Cross-docking was invented by the US trucking industry in the 1930s as a way to speed up the transport of Less Than Truckload, or LTL shipments.
The process of cross-docking reduces handling and storage of shipments, reduces transit time, and reduces or eliminates storage costs for shippers.
Almost half of US warehouses now use cross-docking.
What is Cross-Docking
Cross docking is used in LTL logistics to move products directly from a manufacturer to the customer or retailer with minimal or no handling or storage time.
Cross-docking is used at terminals specifically designed for this purpose. For example, goods can be delivered by truck at one side of the dock (inbound side) where they are removed and then sorted for staging and re-loading onto another truck (outbound side) for continued transport.
During the unloading and reloading process, the freight will incur minimal handling and no or almost no storage time.
Cross-docking terminals are generally shaped like the letter “I”. The largest cross-docking terminals are able to facilitate 200 or more trucks at a time and are shaped like an “X” for best efficiency.
Cross-docking terminals are designed to be “zero-inventory” facilities so that freight is not lingering on the dock for any length of time and is, instead, moved rapidly between inbound and outbound docks, almost like passengers making flight transfers at an airport.
When to Use Cross-Docking
Cross-docking is used by shippers and carriers to improve their logistics processes and costs. Here are several instances of where cross-docking is the preferred method of shipment.
Several smaller shipments are delivered to the same cross-docking terminal for combination into one delivery truck. For example, a manufacturer or producer may have multiple factories or distribution outlets for their goods that all need to be delivered to the same assembler or retailer. By having all outbound shipments sent to one terminal for sorting, staging, and freight consolidation, the recipient can receive all of their orders at one time.
The reverse of consolidation is deconsolidation where a carrier has freight from multiple shippers on their truck and uses a cross-docking terminal to split the shipment up for redistribution to the final delivery trucks.
Hub and Spoke
Shipments are brought into one terminal and then re-sorted for delivery to multiple destinations. An example of a user of hub and spoke may be a food producer who is shipping from one manufacturing center or warehouse and then delivering to multiple end destinations for a retail chain.
Advantages of Cross-Docking
The simple concept of cross-docking provides both shippers and carriers multiple benefits that improve their supply chain logistics.
- Cross-docking provides a central point for freight to be sorted and redistributed
- Goods are moved faster between points of origin to points of sale
- Reduced handling requires less labor costs
- Storage and inventory costs are reduced
- Less warehouse space is required for goods in transport
- Recipients receive their goods faster
- Reduced handling results in less damaged, delayed, or missing freight
At the receiver’s end, they benefit from not only faster, more predictable delivery of shipments, they are able to experience reduced concerns about damage and therefore can lessen time spent and costs associated with quality checks on received goods.
Challenges of Cross-Docking
With just about any process, there can be a downside. For cross-docking, there are some inherent risks to be aware of such as:
- Disruptions in the supply chain can cause delays when shipments have to be collected from multiple inbound trucks and then re-sorted for delivery on one outbound truck
- An adequate fleet may not always be available when needed
- There are labor costs associated with moving the freight from one truck to another
- Sophisticated logistics systems are required for smooth, dependable operations
- LTL shipments have inherent freight damage or loss risks due to extra handling
- Errors made at the cross-docking terminal could accidentally split up pallets intended for combined delivery
Despite potential risks of cross-docking, the benefits outweigh them due to the rapid process of moving freight from one truck to another for speedy journey continuation. For carriers, time is money so delays are a constant focus for elimination.
What is Cross-docking for Retail?
Retailers rely on having goods to sell in their stores. For them, ensuring the required steady stream of supplies for their shelves is paramount. To make cross-docking perform effectively for retail customers, communication between the supplier, distribution center and recipient requires sophisticated communication technology.
The location of retailers is a factor for carriers whose logistics departments have to determine the best way to move freight from the manufacturer to the multiple end destinations as quickly and cost-effectively as possible. Sort of like air traffic control!
The more complex the load, either requiring consolidation or hub and spoke, the greater the planning and communication needed. Tracking the freight inventory while in transit is another key to success so that the shipper, carrier, and recipient know where the goods are at all times to avoid delivery delays or missing items.
What is Cross-Docking for LTL Freight?
Cross-docking is designed for LTL shipments to make the logistics more efficient, reduce time to delivery, reduce handling, lessen potential damage or missing freight, and reduce costs for carriers.
When working with an LTL carrier, one that leverages cross-docking can be a great advantage for shippers who have smaller freight than FTL, or who must deal with the complexity of multiple LTL shipments being either combined or deconsolidated for final delivery.
Choosing Your LTL Carrier
By selecting the right carrier that can help you know when to use LTL shipping, your business will benefit from their expertise and capabilities.
Great LTL carriers are able to move different types of freight, have a fleet of trucks or access to a fleet that is national and regional, and provide the level of service needed for businesses that have pressing pickup and delivery needs.
Contact On Track today to get a free LTL shipping quote.