What is Groupage? – Definition, Pros & Cons

Less than container load

For the collective supply chain to perform at its maximal level, it is essential to ensure that cargo containers are full. Although a full cargo container may appear to be relatively inconspicuous, there is more going on than may first appear: a container may not always contain goods strictly from one supplier. This is where the term groupage is applicable.

What is Groupage?

Usually, cargo containers will be shipped as Full Container Load (FCL) or Less-than Container Load (LCL). The term groupage refers to when goods and packages from different shippers – as collections of separate LCL cargo – are consolidated together within a singular, full container and shipped to the customers or consignees together.

Groupage may also be referred to as groupage transport, groupage operation, cargo consolidation, and consolidation.

Simply put, bringing together the various items together for the groupage transport is known as consolidation and, on arrival to the port of destination, the separation of lots is known as degroupage.

When is Groupage Shipping Convenient

Groupage shipping is useful to use when there is a collection of small shipments that have a similar origin, as well as a similar destination, to form a full cargo load.

The Fundamentals of Groupage

The middle-man of groupage is the forwarder, who will act as the mutual meeting point between the multiple different senders of goods. The forwarder has a key role in being the one in charge of assembling the shipment via grouping the collection of packages, whilst being responsible for any damages sustained whilst the cargo is under their supervision.

Some key characteristics of a groupage operation include:

  • Forwarders are commonly shipping companies that specialise in logistics via land and sea
  • Used when a volume of goods is not large enough to fill a cargo container, but have a similar origin and destination
  • Goods are easily combinable onto one or several collective cargo loads
  • Dispatch and delivery deadlines are not key indicators

Practical Examples of Groupage

A quality, practical example of when groupage is useful is when a producer of bespoke, specialised goods seeks to export its goods but does not have enough produce to fill a cargo container, yet does not wish to pay for transport they see no benefit from due to part-empty cargo containers.

Instead, the company can resort to using groupage. When doing so, they must follow a set of steps:

  1. Search and select a provider of groupage shipping
  2. Writing down the specifics of the goods needing to be shipped – such as weight, dimensions, volume and type of product
  3.  Specifying the loading and unloading locations

The forwarder must ensure that it fulfils its duty to group the separate shipments together, as well as plan the spacing of the shipment for efficiency. Once done, the forwarder will provide the manufacturer with delivery dates.

The Advantages of Using Groupage Shipping

As a shipping method, groupage is one of the most cost-effective and economical shipping methods for companies with regular, small shipments.

If the forwarder is skilled at delivering an optimised groupage service, it can yield many advantages for the shipper, including:

  • Reduced packing costs
  • Inclusive insurance
  • Improved delivery times
  • The risk of loss/damage is limited
  • Saves financial resources

Disadvantages of Groupage

Though groupage has certain advantages under differing conditions, it can pose some distinct disadvantages, too. Some of which are:

  • Inefficient organisation of cargo can cost time and money
  • Improper planning of pickup and unloading can add untimely delays
  • Where the supply chain involves multiple hands, the risk of damage increases
  • Delays can occur when the forwarder/consolidator waits for shipments to fill the cargo container
  • When a container gets detained by customs, all cargo will be delayed
  • Goods can become damaged or perish as a result of poor groupage planning or waiting to fill a container

Necessary Documents for Groupage Shipping

There are several documents necessary should you wish to ship your goods via groupage container.

Bill of Lading

The contract that is formed between the forwarder/consolidator and the original shipper is known as a bill of lading. When this bill is issued by the forwarder it is referred to as a house bill of lading. When issued by an ocean freight company, it is referred to as a master bill of lading.

Commercial Invoice

Typically, this is the bill from the seller for the buyer. Similar to a packing list, it will usually detail the information of the products that have been shipped. The difference between the commercial invoice and the packing list is that the commercial invoice will list the individual and aggregate prices of each product. This is so the authorities can accurately calculate the necessary customs duties due and other relevant taxes.

Packing List/Packing Slip

The packaging slip will list the information pertaining to the goods that have been shipped under the relevant bill of lading, including the item description, volume, weight and packaging. The packing list will typically also include the name and address of both the seller and buyer.

Certificate of Origin

This will show the country of production for the goods in question. This documentation will normally be issued by the said country’s Chamber of Commerce, Consulate or Embassy.

HAZMAT/Dangerous Goods Certificate

The IMDG code (International Maritime Dangerous Goods) and the MARPOL (International Convention for the Prevention of Pollution from Ships) have specified that some goods are determined as hazardous or dangerous. Such materials include certain:

  • Chemicals
  • Oils
  • Gases
  • Materials that may be poisonous or corrosive

If the shipper even suspects that they are sending such materials, they must submit a HAZMAT or Dangerous Goods Declaration to the forwarder, including all information regarding the goods they are sending.

Letter of Credit

The trading terms between the seller and buyer could be via a Letter of Credit. A type of banking guarantee to pay for the goods by the buyer, afforded to the seller upon shipment.

Conclusion – How Breakwells Can Help You

Although shipping, groupage and logistical planning may seem complicated, it does not have to be. With the aid of the experts in third-party logistics and shipping at Breakwells, we can assist you and your business simplify the warehousing, order fulfilment and distribution of goods and heavy machinery. Whats more, Breakwells offers a ‘Non Transhipment’ service, meaning once your goods are loaded, they won’t be moved until they get to the delivery destination.

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