The shipping industry incorporates various layers of supply chain and logistics processes, that are designed to address the complexities involved in order fulfillment and management.
Many internal and external factors can delay shipments, including production or procurement issues and damages. In many cases, shippers are not able to ship an entire order, which is where the popular industry term “partial shipment” comes in.
A partial shipment occurs when a single order is fulfilled in multiple shipments. This means that the order is broken down into two or more orders, where each order is then shipped separately.
Many modern eCommerce companies allow sellers to partially ship orders, to ensure that their customers receive the items that are available in the first shipments, and the missing items in a subsequent shipment.
In this article, we’ll explain in detail the main reasons why orders are partially shipped and the key drawbacks of the process. We’ll also share a brief overview of the process and a simple case study to explain how it works in a real-world scenario.
Reasons Why Orders Are Partially Shipped
Most companies and shippers look to avoid partial shipments unless it benefits them or their clients, as it ultimately leads to increase shipment and fulfillment fees. There are several reasons why certain orders need to be shipped partially. Let’s take a closer look at some of the most common reasons.
Many companies intentionally hold back some items following an order placement due to quality issues. Only the goods without defects, damages, or other issues are shipped, while the remaining products are retained until the issues have been successfully resolved.
While shippers would usually communicate with their clients to plan their order for a full shipment (typically by full container loads or truck loads), certain situations may prompt clients to place an order that exceeds the shipment capacity.
An example of that would be if the client would like to consolidate the accounts for the financial year and places a bulk order. As such, shippers may partially ship goods according to shipment capacity and communicate with their clients to maximize shipment capacity with their next order.
Some Items are on Backorder
In a lot of cases, buyers purchase multiple items, some of which are not in stock within the specified handling time or are made to order. Therefore, their orders are partially fulfilled while the remaining items are placed on backorder for a separate shipment once they become available.
Many companies that ship products directly to consumers often face production issues, such as machinery failure or maintenance, power failure, insufficient labor, supply chain disruptions, or lack of capital.
For instance, a manufacturing plant could fail to secure raw materials for goods production due to a shortage in the market. Therefore, instead of not sending any goods, the plant decides to deliver the completed products and delay the remaining order fulfillment until they receive what they need.
Order from Multiple Warehouses
Many manufacturers or retailers store products in different warehouses. In urgent cases, they might not have sufficient time to consolidate all the orders into a single shipment, meaning it would be more cost-efficient and time-saving to partially ship them.
Requirements of the Buyer
It’s not uncommon for buyers to request partial shipments when buying goods and products, especially in large quantities. Some don’t have sufficient storage or resources to manage large inventory.
Similarly, perishable goods distributors use partial shipments to minimize old stocks and maximize product shelf life. Furthermore, some buyers don’t have enough capital to pay for goods in large quantities.
Drawbacks of Partial Shipments
Since partial shipments involve moving a single order in multiple shipments, the practice has several drawbacks for all parties involved, including the following.
- Higher Cost – The biggest and most obvious drawback of partial shipments is the higher shipping and fulfillment costs. For example, multiple shipping labels need to be generated, along with other sets of documentation and carriers will charge additional for every trip to deliver the remaining items of a single order. Unless a customer pays for each shipment, manufacturers and retailers can incur unnecessary losses that could affect their bottom line.
- Longer Lead Times – Partial shipments can result in longer lead times, disrupting the supply chain process for both buyers and sellers. For instance, a buyer receiving goods at multiple intervals may not always have the necessary resources or equipment for unloading, especially if the skilled labor or equipment is procured on a contract basis. Similarly, staggered arrival times or orders can prompt sellers to hold off shipping until a significant amount of goods can be consolidated for a shipment.
- Staggered Arrival of Goods – By opting for partial shipments, buyers would have to incur the additional cost of delivery, unloading, and other essential services following their goods’ arrival.
Partial Shipment vs Short Shipment
Short and partial shipments are often used interchangeably in the industry, especially since they have overlapping definitions. While they have similar meanings, the key difference between them is the perspective.
As explained earlier, partial shipments typically occur when an order can’t be fulfilled due to defects, capital constraints, material unavailability, or similar issues. These reasons are typically internal reasons related to the fulfillment of an order.
In contrast, short shipments happen when deliveries are affected by issues pertaining to documentation, miscommunication on quantities, and external factors within or beyond control, such as insufficient vessel space, missing documentation, theft, or port and customs issues.
For example, a buyer purchases two containers of canned food items for their stores in another country. The shipper loads both containers on a semi-truck and delivers them to the designated seaport. However, during the customs check, one of the two containers didn’t pass the quality assessment and couldn’t be shipped to its final destination.
Partial Shipment Process
Although partial shipments may not be the ideal shipping practice, fulfilling a single order in multiple shipments is inevitable in some cases. We will explore a common process that occurs during a partial shipment. Below are the main steps involved.
- A buyer places an order for different goods from a seller via physical or digital communication channels.
- The seller (also the shipper) confirms and fulfills the order. They then initiate the loading process by prompting the shipment department at warehouses or production points.
- During the process, the seller identifies a reason for partial shipment, such as defected or damaged products.
- Following the discovery and assessment, they inform the buyer that their order may be required to be shipped partially.
- Upon receiving an agreement from the buyer, the seller completes the first shipment containing products that pass the quality assurance tests.
- Once the remaining goods are available, the seller prompts the buyer regarding the subsequent shipment to complete the order.
- Finally, the seller proceeds to fulfill the shipment and complete the process.
Partial Shipment Example
Let’s explore an example of a partial shipment. A buyer in Chicago orders 400 white shirts, 300 black shirts, and 200 blue caps from a garment manufacturer in Ho Chi Minh, Vietnam.
However, the manufacturer doesn’t have 200 blue caps available in their inventory and is short of 100 black shirts. Instead of waiting for their production team to make the caps and sending all items in a single shipment, the manufacturer informs the customer that they will fulfill the order in two shipments.
Because they do not want to lose this order to a potential competitor, they are willing to absorb any additional costs and have promised the buyer to fulfill and ship the partial shipments at no extra cost.
The customer accepts this offer and the manufacturer ships 400 white shirts with 200 black shirts and places 200 blue caps on backorder. While they wait for the first shipment to arrive, the manufacturer uses the float to complete the remaining order and prompt the customer when the remaining shirts and caps are ready.
To complete the partial shipment, the manufacturer ships the remaining 100 black shirts and 200 blue caps and completes the order.
Co-Founder & Writer
About the Author
Gerrit is a certified international supply chain management professional with 15 years of industry experience, having worked for one of the largest global freight forwarders.
As the co-founder of freightcourse, he’s committed to his passion for serving as a source of education and information on various supply chain topics.