminating extra handling and transportation fees.
  2. Bypassing the CFS means your cargo will be handled less, which reduces the transit time.
  3. Reduced handling reduces the risk of damaged to your goods.

 

See below charts illustrating the cost savings in a buyer’s consolidation.

 

Traditional LCL

Shipment Number

Volume

(CBM*)

Rate

(CBM*)

Ocean

Freight

Cost

Destination

Handling

Fees

Door

Delivery

Grand

Total

1

14

$60

$840

$250

$250

$1,340

2

8.5

$60

$510

$250

$200

$960

3

5.5

$60

$330

$250

$200

$780

4

12

$60

$720

$250

$250

$1,220

5

14

$60

$840

$250

$250

$1,340

Totals

54

 

$3,240

$1,250

$1,150

$5,640

 

Buyer’s Consolidation

Shipment Numbers

Volume

(CBM*)

Ocean

Freight

Cost (40’FCL)

Destination

Handling

Fees

Door

Delivery

Grand

Total

1 – 5

54

$2,100

$0

$380

$2,480

Totals

54

$2,100

$0

$380

$2,480

 

Total Cost Savings $5,640 – $2,480 = $3,160

 

Finding the Right Solution

Developing a solid consolidation strategy will help maximize your savings. An experienced and knowledgeable international freight forwarder will be able to further explain the benefits of buyer’s consolidation. For more information, contact us here.

 

 

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