A Guide to Cross-Docking: Different Types and Advantages

Businesses are always trying to improve their logistics to be able to deliver products faster and more efficiently.  One strategy that can be used to help improve the speed and efficiency of your logistics is cross-docking.

Put simply, cross-docking is a process in which goods are directly transferred from inbound vehicles to outbound vehicles at a logistics facility specially designed to handle the quick transfer.  Incorporating cross-docking into your logistics strategy helps speed up delivery times, which lowers costs and reduces or even eliminates the need for warehouse storage.  This is a common and effective strategy used by retailers, manufacturers, and other types of businesses.

In this guide, we will explain what cross-docking is and how it works, the various types of cross-docking, and its advantages.  

What is Cross-Docking?

Cross-docking is a logistics strategy in which goods are unloaded from incoming vehicles and transferred to outbound vehicles with little or no storage time in between.  The purpose of cross-docking is to speed up delivery times and improve the efficiency of your supply chain.  Cross-docking is often used to consolidate goods from multiple suppliers into one shipment, divide bulk shipments into smaller loads, and reorganize goods for more efficient delivery.

Cross-docking not only accelerates delivery times and minimizes the need for warehouse storage, but it can also reduce labor and transportation costs and improve inventory management.

Cross-docking was developed as a strategy in the trucking industry in the 1930s.  The process is referred to as cross-docking because the goods cross the docks from the incoming vehicles to be loaded onto outgoing vehicles on the other side.  Companies often use specialized facilities that are designed for cross-docking.  These facilities are typically located near major transportation hubs like airports, and they are I-shaped with docks for incoming shipments on one side and docks for outbound shipments on the other.  This allows for many vehicles to use the docks at the same time with minimal distance between where goods are received and shipped.

The following are the two main categories of cross-docking:

• Pre-distribution cross-docking: Pre-distribution cross-docking is when a supplier provides instructions for the final destinations of each of their products before they reach the cross-docking facility.  With this approach, the goods are immediately unloaded, sorted, and then loaded onto the outgoing vehicles according to the instructions.  This process minimizes the need for storage.
• Post-distribution cross-docking: Post-distribution cross-docking is when the destination of the goods is determined after arriving at the facility.  With this approach, the goods are stored at the cross-docking facility until the destination is determined, then they are loaded onto outbound vehicles.  The purpose of this approach is to allow more time for suppliers to determine the destination of their goods based on demand.

Types of Cross-Docking

There are three main types of cross-docking that serve different needs.  Businesses may use multiple types of cross-docking, depending on their needs and the needs of their customers.

The following are the main types of cross-docking:

Continuous Cross-Docking

Continuous cross-docking is when there is a consistent flow of goods through the facility with little or no required storage.  The goods are unloaded from the incoming vehicles and loaded directly onto outbound vehicles to be delivered to their final destination.  The purpose of continuous cross-docking is to reduce delivery times and keep the supply chain moving.  This approach is best for high-volume goods that are always in demand, like food.  For cross-docking to be successful, there must be a high level of coordination and synchronization between suppliers, carriers, and the cross-docking facility.

Consolidation Cross-Docking

Consolidation cross-docking is when smaller incoming shipments are consolidated into one large outbound load at the cross-docking facility.  The goal of this process is to reduce shipping costs as it often costs less to ship a large load than to make multiple smaller shipments.  The goods must be stored at the facility until enough goods have arrived to make a complete outgoing shipment. 

Consolidation cross-docking is used by less-than-truckload (LTL) carriers that transport small loads for businesses as well as international freight forwarders to consolidate multiple shipments into one load to be transported overseas.

Deconsolidation Cross-Docking

Deconsolidation cross-docking is when a large shipment is brought to a cross-docking facility to be divided into smaller shipments and delivered to their final destinations.  This process is used by parcel carriers and retail stores who ship larger loads to the cross-docking facility so they can be separated into smaller loads that are shipped to individual customers or stores.

Cross-Docking Advantages

Taking advantage of cross-docking can benefit businesses in the following ways:

• Faster shipping: Cross-docking speeds up the shipment of goods as they are transferred between vehicles quickly with little to no storage time at the facility. 
• Reduced storage costs: Storage costs are reduced as cross-docking reduces or eliminates the need for warehouse storage. 
• Reduced labor costs: Cross-docking requires less labor as workers only have to move goods from inbound vehicles to outbound vehicles instead of taking them into warehouse storage and managing the inventory before eventually loading them onto outbound vehicles.
• Reduced shipping costs: Consolidation and deconsolidation cross-docking reduces shipping costs by rearranging goods into more cost-effective loads.
• Reduced risk of product damage or spoilage: Cross-docking limits the handling and storage time of goods, which reduces the risk of damage to the products. Perishable items are also less likely to spoil if they are not stored in a warehouse.

Cross-Docking Risks

Cross-docking certainly has its advantages, but there are some risks involved.  To ensure smooth and efficient cross-docking, a high level of planning and effort is required as well as coordination between all parties involved in the supply chain. 

The following are the main risks of cross-docking:

• Investment: It takes a substantial upfront investment to design and build a cross-docking facility with warehouse automation technology such as robotics, conveyer belts, and tracking sensors.  However, the improved efficiency of the supply chain and quicker delivery times often bring businesses an excellent return on investment (ROI).
• Supply chain vulnerability: Cross-docking reduces the need to keep goods stored in warehouses.  However, a disruption with the supply chain can leave businesses with no goods to sell in the meantime as they will have very little in storage.
• Miscalculating demand: Cross-docking is most successful when companies can accurately forecast the demand for their products.  If they underestimate the demand, they may end up short on supplies with very little in storage and if they overestimate the demand, they may have to store more goods which increases storage costs.
• Coordination between carriers and supply chain partners: Businesses must coordinate with their suppliers to ensure they get the goods needed and ensure that their carriers are prepared to move the goods out of the cross-docking facility at the right time to keep the supply chain moving.  Any disruption can lead to higher costs and longer shipping times.

Book Cross-Docking Services with OLIMP

Cross-docking is an excellent logistical strategy that allows businesses to speed up deliveries and limit the need for warehouse storage which helps reduce costs and improve the efficiency of the supply chain.  This process often involves a high level of planning and coordination between businesses and their suppliers and carriers to be successful.  However, there are situations in which businesses and carriers may need on-demand cross-docking services.

OLIMP’s online platform allows businesses to quickly book on-demand cross-docking and other warehousing services to keep their supply chain moving.  Our platform includes a network of thousands of warehouses across the U.S., and you can quickly book cross-docking services with our simple booking process.  You can expect competitive, transparent pricing with no haggling so you can book right away. 

Simply request a quote online or through our app to book on-demand cross-docking services in your area.