Groupage and groupage transport form the core of logistics and are among the most important services provided by freight forwarders.
Groupage is general cargo that is consolidated and transported with other general cargo to form a groupage shipment. The shipping forwarding company first collects the individual general cargoes from the clients in its area and gathers them in a transshipment warehouse, recombines them as a consolidated cargo so that they can then be transported to the respective receiving forwarding company. There, the general cargo is again separated from the consolidated cargo and the shipment of the goods to the respective final recipients is organized.
In the case of very small quantities, the shipment of which would be uneconomical as direct transport, the transport of groupage goods can also be arranged via central warehouses or dispatch nodes (hub-and-spoke).
Importance of groupage transportation
The transportation of groupage cargo has a special significance for logistics companies due to its economic efficiency. Groupage transport enables a great increase in efficiency for the processing of transport orders, because individual general cargoes that have different recipients but the same destination region can thus be consolidated into one transport. The capacity utilization of the individual transport can be optimized. Whereas individual unit loads might otherwise be handled as partial load transport (LTL), the consolidated load can often be handled as full load transport (FTL). Accordingly, this allows the shipper to transport smaller general cargo shipments cost-effectively, as multiple shipments can be transported in one trip. The freight forwarder can make optimum use of the loading capacities of the means of transport.
Groupage transportation is a special form of shipping because the transportation of groupage is a complex process due to the large number of parties involved. The parties involved are the individual principals or shippers, the shipping carrier, sometimes a carrier, the receiving carrier and the consignees of the shipments. In a groupage agreement, the transportation from the shipper to the consignee is contractually regulated between all parties involved.
The transportation of groupage is divided into five steps. Pre-carriage, transhipment, main leg, 2nd transhipment and on-carriage. The individual sub-processes do not have to be distributed among several forwarding companies, but can also be carried out by one forwarding company with corresponding locations.
Step 1: Pre-carriage
In the first step, the preliminary run, the shipping forwarding company collects the individual general cargo shipments from the various customers. The freight forwarder then first collects the general cargo in its transshipment warehouse.
Step 2: Transshipment
During transshipment at the shipping company’s transshipment warehouse, the general cargoes are grouped into different consolidated cargoes according to specific criteria:
- Delivery date
So the goods are sorted according to the criteria and then combined into a suitable shipment.
Step 3: Main run
The individual groupage consignments are handed over to the carrier for transportation, unless the freight forwarder performs this task itself. The carrier then transports the consolidated cargo to the receiving freight forwarder.
Step 4: 2nd transshipment
At the destination, delivery is made to the recipient freight forwarder. Now the second transshipment takes place in their transshipment warehouse. The consolidated cargo formerly assembled by the forwarding agent is again divided into the general cargo and prepared for shipment to the actual final consignee.
Step 5: Post-carriage
After the receiving freight forwarder has divided the consolidated load into individual shipments and again organized and recorded them as shipments, the actual shipment of the general cargo to the recipient of the goods finally takes place in the on-carriage.