Assembly Service

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Adam Hayes
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Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Updated July 26, 2022
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Dr. JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career. She is the CEO of Xaris Financial Enterprises and a course facilitator for Cornell University.
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What Is Assembly Service?

The term assembly service refers to a shipping or transportation service in which a number of small shipments are combined into a single one. This service may be provided for shipments to one party or multiple customers at once.

Assembly service is offered by freight forwarders and carriers. Customers who use this type of shipping service are often able to get better freight rates and reduced shipping costs.

Key Takeaways

  • An assembly service transports several small shipments that have been combined into a single delivery.
  • Assembly service, by aggregating many smaller and costlier items, reduces shipping costs.
  • Assembly service lowers the risk of goods being damaged in transit provides more efficient quality control, but not every transportation company offers it.

How Assembly Service Works

Assembly service is a service provided by companies in the shipping and transportation sector. In some parts of these industries, it's also called cargo consolidation or cargo consolidation service. This service consolidates smaller shipping loads—often called less-than-truckload (LTL) shipping services—into a single shipment. These shipments are normally handled by parcel carriers—those who handle individual shipments of less than 150 pounds.

As noted above, an assembly service bundles multiple parcels or LTL loads into a single, full container. Since they consolidate multiple shipments together, service providers are able to save their customers both time and money. The fastest and most efficient assembly service—at least in terms of cost—is with palletized cargo, meaning items that are consolidated on one or several shipping pallets. Such a format eases movement on docks and offers uniformity regarding the use of space.

This type of shipping service is particularly useful for small exporters and businesses, as shipping costs would otherwise be quite high. For instance, it may be ideal for a business that needs to ship just a few pallets of goods. Assembly services are also useful for moving companies. For example, consumers can use this kind of shipping when they're moving from one part of the country to another.

In these cases, their loads are bundled into a truck or other vessel with those of other consumers who are headed in the same direction—usually for the same destination. This results in significant cost savings since the price to ship is spread across multiple customers. However, an assembly service may not be the best solution for certain shipments such as high-value merchandise, fragile items, or time-sensitive material.

Advantages and Disadvantages of Assembly Service

The benefits of assembly service shipping or cargo consolidation are many. There are, however, a couple of notable disadvantages to remain aware of as well:

Advantages

  • Lower shipping costs: Even if a company utilized a fraction of a trailer or container they will wind up paying for the whole thing—space, fuel, and labor being constants. Assembly service shipping allows several different loads headed to the same vicinity to be combined to fill a truck or container, thereby lowering costs. Each shipper pays for just the space they use.

  • Lower risk of damage: Assembly service reduces the on/off handling of goods, thereby reducing the chance of goods being damaged in shipping. The handling of goods has fewer touchpoints, which are limited to the shipper, the consolidator, and then the receiver or consignee.

  • Better quality control: Assembly service shipping allows companies to get control of their goods sooner, which allows them to have more control over the timeline of deliveries.

Disadvantages

  • Not all carriers offer assembly service at the right timeframe and cost. Some carriers may not offer the service at all. 

  • Assembly service shipping also takes longer to plan and organize, which can add to overall delivery time. Shippers as well as shipping companies must spend extra time factoring package dimensions, timing, and pricing to ensure the best service.