Juggling LTL shipments across different regions? You know how expensive it can be. This post looks at how pool consolidation and pool distribution can help you improve costs!
What is Pool Consolidation?
With pool consolidation, shipments from multiple suppliers are combined into one vehicle at the distribution center for transit in a specific shipping lane. In other words, your cargo is consolidated with freight from other shippers.
For example, multiple wholesalers may be providing products to the same retailer’s warehouse. It just makes sense to combine them and save money and miles for everyone.
At the distribution center, cargo from multiple shippers is scanned, sorted, and loaded onto one truck for delivery to the final destination. This maximizes loads and provides a cost-efficient way to handle deliveries.
However, this can be a complex job to mix and match loads, destinations, and delivery dates. It requires the right shipping management platform for manufacturers, distributions, retailers, and 3PLs to efficiently handle the mixing and matching of loads.
The Pros and Cons of Pool Consolidation
Pool consolidation has noteworthy benefits and disadvantages:
- Reduced shipping costs by sharing costs
- Reduced damage due to less handling
- Lower fuel emissions
- Streamlined transit times
- Less crowded docks
- Requires more communication and coordination
- Does not work as well for reverse logistics
- Often shorter leads times on shipments
As customer shopping habits have changed, demanding faster and faster delivery, goods often need to be shipped fast to accommodate buyers. It can be challenging to find other shippers that need items on the same lanes at the same time to leverage the cost savings of pool consolidation, especially when time is short.
What is Pool Distribution?
Pool distribution allows shippers to combine orders into a single truck. It’s similar to LTL shipping, but instead of combining shipments from other companies, you’re combining your products into a single load. Even when cargo is going to multiple destinations in the same region, you can combine the loads into one truck rather than multiple LTL loads.
How Does Pool Distribution Work?
With pool distribution, cargo is combined at the shipper’s origin point, such as the shipper’s distribution center. Pool shipments are then scanned, organized by destination, and reloaded onto trucks for local delivery.
Compared to LTL, pool distribution gives you less product handling and considerable cost savings.
When Should You Use Pool Distribution?
Many LTL freight companies are prime candidates for pool distribution, especially when retailers want you to consolidate shipments.
You’ll need sufficient volume headed to the same geographic reason and enough consignees to make it worthwhile. Otherwise, you might want to consider a multi-stop full truckload (FTL) as a more economical option.
3PLs and 4PLs
An established 3PL/4PL company will play a major role by helping manage your logistics and pool distribution by coordinating all of the moving parts in your supply chain. While many of the largest shippers in the country have been using pooling for freight hauling for years, it’s been challenging for smaller companies to generate the volume needed for a particular region.
Companies often lack the resources, infrastructure, expertise, and time to coordinate their consolidation efforts. That’s where you need intelligent enterprise logistics tools to optimize your planning, execution, and workflow analysis to manage all of the complexities.
The Pros and Cons of Pool Distribution
Is pool distribution right for you? Let's consider the advantages and disadvantages:
- Lower shipping costs: Removes the need for multiple legs in shipping, lowering first/last mile costs.
- Less handling: Because freight is handled less, there’s less likely to experience damage or leakage.
- Easier to calculate: It does not require complex formulas based on classification, etc. Pool distribution is based solely on weight and miles.
- Better visibility: As shipments make fewer stops, they are easier to track when in transit. That means better supply chain visibility.
Here’s another benefit. Pool distribution uses fewer trucks on the road so that you can reduce your carbon footprint. With more than 37 million trucks on U.S. roadways, heavy-duty vehicles (HDVs) contribute about 30% of all C02 emissions. Fewer trucks mean less CO2, which helps companies meet environmental, social, and governance (ESG) mandates and sustainability goals.
- Finding enough volume matching loads: You need to fill trucks for pooled shipments to maximize your potential
- Not everyone will do it: Some companies may not be excited about changing processes, schedules, or volume to make pool distribution work for you.
- Not all products are candidates for pooling: Some products require special handling and cannot pool with other cargo.
- Finding the right partner: You need to find a 3PL/4PL partner with established networks within your regions and lanes.
Using Pool Consolidation and Pool Distribution Together
In many cases, both pool distribution and pool consolidation are used together to save even more. This provides savings on both ends, reduces the handling of goods and eliminates the multiple legs that occur with LTL shipping.
LTL shipments often pass through multiple hubs, which takes longer and adds to the expense. When you use pool consolidation on the front end and pool distribution on the back end, you reduce the number of hands and locations your freight goes through.
SmartPOOL is a proprietary function of FreightpPOP's TMS platform. With SmartPOOL, AI runs in the background creating a recommendation engine for pooling specific shipments together to save on fuel surcharges, accessorial fees, and more.
Want to learn more? Contact FreightPOP today.
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