In the transportation and logistics space, shippers leverage cross docking services to increase the efficiency of their shipments. Without it, their orders will be delayed, allowing competitors to get the upper hand. A cross dock logistics facility is a centralized warehouse where orders can be picked, packed, and palletized to be distributed for final delivery.
CWI Logistics describes cross-docking as the art of removing the storage link in the supply chain to speed up the transportation process from the supplier to the end user.
In short, cross-docking is the process of moving products between modes of transportation. This could be taking pallets from a train and loading them onto a truck for an “over the road” shipment, or pulling a commodity off a truck and transloading it into a container or “TEU” for a “drayage” movement to either a seaport or rail yard. The name of the game is to keep storage time to a minimum and maximize the capacity of the warehouse to ensure the operator is getting the most revenue per square foot and the shipper is getting their commodity to the receiver or first/final door on time.
Cross docking services consist of the following steps:
- The commodity is offloaded at cross-dock.
- The product is broken down and shifted to racks for storage.
- The product is picked, stacked onto pallets, and loaded onto the next vehicle in the supply chain.
This service can be used when moving non-palletized and palletized freight. As a result, shippers have more flexibility in how they ship goods while using this hub-and-spoke logistics model.
There are a lot of differences between cross-docking and traditional warehousing, but the most basic is that in standard warehousing, the product is received and stored for an extended period. This is not necessarily a bad thing as long as the shipper or receiver business suits this model of warehousing and they aren’t being bogged down by labor and storage costs.
Utilizing a cross dock warehouse means the shipper saves time in getting products to customers because these facilities are better equipped to get more skews in and out of their dock. Either through superior technology, staff training, or location, Many competitive warehouses utilize WMS (Warehouse Management System) and asset tracking or vehicle tracking solutions to track shipments in real-time. Shippers, carriers, brokers, and receivers can see exactly what is moving through the warehouse and adjust commodity input levels as needed.
When a shipper is trying to decide between warehouses, their decision often comes down to shipping times, cheaper costs, and whichever partner technology stack more accurately aligns with their business needs.
Types of cross-docking
The cross-docking process has two standard models. Businesses can choose between post-distribution and pre-distribution strategies.
Pre-distribution cross-docking
Pre-distribution Cross-docking works by immediately loading all inbound shipments, sorting them, and loading them onto an outbound mode of transportation for final delivery.
Efficient supply chain management is critical to this type of strategy. This works by implementing a JIT (just in time) supply chain schedule and plugging it into a WMS, TMS (transportation management software), or ERP system (enterprise resource planning). Warehouse workers can see the incoming shipment, and the technology will provide them with predetermined distribution instructions. As a result, the turnaround of goods happens very quickly, and the revenue per square foot is maximized.
Shippers that own their warehouse often decide to use pre-distribution cross-docking. For this strategy to work successfully, the shipper’s carrier partners need to be looped into the supply chain schedule and effectively communicated in case of delay so the warehouse manager can adjust the schedule before the load misses its delivery or pick-up appointment with the facility. If delays are not communicated early enough, the cross-dock will run into opportunity costs from labor and storage, potentially disrupting their customer’s JIT supply chain.
Post-Distribution Cross Docking
Unlike pre-distribution cross-docking, post-distribution utilizes storage. When a commodity arrives at a warehouse, the products are kept on racks or broken down and placed in an easy-to-count and access drawer system that is managed by a WMS, or inventory management system.
This type of cross-docking service is very beneficial for a shipper, as it allows them to ship specific commodities in bulk from suppliers to save on shipping costs. Then either LTL (less than truck load) or parcel ship out the product for final delivery. However, it doesn’t work out for every type of product. This option is most useful when planning outbound shipments of high volume and high turnover orders with various products. A few examples of industries that this would be best suited for are retail, CPG (consumer packaged goods), e-commerce, and medical supply.
If your shipment is ever distressed and in need of a re-work, re-stack, transload, disposal, or cross-dock for short-term storage, please contact our team here to get an instant free quote and get your supply chain back on track.
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Cross Dock Goods
The purpose of a cross dock facility is to get things in and out of the warehouse facility quickly for delivery to the consignee while maximizing value to the shipper and most effectively utilizing every cubic foot of the warehouse. While goods can be shipped as non-palletized and palletized freight, not all items are appropriate. Suitable industries and commodity types for cross-docking vary and tend to include products that have a limited shelf life, are marked for expedited delivery, or need to be packed into a different type of packaging material before delivery to the consignee.
Popular items for cross-docking include:
- Perishable items (food and beverage or chemicals)
- Pre-packaged and pre-labeled products
- Products with stable demand
- Distressed commodities
- Cold Storage
For perishable items, time is the name of the game. Fresh produce, dairy, meat, and similar goods need to reach their destination quickly to ensure freshness and prevent spoilage. Cross-docking reduces storage time, making it an ideal method for transporting these items.
Pre-packaged and pre-labeled goods reduce transit time as they allow warehouse workers to scan skews and repack items to the appropriate median and vehicle of distribution. This can consist of a variety of cargo, like produce, and certain chemicals or electronics that are sensitive to temperature fluctuations. These products can swiftly switch between an inbound and outbound vehicle and mode of transport.
Goods with predictable and consistent demand patterns are well-suited for cross-docking. Retailers can’t afford to run out of stock for products like these. Manufacturers also cannot run out of manufacturing inputs; using this service will ensure freight gets to the final destination promptly and inventory stays within tolerance.
In international shipping, clusters of commodities are often pooled together within one mode of transport. Most often in a shipping container on a steamship line. This concept is referred to in short as LCL (less than container load). Hemisphere Freight Services wrote an excellent article detailing the intricacies of LCL shipping. Cross-docking is mission-critical for LCL shipping, as the commodities that are clustered together are most often not being shipped under the authority of one importer or exporter but rather bundled under a freight forwarder or NVOCC (Non-Vessel Operator Common Carrier). The cross-dock will take the container and break down the cargo while simultaneously handling the customs paperwork.
Promotional and seasonal goods can benefit from cross-docking services as well. Items like these need to reach their final destination quickly since peak sales are within a limited schedule. The post-distribution cross-dock model allows retailers and manufacturers to plan the demand for a specific product and keep enough inventory on hand to satisfy the need while also maximizing warehouse revenue per cubic foot.
If you are interested in the benefits of just-in-time cross-docking, please check out this in-depth summary by ShipBob, an industry leader in e-commerce distribution.
3PL Cross Docking
Many shippers choose to outsource their warehousing to 3PL (third-party logistics) providers. The reason they outsource is that this model allows for elasticity when it comes to capacity, and the 3PLs assume responsibility for labor and technology enablement and capital expenditure to ensure the facility is operating at the highest possible revenue per cubic foot.
The benefits of outsourcing cross-docking to a 3PL have a few key advantages:
- Expertise
- Cost-effectiveness
- Scalability
3PL providers come with a wealth of experience in logistics. They typically have the know-how to optimize cross-docking processes, ensuring maximum efficiency. For many businesses, outsourcing this service is more cost-effective than running it in-house. Retailers can potentially save a fortune when they outsource their cross-docking operations.
Since technology plays a major role in this service, businesses able to integrate with existing warehouse systems can keep tabs on shipments and inventory. Others who need to catch up on updating technology and tracking skews may find it impossible to remain competitive.
Traditional warehousing often involves multiple steps that cross-docking bypasses. This not only decreases the handling of materials but also reduces the potential for damages that can occur.
Thanks to fast processing, cross-docking lets goods move quickly through the supply chain. When a shipment arrives, an outbound vehicle is already prepared to deliver the freight. This contributes to the speed of cross-docking.
Products arriving from various suppliers can be consolidated into full truckloads destined for similar locations or freight lanes. This process optimizes transportation capacity and can lead to significant savings, especially when the alternative would be multiple trucks transiting without utilizing the whole trailer.
With goods spending minimal time at the warehouse and no need for extensive storage, variable costs associated with inventory management and distribution are reduced. Fewer variable costs mean less money spent by retailers using 3PL warehousing.
Please feel free to contact our team HERE if you have any questions or need assistance with reworking, restacking, transloading, or cross-docking.