Potential Benefits of Shipper Consolidation at Inland Distribution Centers

Abstract

This paper discusses bundling of freight activities at the operational level. The cost of freight transport may be decreased by raising the fill rate of loading units. Shippers attain scale economies and a better utilization of transport equipment through consolidation of freight inside a loading unit. This may on the one hand reduce the costs of pre- and end-haulage by road or on the other hand increase the attractiveness of intermodal freight transport for further continental distribution. A discrete event simulation model is developed to investigate possible benefits of consolidation between shippers at inland distribution centers. Opportunities of consolidating freight from three different distribution centres are identified through simulation of current and future operations. The organization of a crossdock to consolidate freight of multiple shippers may lead to a reduction in standing time of loading units. Second, simulation results show that capacity gains can be realized through a shift to non peak periods. The third performance measure to evaluate the consolidation scenario is the fill rate of loading units. The consolidation scenario leads to an increase in the average fill rate over all load orders in all three DC's. Finally, the consolidation scenario leads to a reduction in number of loading units necessary over the observed period.