LCL Consolidation at the Montreal Warehouse: When It Pays Off

The Consolidation Problem at the Dock

LCL cargo arrives at the warehouse all the time. One shipper sends 6 pallets, another sends 4, a third sends 2. Each shipment clears customs separately, each gets its own dock door slot, and each one is technically ready to move to the customer. But the importer who only has 2 pallets doesn't have enough volume to justify a dedicated truck run from the warehouse to their facility. A full load costs roughly the same whether it's 8 pallets or 24 pallets, so that 2-pallet shipment pays full drayage on half a truck.

That's where consolidation lives. Instead of running three separate LTL trucks, you hold those shipments for a window (typically 48-72 hours), sort them by destination geography or customer, repack them onto new pallets if needed, and load them together into one FCL outbound. One truck run, one drayage bill, spread across all three importers.

When Does the Math Actually Work

Warehouse consolidation services at FENGYE LOGISTICS include receiving, unpacking, sortation, repacking onto GMA pallets, and reloading. A typical handling charge runs $12-$20 per pallet, depending on whether it's light receiving-only or full repack labor.

For consolidation to pencil, the drayage savings have to exceed the handling cost. If you're paying $120 per pallet for an LTL run (8 pallets at $960 total), but an FCL to the same zone runs $800 all-in (spread across 16 pallets = $50 per pallet), you save $70 per pallet. Subtract $15 in consolidation handling and you're ahead $55 per pallet. The importer with just 2 pallets goes from a $240 LTL bill to roughly $30 in consolidation handling plus $100 drayage share = $130 total. That's a 46% saving.

But that only works if three things align: the pallets are bound for overlapping geographies (otherwise you're just shuffling cost around), the consolidation window doesn't cause the customer to miss their promised delivery date, and the customs paperwork doesn't hold one shipment hostage while the others are ready to move.

The Dock-Level Flow

When consolidation happens, the warehouse runs a specific sequence. First, all inbound shipments get their CBSA release. That's non-negotiable. You can't repack bonded cargo without Customs present, and you definitely can't move unlicensed goods through a consolidation station. Once released, the pallets move to the consolidation zone (usually a dedicated racking section or floor space near the outbound dock).

Next, the warehouse sorts by outbound destination. Pallets going to Toronto stack together, Vancouver pallets stack separately, and so on. If the pallets need to be unstacked and repacked (e.g., the inbound shipment used EUR pallets but the customer wants GMA or block pallets), the warehouse crew unpacks, repalletizes, and wraps. This is where most of the handling cost lives.

Then those consolidated pallets load into the outbound container. A 40-foot container holds roughly 20-24 pallets depending on pallet type and box dimensions. A 20-foot holds 9-12. The warehouse deck crew secures them with load bars or straps, and the container seals for shipment.

The whole cycle from inbound receive to outbound load typically runs 48-72 hours. Anything longer and you're tying up warehouse space (roughly $40-$60 per pallet per day in bonded storage) and risking the customer's delivery commitment.

Port of Montreal Drayage and the Dorval Factor

Here in Montreal, the cost arithmetic changes depending on terminal location. Port of Montreal's main container terminal is in Lachine, about 12 km west of downtown. Dorval (the city just north, home to Montréal-Trudeau Airport) has some transload facilities, but the bulk of container traffic flows through Lachine or via Mirabel rail facility further north.

Drayage from Port of Montreal to a warehouse in the Lachine/Dorval corridor usually runs $400-$600 per 40-foot container, depending on time-of-day and pickup window (urgent rush is premium). That's your baseline to justify consolidation. If you're moving just 6 pallets on an LTL, that's roughly $100-$140 per pallet. Consolidate that into an FCL and the per-pallet cost drops to $25-$35.

The port's container free-time window is important. Port of Montreal typically allows 5 free days for container dwell before detention charges kick in. If your consolidation window stretches beyond that, detention costs add up fast (roughly $40-$60 per day per box, 20-foot or 40-foot). That's usually enough pressure to keep consolidation batches moving inside 72 hours.

Bonded Warehouse Consolidation vs. Open Yard

At FENGYE LOGISTICS, consolidation happens inside a CBSA-authorized sufferance warehouse. That matters for three reasons. First, you can hold bonded cargo (not-yet-released imports) in a secure holding zone without immediate duty payment. That gives the importer time to wait for consolidation windows and negotiate release timing with their broker. Second, all the handling and repack work happens under Customs compliance (or at least under a facility licensed to do it), so there's no question of tariff classification shifting or duty evasion when you repack onto new pallets. Third, the warehouse can issue proper shipping documentation and SOP paperwork, so the outbound consolidated load is compliant from dock to final destination.

Some competitors run open-yard consolidation (no bonded license), which is cheaper per pallet but comes with risks. If any item in the consolidation isn't fully cleared, the whole load can get held. If Customs has questions about the repack, the facility has to call in a broker to reconcile. It's usually not worth saving $2-$3 per pallet.

Cross-Dock Consolidation: The Faster Path

Sometimes consolidation doesn't need warehouse storage at all. If you have multiple inbound shipments arriving within the same 4-6 hour dock window, and they're all destined for the same zone, you can cross-dock them. That means they arrive, get sorted, repacked, and loaded back out without ever sitting in racking. No storage charge, no multi-day holding. Just dock-to-dock, typically 6-8 hours from first pallet receive to final load seal.

Cross-dock consolidation is the gold standard for cost, but it's operationally tight. One missed truck window or a slow customs release and the whole thing falls apart. Suddenly you're burning warehouse storage and tying up dock doors. FENGYE LOGISTICS warehousing and distribution services handle both cross-dock and standard consolidation, depending on the inbound timing and destination clarity.

When Not to Consolidate

Consolidation doesn't always win. If an importer has just 3 pallets but they need to ship in 24 hours because their customer has already given them a delivery commitment, consolidation is off the table (you're forced into LTL). If the pallets are going to three different destinations in opposite directions (Toronto, Vancouver, and Halifax), consolidation creates routing complexity that eats up the drayage savings. If the shipment is refrigerated or hazmat, consolidation adds compliance checks and delays.

Consolidation wins when the importer can flex 48-72 hours and cluster shipments by zone. Locked into 24-hour windows with scattered destinations, LTL is cheaper despite feeling expensive.

Duty and Customs on Consolidated Shipments

One final operational detail: duties don't vanish when you consolidate. Each importation retains its own duty classification and HS code, even after the pallets are repacked. Your warehouse doesn't reclassify goods or adjust duty. The broker files the CAD (Commercial Accounting Declaration, the post-CARM filing) per importation, and duties are paid separately per importer. Consolidation is purely physical movement and handling, not duty planning.

That said, consolidation can slightly improve customs clearance timing. A warehouse with multiple shipments held for consolidation means the broker can batch-file multiple CADs together and release them in one CBSA batch, rather than drip-feeding releases one at a time. That doesn't change the duties, but it can speed dock throughput by 4-8 hours.

The warehouse math is straightforward: consolidation works when drayage per-pallet savings exceed handling and hold costs, and when the consolidation window doesn't break the customer's delivery date. In Montreal, where drayage to most Canadian zones runs $100-$150 per pallet on LTL but $30-$50 per pallet on FCL, consolidation almost always pencils for shipments larger than 4-6 pallets and flexible enough to wait 48-72 hours. For smaller or tighter shipments, LTL is the only answer.

Originally published at https://www.fywarehouse.com/news/lcl-consolidation-at-the-montreal-warehouse-when-it-pays-off-bf2f7915.