Pool distribution has become a popular way for shippers to deal with the trucking crisis and reduce delivery costs and transit times. Pooling uses a network of logistics providers and services to speed up deliveries and lower costs for shippers and retailers. Pooling offers the speed of FTL or parcel at the lower cost of LTL.
It’s a smart move for businesses and distributors to consider pool distribution for their shipment needs. It helps lower cost, improves performance, and simplify shipment in an increasingly-complex retail sphere.
What is pool distribution and what are the benefits for your business? (We’ll go through the advantages of pool distribution, but keep in mind that it’s not the right solution or all retailer’s needs.)
Pool distribution is the process of bringing different shipments together based on geographic region of delivery or destination. The goal of the pooling concept is efficiency. Pool distribution uses the concept of LTL shipments to combine goods, but it uses larger trucks and trailers. It also ships based on destination, not necessarily by route or freight type.
Think of it like carpooling for products.
So here’s how it works…
Shipments that would have normally been shipped on LTL carriers are pooled together based on location.
The beginning of this process is referred to as “pool consolidation.” The goods are loaded onto a full trailer, make their way to the main geographic region, and then they’re re-sorted when they get there. So, the idea is similar to less-than-truckload: consolidating shipments from different customers to ship on one truck. But pooled distribution generally consolidates product shipments on larger trailers, often bringing together multiple retailers and even shipping companies to share trucks.
The pooled shipments are delivered to a single regional terminal called a “pool point.” This is referred to as “pool distribution.” At the pool point, the products are sorted and reloaded onto new trucks to be brought to their local final destinations. Basically, the pool shipments drive the majority of the distance and LTL trucks take over the last mile.
Let’s look at some examples of when pooling would be effective.
Example 1: four different retail stores at the same mall would usually have four separate LTL deliveries of their products. Instead, they share a single pooled delivery on a larger truck, serviced as a single endpoint. Even if they use different shippers, the LTL companies have a network to pool their operations together.
Example 2: Four retail stores in the same town would have four LTL deliveries. A pool distribution would bring those four retailers’ products across the country to that town, where they would be left at the main distribution center. Then, smaller last mile trucks would take each retailer’s goods to their final destination.
Combining shipments on a larger truck reduces costs throughout the supply chain. There are fewer trucks going out, and you can generally spend less on fuel. You reduce cost on overhead expenses for distribution centers, where LTL trucks need to dock for the hub-and-spoke model. It’s also easier or shippers to manage inventory and schedule routes, which allows them to cut down on overhead expenses and provide more cost-effective rates.
The pooling method saves a lot of time spent in transit and in distribution centers. LTL carriers typically have to unload in multiple “spokes” or centers as the products reach the regions of their final destinations. But pooling goes from one center to one final destination, rarely stopping along the way at additional locations. Once the goods are initially loaded, they make the trek across the country quickly and consistently. Then they unload at their final pool distribution, and the goods may only have one more short leg to get to their final destination in the last mile.
Pooling shipments is the most eco-friendly solution to shipping, especially across large distances. Fewer trucks are going out, using less fuel, driving fewer miles. That means overall there are fewer carbon emissions and energy waste, which quickly adds up to major energy savings with a large fleet of trucks.
Pooling generally only loads and unloads once. LTL shipments, on the other hand, are often being moved around when they arrive at different warehouses and centers. Less handling of the freight with pooling reduces the likelihood of product damage and loss.
In general, pooling is easier to operate and organize than other forms of shipping. Route optimization is streamlined since all the products are moving between two main points. This allows the company to speed up the timeline and scheduling of the shipment, as opposed to waiting for enough applicable customers to get onboard.
Pool distribution can reduce shipping costs and transit times by consolidating multiple shipments in the same region, utilizing an A-to-B destination system as opposed to a hub and spoke model.
Pooling is a strong form of LTL to manage and optimize your supply chain. It’s right for some companies, but not all. Not sure if pool distribution is the right choice for your shipment plan? Contact Redwood Logistics for a free consultation about your shipping solutions. It’s our job to manage your shipment in the fastest, most efficient and cost-effective way. We look forward to hearing from you.