In the world of trucking and logistics, cross-docking is the practice of unloading goods or materials from an inbound tractor trailer or railroad car and loading these goods or materials directly into an outbound tractor trailer or rail car without storing the goods or materials in a warehouse in between receiving the items and shipping the items.
Typical reasons for this type of transfer of goods/materials include: (1) sorting goods intended to multiple destinations, (2) combining goods/materials arriving from multiple points of origin for transport to a single destination or several destinations along a single route, (3) transferring goods/materials from one form of transport to another; i.e., switching from rail car to truck or vice versa, or switching between tractor trailers and smaller trucks.
Cross-dock procedures were initially developed in the 1930s by the U.S. trucking industry and have remained in continuous use in the LTL (less than truckload) segment of the trucking business to this day. The U.S. military adopted cross-dock methodology in the 1950s. Cross-docking penetrated the retail sector in a major way in the 1980s when Wal-Mart pioneered its use.
In LTL trucking, cross-dock operations often involves transferring goods from one tractor trailer directly into another tractor trailer (or from a tractor trailer into a smaller truck or vice versa) with no warehousing of those goods. However, cross-dock operations may utilize staging areas adjacent to loading docks in a warehouse where inbound goods can be sorted, consolidated and held until the outbound shipment is fully assembled and ready to ship. In this case, the goods are not “received” into the warehouse and put away, but rather held in the staging area for transfer from the inbound loading dock to the outbound loading dock.
- Streamlines the supply chain from origination point to final destination/end user, resulting in products getting from manufacturer to distributor to customer faster
- Reduces handling costs and operating costs
- Reduces the storage of inventory
- Reduces warehousing costs
- Reduces fuel costs when consolidating LTL shipments into full loads
- In the retail sector, may increase available retail sales space in a brick-and-mortar stores
- Some potential partners may not have necessary storage capacities for staging areas needed during cross-dock operations
- Other potential partners may not have a large enough trucking fleet to implement cross-dock procedures
- Requires sufficient IT systems to implement
- Additional freight-handling during transit can increase the potential for damaged cargo, as opposed to transferring sealed cargo containers during intermodal transportation.
By eliminating the put-away process, companies reduce 3PL warehouse requirements and inventory levels when using cross-docking. In addition, these firms reap the benefits of consolidating their freight which lowers transportation costs, while at the same time improving product availability.
Successful implementation is dependent on continuous communications between all members of the supply chain: manufacturers, wholesalers/distributors and retailers. This can and should ideally include logistics software integration between all members of the supply chain, including the ability to track inventory in transit.
The savings in time and money from the use of this procedure can be significant, but depend on a variety of factors including the handling methods used, the complexity of loads, freight costs for the commodities being shipped, the costs associated with inventory in transit, and the customer/supplier geography (especially when an individual corporate client has numerous branch locations, distribution centers and/or retail locations.