Groupage: what it is and what it means for logistics

Pubblished on: 20 February 2023
Category: About shipping

When we look at a container full of cargo, it is easy to assume that all the material comes from the same company, but this is not always the case.

Gathering goods from different shippers in a single container is referred to as groupage, and it can significantly improve the efficiency of the supply chain.

How groupage works

Goods are generally shipped by sea Full Container Load (FCL) or Less-than Container Load (LCL); a company that needs to transport goods in bulk may fill up a whole container without resorting to groupage, but if you are in the business of moving loads of merchandise that are not enough to fill a container, you may find that sending them as LCL is cost-efficient.

That is a typical situation in which you may want to look into groupage: a shipping company known as the forwarder will act as the middle-man and organize multiple loads from different senders into one larger shipment made up of goods with the same destination. Putting the loads together is called consolidation; separating them upon arrival is referred to as de-groupage.

The pros and cons of groupage

If your loads are generally small, a land or sea freight company that offers groupage as a service may result in great advantages for you and ultimately for your customers: it is less wasteful than sending containers that are only half full, it offers better insurance for all the goods in the operation, it may even improve delivery timing.

In an LCL, however, the fate of one shipment affects all the others: if a single load gets held up at customs or the operation is not properly planned by the NVOCC, the entire container may suffer delays and even loss or damage, especially if the goods are peculiarly sensitive (such as perishable or IMO).

While groupage does involve an element of risk, the potential positive impact on your business ultimately outweighs the negatives, as long as you can count on an expert to navigate it, and we at Global Shipping will be glad to help you look into it.

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