What do you mean by Cross Docking Service in the Logistics Industry?

Explaining Cross-Docking Service in the Logistics Industry

The logistics industry involves numerous processes in the journey from manufacturing raw materials into finished products to their ultimate delivery to the end consumer. Cross-docking is a specific process within logistics that enables traders to optimize supply chain management by reducing delivery times and minimizing investment. It is a method of transporting goods where inbound vehicles from manufacturers directly reach distributors or retailers. Instead of storing the goods in warehouses for an extended period, they are promptly transferred to outbound vehicles. The cross-docking process can be further explained to facilitate a better understanding of its operations.

What is cross-docking in logistics?

The logistics industry manages, supervises and moderates the cargo for international trade, thereby equipping the supply chain with cargo handling and transportation processes. Intermodal transport involves switching modes for long-distance deliveries, while there are transcontinental deliveries where trucks, rails or planes are utilised as the delivery modes. 

Cross-docking in logistics refers to a management process where incoming vehicles are immediately unloaded and their cargo is loaded onto the next outgoing vehicle for onward delivery. This process typically occurs within 24 hours of receiving the shipment, and it takes place at a docking terminal in a warehouse. Cross-docking eliminates the need to store goods in inventory and wait for another mode of transportation to arrive. It is commonly used when a bulk shipment is received from a manufacturing unit and needs to be sorted and delivered to the designated consignee.

By assigning cargo directly to their new transporters, logistics management helps in saving time, money and labour that would have otherwise been wasted in managing the storage of those goods in inventories and later transporting them for delivery. Therefore, all the order preparation and loading of goods onto the scheduled vehicle is included under the cross-docking procedure.

By directly assigning cargo to its new transporters, cross-docking with logistics management helps save time, money, and labor that would otherwise be spent on storing goods in inventories and later transporting them for delivery. The cross-docking procedure   process includes order preparation and loading of goods onto the scheduled vehicle, streamlining the supply chain and optimizing logistical operations.

History of cross-docking

The concept of cross-docking was invented in the US in the 1930s by a trucking company to optimise the transportation process and enhance the effectiveness of the supply chain management system. Retailers in the US further adopted the concept during the 1950s as it helped them cut down on inventory costs and fastened the delivery process to their end consumers. However, cross-docking in earlier days faced a few challenges, of consignments getting lost or misplaced at warehouses and somewhat slower delivery due to traffic or congestion. In today’s era, due to technological advancements, real-time tracking enables manufacturers, retailers and consumers to know the whereabouts of their goods. AI-optimised shipping routes have minimised transportation challenges due to traffic or wrong routes.

How does cross-docking take place?

Since cross-docking is instantaneous, it requires fast processing and completion of all procedures before being loaded onto the outbound scheduled vehicle. It is a smart process that relieves the warehouse from bearing the load of storing the arrived consignments. For example, you have a shipping consignment that is being shipped intermodal. The shipping company will first ship your cargo through the initial transport mode. The transport mode is assigned a docking terminal that addresses inbound vehicles entering the warehouse. Your cargo will be carefully unloaded from the vehicles by labourers once it reaches the terminal. The next step involves sorting the goods based on their destination and consolidating them in batches for transportation to the destination. The consolidated goods are then assigned to vehicles travelling through the destination routes based on their pre-appointed schedules. The goods are moved to the other side of the dock using forklifts or conveyor belts, and the loading process gets initiated when the shipment is loaded onto outbound vehicles.

What are the methods of cross-docking?

The transport of goods from the manufacturer and then between the distributor and the retailer can occur through different methods. Cross-docking is an efficient way to streamline the supply chain and enhance productivity. The company’s goals and requirements are a primary factor in defining which method to choose. 

  1. Pre-distribution Cross Docking– When the retailer is aware of the end-customer, the goods have higher chances of reaching the destination on time. The pre-distribution process involves quickly moving goods from the supplier to the end customer without spending much time in the warehouse facility. For retailers having warehouses, it becomes easier to know about the supplier and end-customer and work to fulfil their shipping demands. According to pre-distribution instructions, the warehouse staff is well prepared to unload quickly, sort, repack and load the cargo from inbound onto the outbound vehicles to reach their designated destinations. It offers faster delivery and cost savings.
  2. Post- distribution Cross Docking– When the goods received from the manufacturer are brought to the warehouse, they are stored at the cross-docking facility. The distribution of goods takes place via inventory forecasting. It results in more expenditure required to store goods, including labour charges. A significant benefit of post-distribution is that the retailers and suppliers get time to make a well-informed decision regarding where to ship goods to earn more profits.

Benefits of cross-docking

  1. Minimises inventory costs– The incoming goods need not be stored in the inventory for days before shipment. So the owner can convert the warehouse space into terminals to accommodate more vehicles, thereby reducing the unnecessary cost spent on warehousing. 
  2. Faster delivery– Since the unloading, sorting and loading of goods is quick and instant, requiring no storage facilities, the delivery process gets more rapid than ever. Cross-docking helps in optimising the supply chain. 
  3. Reduces labour cost– Since the only place where manual work is required is operating machines such as forklifts and conveyor belts and assisting the sorting process, the need for handling cargo is minimised. It helps in reducing labour charges by eliminating the work of storing.
  4. Consolidating goods– The inbound vehicle is unloaded for sorting of goods to check if cargo consolidation is possible. It helps reduce the number of vehicles and the number of trips they make, thereby limiting the total distribution cost.
  5. Environment friendly– Goods bound for delivery near the same destination are put together to reduce fuel consumption and lesser carbon emissions due to transportation via fewer vehicles. Therefore, it offers a more sustainable means of delivery.

Applications of cross-docking 

Although many shippers across the globe utilise cross-docking, it is of major benefit to a few traders.

  1. Time-sensitive products– Perishables stored in reefer containers require timely shipment to maintain the cargo quality and avoid cargo damage. As soon as the sensitive shipment arrives at the docking terminal, it is shipped to the next destination to maintain the shelf-life of the goods.
  2. Multiple suppliers– If the company has ties with multiple suppliers, the need for warehousing is minimised as the circulation of goods in the supply chain will be consistent. The goods can be easily managed, sorted and transported to their destination.

Cross docking has helped the logistics industry optimise the transportation process and make delivery faster, more sustainable, and more economical. 

LOTUS Containers are leading marketers of shipping container services in Germany that deal in new and used shipping containers and offer services across the globe with a network of more than 300+ container depots.  Contact us for more details.

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