Updated: Jun 8
When it comes to the logistics of a supply chain, there can be some confusion about what transloading is and what cross-docking is. The strategies may be very different but they are intended to both accomplish the same goal — to help reduce the costs of the supply chain. Both cross-docking services and transloading services involve handling a product and delivery to multiple destinations, but on a different track or container than what was used for the inbound shipment.
With more companies setting up manufacturing plants in overseas destinations or sourcing suppliers abroad, the number of inbound and outbound ocean containers has increased. And it is expected that this will continue. Ports along the West Coast continue to set new volume records with every year that passes, with the ports of Long Beach and Los Angeles accounting for 40% of all imports from Asia.
What is transloading?
Transloading is the logistics process where shipments are moved from one location to another using more than one type of transportation. The procedure usually involves transporting goods via water or rail for one part of their journey and transloading the goods to or from trucks for the other part of their trip, although it can involve switching from one truck to another.
It sounds like a straightforward process on the surface, but the truth is that transloading is an intricate logistical technique that involves detailed planning and tracking at every stage. With this process, the transported products are transferred from one container, commonly 20 or 40-foot shipping containers, directly to truckloads or onto pallets. Or vice versa.
While there is a possibility of delays, damage, and even theft — shippers enjoy their highest cost savings during the actual transfer of their products.
What is cross-docking?
Cross-docking is a common logistics procedure where the products from a manufacturing plant or supplier are distributed directly to a retail chain or an end customer like distributors, importers, exporters, and more with only marginal or no handling and storage time in between. The process takes place in a distribution docking terminal. These terminals usually consist of dock doors on both the inbound and outbound sides, as well as trucks.
There is also this typically very little storage space within a distribution docking terminal. The phrase cross-docking explains this process of receiving products via an inbound dock before transferring them across the terminal and directly to the outbound transportation dock. In fact, cross-docking procedures are usually completed within 24 hours or less, making this a popular choice for those with tight delivery deadlines.
Reasons to choose cross-docking
It reduces storage costs: Because cross-docking is designed to be completed inside a 24-hour window, there are virtually no storage requirements whatsoever. This saves you on the cost of a warehousing or storage facility.
It reduces inventory management costs: Storing, managing, counting, securing, and ensuring inventory can all tie up your much-needed capital. There is also the risk of excess goods being spoiled or damaged — a problem that is lessened with cross-docking.
Material handling is reduced: Warehouse operations traditionally consist of a significant degree of inventory handling that includes storing, sorting, packing, and picking. With cross-docking, there is less need to move goods around a warehouse.
It increases the quality of delivered products: With cross-docking, workers are able to use the staging phase to easily inspect products for any damage the transportation process may have caused. This saves you on the costs of customers retaining damaged items and increases overall customer satisfaction.
It lowers labor costs: Cross-docking requires fewer people to manage your inventory and therefore helps to keep your labor costs down. With the savings gained from this usually challenging cost, you can implement other process improvement projects or pass those savings on to your customer.
It reduces the risk of damage from handling: Moving and handling goods always includes the risk of those items sustaining damage. As cross-docking involves less material handling, it reduces the chance of your products suffering damage.
It reduces lead times: Cross-docking facilities tend to be located near the end clients' delivery destination. This means delivery times can be reduced and customer satisfaction with the speed of your service is increased. This can also reduce your transportation costs, providing you with savings that can be used elsewhere.
It reduces a variety of fixed costs: Large warehousing spaces involve a number of fixed costs that include things like utilities and equipment. Because cross-docking requires smaller spaces, this reduces how much you spend on lighting, heating, material handling equipment, and more.
It increases service levels: With cross-docking, you are lowering the cost to your consumers, minimizing the risk of project damage, and speeding up delivery times — all of which contribute to improved service levels and customer satisfaction. This is a factor that can be especially important with specific service level agreements that exist in B2B environments.
So what is the difference between transloading and cross-docking?
While these two processes seem very similar on the surface, there is one key difference between the two. And that lies in the deconsolidation and storage aspects that come with transloading. Cross-docking involves ground transportation and nothing else, even if it is used for loading goods onto or from a container ship. With transloading, on the other hand, shippers are bridging the gap between different phases of intermodal freight.
Two important things to note about these two processes:
1. It is possible for a product to experience both transloading and cross-docking at some point during its journey from the manufacturer or supplier to its final destination.
2. Both transloading and cross-docking services can include product customization such as labeling and kitting at the warehousing or cross-dock facility.
Supply chains tend to make use of both processes to enable more efficient and timely delivery of their products. However, it is essential that any business has a clear understanding of each stage of the shipping process. By doing this, they are able to better plan their logistical strategy and avoid disruptions in their supply chain.