Inbound freight consolidation for US manufacturers at China

Abstract

In recent years, China has become the world factory for a sizable portion of products. Most manufacturing conglomerates in the United States now have contract manufacturing plants in China. Because many of these US companies have implemented a variety of inventory reduction approaches, they are now faced with the expensive transportation of large numbers of low-weight, small- quantity shipments in international inbound transportation, transportation that covers the flows of goods from contract manufacturers (CMs) in China to original equipment manufacturers (OEMs) in the States. While there has been research on consolidation, little attention has been paid to international inbound freight consolidation, which provides a potential savings opportunity in international transportation by combining several small shipments into one large shipment. This paper examines how manufacturers in the United States can use freight consolidation in their international inbound transportation flow from CMs in China. It then explores a framework for designing inbound consolidation, focusing on how to implement inbound consolidation in the context of China's fast-evolving logistics industry.