In logistics, consolidation is the process in which several smaller shipments are combined to form a larger transport unit. The aim is to reduce transport costs, utilize load volumes efficiently and reduce the number of shipments. Consolidation can take place at various stages of the supply chain — such as within a warehouse, in a distribution center, or at a cross-docking point.
Consolidation is particularly relevant in fulfillment, international shipping and multi-channel structures in which many individual orders are processed simultaneously. Ecological aspects are also playing an increasing role, as consolidated shipments reduce CO₂ emissions through fewer shipments.
An e-commerce retailer sends hundreds of individual packages to other European countries every day. Instead of sending each order separately, the fulfillment center consolidates all orders by destination region — e.g. all shipments to France. These are packaged together and transported as groupage. On site, a local service provider takes care of the fine distribution. Outcome: 30% lower shipping costs, less emissions — and yet on-time delivery to customers.
