Deconsolidation

Deconsolidation: The Ultimate FAQ Guide

This guide covers all the critical aspects you need to know about deconsolidation.

So, if you want to learn more about this freight term, read this guide.

What is Deconsolidation?

Deconsolidation is the breakdown of a big shipment into smaller shipments usually at the port of entry for the final destination delivery.

The final destinations for the smaller cargoes can be a warehouse, distribution centers, stores, or to the end user client.

Why is Deconsolidation important in shipping?

Deconsolidation helps in making freight manageable by dividing them into smaller pieces and processing for delivery.

This saves the cost of last mile shipping as well as boost delivery speed to shippers and customers respectively.

Despite deconsolidation being a cost saver in the shipping process, it may increase cost of shipping if mismanaged.

This is because there are many touch points that may pose a risk to both the carrier and shipper.

Having a proper and up-to-date inventory system is crucial for a successful deconsolidation process in shipping.

What is the difference between Consolidation and Deconsolidation?

FCL vs LCL

FCL vs LCL

Consolidation is the merging of several less than container load (LCL) into a big container or truck shipment before transporting.

Deconsolidation is the act of separating a big cargo into smaller shipments for inland delivery to either stores, distribution center, etc.

The mode of shipping of consolidation is sea freight while deconsolidation is mainly inland transportation by trucks or rail.

While consolidation happens at the port of origin while deconsolidation is done at the destination port.

Consolidation and deconsolidation are mutually exclusive. They are like two sides of the same coin, one cannot be without the other.

Both consolidation and deconsolidation is carried out at the container freight station (CFS).

What are the benefits of Deconsolidation to Shippers?

Deconsolidation of freight is an integral part of enterprises in this age of e-commerce.

Small and medium businesses (SMBs) are able to operate profitably by consolidating and deconsolidation the shipment.

Deconsolidation shares the same benefits as that of consolidation process. They include:

Reduced Freight Cost

Deconsolidated freight are processed before they can be loaded for their respective destination delivery.

In this case, various means of transportation is used depending on the size and weight of the packages.

Trucks, train, motorcycle are among the vessels of transports used to carry out last mile delivery of the deconsolidated shipments.

This reduces the cost of transportation of these goods as compared to using the alternative.

Proper processing and handling of the goods is crucial to ensure correct, timely and cheaper delivery costs.

Proper Inventory Management

Deconsolidation process is not a walk in the park as it involves several different goods from different shippers in different locations.

Any carrier or freight forwarding company offering deconsolidation services has to have an excellent inventory management system to attract clients.

Secondly, proper inventory management will ensure efficient, accurate and timely delivery of the various goods to their respective localities and destinations.

Destinations of deconsolidated shipment include, warehouses, end user client, distribution centers, fulfillment centers, online orders collection centers.

Increase Market Delivery

Shippers can consolidate their goods and ship into the country using the third party companies and store in their warehouses.

Freight is then separated and transported to their respective markets and avoid out of stock situations.

Discounted Shipping Rate

Using third party logistics companies to ship consolidated goods makes them stay afloat during low season and also reduces cost of shipping.

This makes such shippers their preferred clients hence they are offered better discounts during shipment.

What is Deconsolidation Point?

Once the consolidated container arrives at the destination port, the container is transferred to a separation station within the port facility.

It is at this point that the shipment is separated into smaller packages and prepared for inland delivery.

Hence the name, deconsolidation center.

Deconsolidation points have workers who help with the offloading and processing of the goods using an inventory management system.

The goods are then loaded to appropriate mode of transportation and shipped to their final delivery points.

Product distribution

Product distribution

Where are Deconsolidation Facilities located?

Deconsolidation facilities are conveniently located within the ports to enable easy and faster separation of consolidated goods.

The reason for having them at the port due to availability of warehousing services, advanced equipment, inventory systems, manual and skilled labor.

This location is ideal for unloading, separating, classifying, tracking and transporting unmerged goods to several locations.

What is the difference between Deconsolidation and ‘Merge in Transit’?

Deconsolidation is the separation of consolidated loose, bulk or containerized goods into smaller Shipments.

Merge in transit is bringing together different goods from different suppliers and combining for transportation to a single customer.

Deconsolidation happens at a deconsolidation center while merge in transit is done at a merge center.

Whereas deconsolidation requires warehouse facility for storage, merge in transit eliminates the need for warehousing as it delivers to the final client.

Deconsolidation happens at the final destination port, merge in transit is carried out in the country of origin before shipping.

Both deconsolidation and merge in transit aim to lower the cost of transportation.

How can Deconsolidation simultaneously Increase and Decrease Risk in International Shipping?

Deconsolidation as we know involves dividing a big consignment into smaller packages for the last leg of shipment delivery.

This involves offloading all the goods from the FCL or FTL, segregation, processing, inventory update and dispatch to various destinations.

This increase the goods’ touch points and thus exposing them to risk of damage, loss or quality degradation if mishandled.

Furthermore, goods may be delivered to the wrong destination if the address is unclear or misplaced.

Conversely, deconsolidation decreases the risk of international shipping because it has made the carriers develop and use better inventory systems.

Carriers that offer consolidation and deconsolidation have warehouses management systems (WMS) integrated to the cloud.

This technology only requires the shipper to login from wherever they are in the world and monitor their shipment.

It easily integrates with the monitoring technologies such as RFID and AIDC that are tagged on the goods.

In some instances, the WMS come with camera that enable visual monitoring of deconsolidation process.

This has greatly reduced the risk of international shipping.

What are the Common Problems Experienced by Shippers in Freight Deconsolidation?

While deconsolidation comes with some benefits, it also has some challenges that shipper may encounter. They include:

Increased Risks

Consolidation and deconsolidation of goods has several touch points which also increases the likelihood of loose or damage of goods.

It is therefore, critical to reduce the touch point as possible to mitigate the risks.

Delays in Offloading and Deconsolidation

Upon arrival at the port, the container is expected to be offloaded and unloaded and goods separated. However, lack of space, injuries, etc. may cause delays in deconsolidation process thus affecting timely delivery and increase other costs.

Finding the Appropriate Carrier

Getting the right carrier can be a challenge as consolidation and deconsolidation process is quite involving.

Using freight forwarders or third party logistics companies is ideal as they are knowledgeable and can execute seamless deconsolidation of freight.

Tracking Challenges

While it is easier to track consolidated cargo, challenge arises once the goods are separated at the deconsolidation center.

This can cause chaos when you cannot locate your small shipment real-time while on transit.

To negate the chances of losing visibility of your shipment it is imperative to have the goods tagged using automatable technologies.

Some of the methods you can apply include; radio frequency identification code (RFID), automatic identification data capture (AIDC).

These will enable you have real-time end-to-end visibility of your goods from point of origin to final destination point.

Intermodal Shipping Challenges

FTL vs LTL

 FTL vs LTL

Disintegrated goods move from full truck load (FTL) to less truck load (LTL) or small shipment vessels for transportation to various destinations.

In some cases, they maybe need to reconsolidate and deconsolidate at various points thus presenting increase in touch point risk.

Having a real-time tracking method in place may come in handy in monitoring goods movement.

Routing Issue

During the major shipping leg, situation may arise that require goods to be deconsolidated and reconsolidated during shipment.

This situations may be out of natural causes hence causing delays.

Carriers should plan ahead and make sure they stick to shippers’ route despite arising situations.

Who does Freight Deconsolidating?

Freight deconsolidation is carried out by third party logistics carriers or freight forwarders for shippers who do not have such shipping capacity.

Such shippers include small and medium businesses or e-commerce enterprises that struggle with their freight shipping.

Large shipping companies have the muscles to move freight without consolidation or deconsolidating hence seldom offer deconsolidation services.

How much does Deconsolidation cost?

The cost of disassembling freight at their destination port is averagely USD 25 depending on the dimension on the goods.

What are the key considerations for reducing the costs of Freight Deconsolidation?

The aim of freight deconsolidation is reducing their overall shipping costs, fasten delivery process among others.

In order to reach this goal, the following key aspects must be looked into.

Better Process knowledge

This help the carrier company to plan well for the cargo movement as well as deconsolidation and final deliver transportation.

Proper Shipping Documentation

Carriers and freight forwarders understand the importance of timely delivery of goods to their clients. To ensure they make timely delivery, carrier’s present proper documentations for the goods in transit across the borders for inspections.

This avoid hold up of goods by customs that may lead to unnecessary delays and extra shipping expenses to the shippers.

Freight forwarders may use pre-approvals lines where applicable to avoid delays.

Accurate Package Dimensions Entry

Lately, there has been an increase in the use of dimensions-price models by freight forwarders.

It is therefore important to correctly capture the weight, size and volume of each shipment to be shipped.

This assist freight forwarders to give accurate quotations and also to plan for consolidation and deconsolidation appropriately.

Experienced Freight Forwarder

Experience in working with different and warehouse and yard management systems makes the process seamless for the carrier company.

Real Time Traceability

End-to-end visibility of goods during transportation is important for tracking purposes and avoid lose.

Goods Prioritization

During consolidation, goods should be loaded in various categories which will subsequently make deconsolidation process easier and faster.

It makes entry of inventory process easier and further fasten the last-mile distribution process.

Does Freight Deconsolidation work for everyone?

While deconsolidation may work well for some business, it may lead to terrible losses and higher costs for some.

It is therefore important for business owners to analyze their market before venturing into deconsolidation services.

For instant, clothing business might do well with deconsolidation services. First, the clothes will reach the market faster by bypassing distribution centers.

Secondly, the business owner might decide to hold stock and study trend before dispatching thus gaining more profits.

Finally, if the business has several retail centers across the country, deconsolidation allows them to redistribute the clothes faster and cheaply.

While this might lead to higher sales, reduced costs to the clothing business it might lead to overstocking for furniture business.

Higher inventory capacity may be costly and lead to bigger financial burden.

How can you Ensure Safety of Goods during Freight Deconsolidation?

Safety of goods that are to be deconsolidated is paramount to avoid product loss due to theft or misplacement.

Shippers can ensure their product safety by using modern technologies such as RFID and AIDC to trace their goods end-to-end.

Having real time visibility of the product will enable the shipper to know every location of the freight during transit.

Such technologies also enable inventory monitoring from the cloud for shippers who use carrier’s warehouses for storage.

Additionally, carriers provide a round the clock security to the goods once they take over from the supplier.

They oversee deconsolidation process at the deconsolidation station and countercheck goods as they are loaded for dispatch.

Does Cargo Insurance Cover loss and Damage of Goods During Freight Deconsolidation?

Marine cargo insurance policy

 Marine cargo insurance policy

Cargo insurance is the protection of goods provided by the carrier vessels corporation.

This covers loss of goods in case of any incident while on board.

To protect freight during deconsolidation, the terms need to be added to the policy for it to apply.

It is important for shippers to ensure the insurance cover taken is comprehensive to cover deconsolidation process.

This comes at an extra fee since the risk involved in freight deconsolidation is high.

How do you Make a Deconsolidation strategy Successful?

Like any other strategies, deconsolidation planning should factor in all the pros and cons towards a specific items.

While the aim is to reduce shipping cost and fasten goods availability in the market, risks must be mitigated.

Carriers have to ensure that the multiple touch points get extra attention and if possible reduced.

This can be achieved by putting in place a working measures during offloading and sorting.

Equipment such as conveyor belts to be used for loading onto waiting truck, and fragile items separated and handled carefully.

With this and good inventory system in place, deconsolidation strategy will be successful.

Is Deconsolidation viable for all kinds of Shipments?

Deconsolidation services cannot be offered to any type of goods.

There is a limit for goods that can be disintegrated from the original consolidated freight for final destination shipment.

Such items include; fragile goods like carvings, food items that are perishable, drugs, minerals etc. Hazardous materials (HAZMAT) cannot be deconsolidated, they include; toxic chemicals, biological and radioactive agents, nuclear waste products, fuels, etc.

 

HAZMAT Symbols

HAZMAT Symbols

How can BanSar help Shippers boost Proficiency and Efficiency in Freight Deconsolidation?

Shippers use deconsolidation services in order to reduce cost and ensure goods availability on time.

Bansar shipping can help shippers to realize efficiency and proficiency of freight deconsolidation by the following:

  • They can also offer discounted rates to their frequent shippers to help them reduce their shipping costs.
  • Timely arrival and deconsolidation at the entry port ensure the goods reach the market on time avoiding out of stock situations.
  • Keeping clean inventory records for shippers to monitor their items throughout the process.
  • Assist with end client delivery of items.

Do you Recommend Consolidation and Deconsolidation of Amazon FBA Shipments?

Yes.

Amazon FBA serves global customers therefore, in order to deliver to the on time, they can use consolidation and deconsolidation services.

This online store serves customers in different geographical regions.

It operates by customers ordering through their Amazon account and the goods are delivered to their fulfilment center buy manufacturer.

Once they receive the goods, they sort and consolidate all freight going to similar region and dispatch them.

Upon arrival to their respective country ports, the freight is deconsolidated and good distributed to all their customers respectively.

What Does a Deconsolidation Service Entail?

Deconsolidation services include:

  • Receipt of cargo at the deconsolidation center
  • Storage
  • Clearance with customs
  • Offloading, sorting and inventory management
  • Documentation
  • Packing and truck loading
  • Cross docking
  • Inland Shipping

What is Deconsolidation Notice and why is Important?

A deconsolidation an electronic notice issued by border authority allowing the client (carrier or freight forwarder) to take over consolidated shipment.

This electronic authorization is presented to the warehouse manager to authorize the freight forwarder to take charge of consolidated cargo upon arrival.

Besides, it acts as an electronic notice to customs official that taxes and duties of that particular consolidate freight have been acquitted.

If the warehouse operator does not get the electronic notification the client can present them with printed copy of the same.

A verified and stamped copy of the consolidated cargo control document by CBSA may also be presented to the warehouse operator.

At BanSar, we will help you in all freight forwarding services from China – contact us now.

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