The Advantages of Zone Skipping and Freight Consolidation
Zone skipping is a shipping technique that businesses use to take advantage of local freight rates, instead of national rates, in order to reduce transportation costs and improve transit times, especially for cross-border and long haul domestic shipping situations.
What is Freight Consolidation?
Freight consolidation is the process of combining parcel and LTL freight from various North American customers into LTL and TL shipments for Northbound and Southbound cross-border shipments, as well as shipments from Eastern to Western Canada. Farrow offers this service to its customers, enabling them to benefit from lower rates.
What is Zone Skipping?
When carriers group several geographical regions into zones, they provide shipping charges for moving goods between them. Zone skipping occurs when businesses use freight consolidation to directly induct LTL and FTL shipments into the “last mile of delivery” or local area to take advantage of lower costs, thereby skipping the cost of direct shipping across multiple zones. Once the parcels and pallets arrive at a local sorting facility, they are delivered to their final destination using local carriers.
An Example of Zone Skipping:
For example, if you are shipping 5,000 parcels from Ontario to Vancouver at $10 each, the total shipping cost would be $50,000. However, if you send a truckload of 5,000 parcels from Ontario to a sorting facility in Vancouver, the flat rate would be $5,000. Then, add the cost of local parcel shipping from the sorting facility to the customer, which is $7 per parcel. With the original $5,000 flat rate shipment and 5,000 parcels at $7, the total cost would be $40,000, saving your company $10,000.
By using these logistics techniques, your business can benefit in three major ways:
- Cost savings for your business and customers: By taking advantage of both of these techniques, you’ll be able to reduce the cost of freight on your inventory and the cost of delivery, which can be passed on to your customers, who will pay less for their shipments.
- Reduced transit times: With zone skipping, parcels no longer have to travel to multiple sorting facilities to reach their final destination. Instead, you’ll experience faster shipments to local carriers, which will create quicker deliveries for your customers.
- Full track and trace visibility: By taking advantage of Farrow Consolidation and Zone Skipping, both your business and your customers can easily track the whereabouts of your shipments and its expected arrival times.