Groupage: flexibility and cost optimization

Not all shipments have the same size or the same needs. For this reason, being able to choose the appropriate modality for each delivery is essential if we want to optimize our logistics and our costs. Groupage is one of the most common types of shipping and, of course, there are reasons for it. Both the cost savings and the alternatives offered for deliveries are two of the reasons for this.

What is groupage

We can place groupage between full load, on one end, and express parcels and pallets, on the other. While the full load (Full Truck Load; or FTL in its acronym in English) refers to the trips in which we all use a trailer, the groupage (Less Than Truck Load; LTL) includes all those shipments in which we do not occupy all the trailer and our merchandise will travel together with the merchandise of other clients.

Technically, since we send a small package we can talk about groupage. However, it is common for the term groupage to refer to loads with a certain volume and from a certain number of pallets or packages, thus differentiating it from the world of express parcels and pallets.

For example, in pallet networks -such as our Palibex network- the usual number of pallets in shipments is between one and three pallets. While in groupage terms such as “half a truck” are common; that is, hiring half a trailer for our merchandise, which means a considerably higher number of pallets. In a certain way, the express pallet shop was born as an evolution of groupage due to the need for increasingly smaller and more urgent shipments.

Another usual way of contracting groupage is by linear metres. That is, the number of meters long that we occupy in the trailer. As the European pallet measures 0.8 x 1.2 meters, approximately each meter of truck will entitle us to two pallets.

When to resort to groupage

As we have said before, groupage is an appropriate solution when we cannot occupy an entire trailer with our merchandise. One of the reasons for this is that our sales volume may not be enough. However, another of the reasons that has led to the contracting of more groupage is the reduction of stocks. With less merchandise stored, there is an increase in the frequency with which shipments are produced. For example, if we used to ship one trailer every week, we may now ship multiple pallets every day.

Groupage is a very attractive option also because of its good cost ratio. A logistics operator with a good groupage service will offer you costs with a higher ratio than what you would get from a parcel company, in small consignments of express pallets or if you had to charter a full trailer and left empty space unused. As long as, as we have said, you move from a certain volume.

It is also convenient that you study your rates carefully. When your merchandise is bulky, it is possible that the rates of parcel companies, which usually use rates that take into account the size of the merchandise, are less economical than groupage.

Being able to unite and optimize different shipments is the key to groupage

How groupage works

At an operational level, the key in a groupage is that the logistics operator manages to gather enough shipments in the fastest and most economical way so that the process is efficient and all the actors can benefit from it. It is the responsibility of the carrier to be able to find those loads that they also have to send to a destination close to the rest of the merchandise, so that the fact of sharing a trip means savings.

Due to this, and depending on the difficulty of the groupage (number of shipments to collect, number of kilometers to travel, etc.), groupage sometimes has longer delivery times. While as soon as we load a complete trailer it can -in theory- go directly to its destination, in groupage we have to wait for the truck to be complete.

It is also possible that not all merchandise has to share the entire journey. For example, a groupage from Madrid to Barcelona may have a final destination in Paris for any of the items that it transports. In this way, he could leave some of the consignments in Barcelona, load more merchandise headed for France, and continue on his way. This work of coordination, use and optimization can make a difference when it comes to saving costs.

In addition, these tasks usually require infrastructure -facilities to load, unload and consolidate merchandise- that shippers (that is, whoever ships the merchandise) often do not have as their own resources. This makes the presence of a logistics operator that does have them more attractive.

Although up to now we have talked about trailers, groupage can also be done using smaller vehicles, which give you more flexibility; either during the entire journey, to better adapt to the amount of merchandise to be transported or to carry out the final distribution in difficult access areas for a trailer. Again, here the fleets of logistics operators give them a new extra value to meet the needs of customers. There is also the possibility of off-road groupage, as in the case of maritime groupage.

Advantages of groupage

In addition to the benefits that we have already seen, groupage offers another series of advantages:

Security: a groupage shipment is usually subject to fewer loading and unloading processes than parcel and pallet shipments. Due to this reduction in handling, the chances of suffering damage, mishaps or errors when routing the merchandise are also reduced.
Simplicity: when it comes to having our merchandise located, we will also have more facilities when working with groupage, as there are fewer hands in between.
Delivery options: for those deliveries that need a hatch, access residential areas or narrower areas, groupage is a very timely solution. Since the last leg of the delivery can be carried out with smaller vehicles, more used to this type of deliveries or to other services such as manual depalletization, groupage is ideal for cases in which the full load may be inadvisable.

Once we have studied our needs, our type of shipments and the frequency with which we need to send merchandise, opting for groupage can be an excellent decision for our supply chain.

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Khaterine William

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