Package Consolidation Service: What It Is and When To Use It
by Jaidyn Farar
International shipping is vital in our interconnected world, but it comes with countless logistics headaches. To save money and minimize complexity when shipping to other countries, many businesses rely on package consolidation.
What is package consolidation?
Package consolidation is a shipping method where multiple packages heading to the same destination are sent as a single shipment. In the context of ecommerce, consolidation is usually achieved by palletizing or containerizing individual packages, shipping them to a fulfillment center, and separating them for last-mile delivery.
Like freight consolidation, package consolidation helps simplify shipping logistics, lower costs, and boost efficiency.
Note: The term package consolidation is sometimes used interchangeably with order consolidation to refer to multiple items from one order being shipped in the same box. The term can also refer to a service that helps international consumers reduce shipping costs by combining orders from various businesses into a single package. For example, if somebody in Japan orders products from three separate U.S. companies, they might have all three packages shipped to a consolidation service, which then sends a single larger package to the consumer’s address.
When should you choose package consolidation?
Package consolidation is useful for shipping internationally, as it speeds up customs clearance and prevents product damage. However, consolidation can also be used domestically to get packages closer to their end destinations before turning them over to parcel carriers (this is known as zone skipping).
Let’s take a closer look at each use case:
- International shipping. When shipping internationally, parcel consolidation helps streamline customs clearance and avoid delays or other issues. It also reduces the risk of product damage, since packages are secured in pallets or crates rather than handled individually.
- Domestic shipping. When you have several packages heading to the same region, consolidation can be used to combine them into a single shipment. This allows you to take advantage of bulk shipping rates and minimize last-mile delivery costs.
“Domestic and international consolidated are essentially the same thing. You’re working off bulk shipments, and you’re zone skipping in the United States or country skipping internationally. And that's going to get you to the closest point to drop and deliver locally.” — Guy Gemmill, Is Consolidated Shipping Right for You?
Keep in mind that some types of products aren’t ideal for consolidation. Perishables, HAZMAT items, and high-value products are best sent with an international parcel shipping service like USPS, UPS, FedEx, or DHL.
Benefits of package consolidation
Package consolidation is a great way to cut costs, but the benefits don’t end there. Consolidation can also streamline customs clearance, reduce the chances of damage, and minimize your environmental impact.
- Cost efficiency. Consolidation allows businesses to take advantage of economies of scale, saving money by shipping orders in bulk. When it’s time to hand things off to last-mile carriers, rates are low because the shipping distance is short.
- Simplified customs clearance. When shipping internationally, consolidation can simplify customs documentation and compliance, as you’ll have fewer shipments to manage and fewer sets of paperwork to process.
- Lower risk of package damage and loss. Consolidation often involves palletizing goods. This helps ensure that they’re handled more efficiently, making them less prone to damage during transit. The likelihood of package loss also goes down, since fewer individual items are handled.
- Lower environmental impact. Consolidation reduces the number of shipments required to send goods to customers, which minimizes the carbon footprint associated with shipping your products.
How does package consolidation work?
The package consolidation process involves shipping packages in bulk, then deconsolidating them for last-mile delivery. While a business can manage the logistics of package consolidation internally, this section will describe what the process looks like when you use a package consolidation service.
1. Orders are picked, packed, and sent to the consolidator
When a business receives new orders, it picks and packs them. Then, it sends the packages to a consolidation service. The consolidator might collect parcels from hundreds of merchants daily.
2. Packages are sorted and consolidated
Once received, parcels are sorted based on their destination regions and countries, then packed into larger containers. Because bulk shipping rates are lower than individual parcel shipping rates, consolidating packages this way helps reduce costs.
3. Consolidated shipments are transported
The consolidated shipments are transported to the destination region or country. For international shipments, the consolidator handles customs clearance, leveraging their expertise to ensure compliance with local regulations and requirements.
3. Shipments are deconsolidated and passed to local carriers for last-mile delivery
Once the consolidated shipment arrives at its destination, it’s broken back down into individual parcels. A local carrier, often the local postal service or another delivery company, performs the final delivery to the recipient's address.
The fastest way to ship packages
Whether businesses use consolidated shipping or not, they have plenty of opportunities to remove friction from the shipping process, save money, and provide customers with a great delivery experience.
One way to accomplish all of the above? Use shipping software like EasyPost Enterprise Shipping. With EasyPost Enterprise, high-performance shippers can connect with over 100 carriers, generate labels at sub-second speeds, and integrate with their other supply chain solutions for end-to-end logistics visibility.
Connect with our team to see how EasyPost Enterprise can help your business.