What is Pool Distribution?

Pool distribution is a form of shipping that allows companies to ship their products along with other orders in a single truck. This strategy is similar to less-than-truckload (LTL); however, you would be pooling multiple shipments of your products rather than sharing the load with other brands. 

For anyone looking to reduce costs and improve transit times, the pool distribution model is one of the most practical solutions.

 

What is Less-than-truckload (LTL) shipping?

LTL is a shipping option that allows companies to pay only for the portion of the trailer they use rather than the entire truck. The remaining space will be filled with goods from other companies heading to the same area. 

 

Pool Distribution vs. Pool Consolidation?

Pool distribution allows you to “pool” your shipment together with other loads that are being delivered to multiple destinations within the same region.

Shipments that would usually be shipped through LTL shipping can be pooled together or consolidated onto a full trailer. Next, they are delivered to a distribution center offloaded, and sent to their final delivery.

You can utilize pool distribution at both ends of the shipping lane — the origin and destination. The beginning of the trip is called pool consolidation. Whereas pool distribution refers to the end portion, when the shipment is removed from the truck, scanned, and delivered to its final destination.

 

How Does Pool Distribution Work?

Usually, pool distribution involves consolidating multiple shipments from a single shipper at one point of origin — typically the shipper’s distribution center. The load as a whole will be going toward a specific geographic region, with multiple delivery points within that region for individual shipments.

Shipments are consolidated and loaded onto a truck to make maximum usage of the space. Next, it goes to a pool point facility (aka a regional terminal) or distribution center, instead of directly to the final destination. The pool shipment will then be offloaded, scanned, and organized by where the freight is headed. Your shipments are then reloaded onto smaller, local delivery trucks or vans for their final mile delivery.

In some cases, a company may not have enough product to make pool distribution a good option. Instead, the pool might share a truckload cost with another pool from a different company. When this occurs, the truck will stop at both distribution points to load in the shipment and then go to a single final delivery point, meaning the two pools are being shipped to the same retailer.

Pool distribution can often offer significant cost savings to traditional LTL shipping. Benefits include significantly reduced shipping times, less handling of your products, keeping them safer, and visibility to track your shipment throughout the entire journey.

A pool distribution strategy is more common on a smaller scale; however, larger companies can benefit from this shipping method. The right partners will have a set of network points and distribution centers to unload trucks and sort items for distribution. 

Using an experienced partner for pool distribution is valuable because they will already have the systems and right personnel in place, particularly for shipments that require special vehicles such as smaller vans or trailers with lift gates. An experienced partner will also have  the right floor personnel needed to receive deliveries with the necessary know-how to use any specialized equipment.

 

When To Use Pool Distribution?

You may have already used pool distribution in some form. For example, if a retailer asked you to consolidate your orders onto pallets and ship them via LTL instead of parcel delivery. 

Companies with a high frequency of consistent, LTL-size shipments are best suited to use a pool distribution strategy. It is dependent on the size and the circumstances of your orders. 

While smaller companies may be better suited for pool distribution, you still need a certain level of volume for it to bring value to your business. To benefit from the value that pool distribution brings, companies need to have enough sales volume and shipments to a specific geographic region. If a company doesn’t have enough product to fill a truck, it is most likely better suited for LTL shipping than pooling. Working with an experienced third-party logistics provider is crucial because they can provide an established carrier network to help identify the best strategy to bring value to your supply chain. Particularly for companies lacking the infrastructure or the systems to coordinate pooling.  

 

What is Pool Consolidation?

Pool consolidation is part of the pool distribution process at the shipping lane’s beginning. With consolidation, multiple vendor shipments are consolidated onto a single truckload to a distribution center. The lane’s pool distribution portion occurs as the shipments are separated and sent to their final destination.

Other times, pool consolidation is not paired with pool distribution. In these cases, the vendors that share the truckload are all going to the same retailer or other location, creating no need for distribution at the end.

Companies typically use third-party logistics providers to handle their shipping as there is a lot of coordination that goes into pool consolidation. The planning process considers many factors, including delivery dates, shipping schedules, and truck availability.   

Pooling saves time at both the beginning and the end of a shipment’s journey. You can load your entire shipment into a single truck rather than in pieces, and on the other end, it only needs to be unloaded once. This means fewer receiving doors are required, and fewer workers are required to unload the shipment. 

Pool Consolidation

The Benefits Of Pool Distribution

  1. Reduced Shipping Costs: Pool distribution is typically more efficient than other shipping options as it removes the need for multiple legs on the journey. With shipping, the most costly miles for a truck are the first and last few miles. 
  2. Straightforward: Usually, pool distribution cost is based on just weight and miles, meaning it does not require complex formulas and more straightforward to calculate the costs.
  3. Supply Chain Visibility: Pool distribution makes it easy to track your shipment as it will be making fewer stops. 
  4. Speed: Pool distribution is typically faster as your shipment will be making fewer stops. 
  5. Lower Carbon Footprint: By placing fewer trucks on the road, you are doing your part to reduce your companies’ carbon footprint. 

 

Why Pool Distribution Might Not Be Right For Your Business

  1. Requires Change: Some companies may not be willing to change processes, schedules, or volumes to make pool distribution work. 
  2. Filling the trucks: You want to make sure you can fill the trucks with your pooled shipment consistently. Otherwise, pool distribution will have minimal value as part of your supply chain. 
  3. Right Partner: You want to ensure your 3PL/ 4PL partner has an established network in the regions you wish to send your pool shipments. 
  4. Product Pooling: Ensure the products you pool together make sense to be on the same truck. Depending on your products, some items may require special handling or shouldn’t be pooled together pending your products’ nature. 

 

Implementing pool distribution will require a lot of initial work on your end, but once you have systems in place with the right shipping partner, it will be worthwhile for your company. 

 

Technology Drives Supply Chain Visibility

Anyone who’s ever taken a driver’s education class should be familiar with the notion of reaction time and the importance of good visibility. The further you can see, and the clearer your visibility, the better you react to the conditions ahead of you. Bad visibility can be calamitous to a driver, and the same can be true when applied to a business lacking visibility into their supply chain.

A high level of supply chain visibility is a cornerstone of the modern logistics business. Particularly with the growth of companies operating at an omnichannel level, the need to understand where inventory is at any given time is vital for effective operation, problem-solving, planning, and, ideally, optimization.

Companies trying to keep pace with supply chain demands accelerated by COVID-19 better supply chain visibility can defend against difficulties created by unexpected circumstances. On better days, it can become a competitive advantage. Who wouldn’t want in-transit transparency on their inventory and the ability to keep customers up to date on its movements? But getting that visibility can be a daunting process. In a recent study, 40% of supply chain decision-makers expressed an intention to increase supply chain visibility in the coming year, with many feeling their visibility is “awfully low.” 

The tools to utilizing data in your supply chain data are, inevitably, technological. And any company with a modern supply chain is a technology-dependent company. But not every company starts that way. Different organizations have different levels of tech fluency and needs.

At Expak Logistics, we recognize that no two companies are the same. We address supply chain visibility issues through our Expak Performance Suite (EPS), a technology platform that’s easily customized to meet customers’ unique and varying needs. 

EPS is comprised of both a complete Electronic Data Interchange (EDI) solution, ExpakConnect™, and its client-facing portal, ExpakShip™. 

ExpakConnect™ can manage every piece of data from your shipping partners electronically via Advance Shipping Notices (ASNs), Electronic Data Interchange (EDI), AS2, as well as proprietary B2B data interchange methods. Data transfers can be in real-time, sequenced, or processed as batch updates, pulling files from any system: Email, FTP, SFTP, API, VANs, etc. This allows us to manage both inbound and outbound integrations for your supply chain data with ease.

ExpakShip™ is a web-based tool that operates seamlessly from any browser or device. You can utilize it to create, label & track shipments, update shipment statuses, view customizable analytics, manage invoices, and more. It provides settlement capabilities for drivers, carriers, and customers, handling the settlement tasks where the data sits or exported to any accounting system. ExpakShip can integrate into any existing infrastructure, or you can run in our cloud deployments that reduce the need for any infrastructure or technology requirements. 

We are continually improving our technology based on three core principles: Effective Communication, Business Intelligence, and System Innovation. Harmonizing data and automation will drive exponential growth from sustainable ways of transportation to fast deliveries. By continuously pursuing automation and seamless integrations reduce time, increases efficiency, and, most of all, lowers costs.

3 Myths About Dedicated Fleet Management

Operating a fleet of delivery vehicles is a complicated and time-consuming task. From hiring drivers to managing routes, payroll, taxes, insurance, vehicle maintenance costs, safety compliance, and more, it can easily interfere with your core business operation’s efficiency.

Outsourcing your fleet management with a 3PL logistics company can lower liability and reduce transportation expenses – if you get the right vendor. 

With a strong dedicated fleet management partner, you can forget about dealing directly with recruiting, payroll, accidents, injury, no-shows, workers compensation lawsuits and countless other interruptions that can paralyze your business.

While the possibility of relinquishing control and choosing to outsource your fleet may feel worrying, a lot of your apprehensions could be based on common misconceptions about fleet management.


Myth 1: Outsourcing a fleet is too costly

Many companies believe their transportation needs are too specialized to let anyone else handle. But for most companies, transportation is simply not a core competency. That makes it hard to optimize your transportation efficiently, and that can be costly in itself.

Outsourcing your transportation to the right provider means handing your fleet needs over to someone whose core business is designing and executing custom fleet strategies. A reliable 3PL logistics company should have the scale and experience to make your transportation dollars go further.

There are many scenarios where this experience can pay off. For example, when you have unexpected shifts in demand, your 3PL partner has more expertise in sourcing extra trailers, workforce and other resources to quickly and efficiently pivot operations. Likewise, dedicated fleet providers have the expertise to consolidate new routes into existing schedules, producing cost savings for you and your customer. 

Myth 2: We must do it ourselves to ensure quality

When you outsource your transportation to the right provider, they will want to take your pre-existing expertise into account and develop a custom strategy that addresses your goals and challenges. Find a provider that is willing to do the up-front due diligence, including site visits and interviews with your team establishing safeguards that they understand your workflow and how your personnel and customers interact with it.

Larger providers don’t always have the flexibility to customize with your needs and may ask you to make some concessions to fit their “one size fits all” approach. Ideally, your transportation strategy should combine what you know about your business with best-in-class 3PL thinking. 

When vetting partners ask them how they continuously assess performance, including the ability to identify and solve recurring problems ensuring they are meeting service levels.

Myth 3: If we outsource, our current drivers will lose their jobs.

Safe drivers with experience and knowledge about your customers, routes and products are invaluable. Most dedicated providers aim to retain as many existing drivers as possible during a fleet’s transition. 

Drivers who transition to a 3PL role may even enjoy more job stability. Instead of being furloughed or laid off during times when you have fluctuating demand, drivers working for dedicated providers can be “loaned” to other jobs until you need them again. 

Arrangements like this can save you money while helping your drivers get paid even when your volume is low. In the end, you can retain the quality drivers you need — and their connection to your customers — while releasing many of the responsibilities that come with employing drivers.

 

The benefits of outsourcing fleet management

 

Cost savings: Outsourcing eliminates the time and expense associated with managing drivers and vehicles

Eliminate staffing hassles: Avoid driver staffing problems caused by high turnover and absenteeism

HR compliance: Eliminate training, legal, and other HR compliance costs from your P&L

Liability issues  Eliminate your contingent liability risk, including vehicle accidents, employee injury claims and lawsuits

Service consistency: Provide better, more consistent service to your customers

Fleet capital costs: No more investing in vehicle maintenance and appearance, including upgrading and downgrading

Supply chain security: Leverage experienced security, to ensure the chain of custody throughout the supply chain

 

What to look for in a dedicated fleet provider

 

Customized routes and fleets. A quality 3PL partner should be ready and willing to create a customized fleet, schedule and route to match your deliveries, when and where they are.

 

Brand Visibility. Don’t miss the opportunity to build brand awareness. Ask your partner to display company insignia or logo on every dedicated fleet truck, and if their drivers can wear uniforms that match. That’s all part of the customization process.

 

Flexibility and Scale.  Can your network-based fleet efficiently keep up with demand during peak seasons? Is it underutilized during off seasons? A dedicated partner provides you with a fleet that easily adjusts to the volume and number of deliveries – regardless of the season. No more struggling to meet demand, or missed opportunities.

 

Security and Compliance.  How do they ensure the chain of custody throughout the supply chain for your products? Are they up-to-date on insurance, compliance and regulations.

 

Customizable Technology. Do they have a customizable solution that meets your needs? Or do they try to provide you an off-the-shelf solution that requires your team to make changes? A good 3PL partner with customizable technology should be able to streamline processes, trouble-shoot problems and eliminate or reduce the need to solve the same problem multiple times.

 

The Bottom Line

With the growing complexity and expenses of operating a private fleet, companies must re-evaluate the costs. From increasing regulations, recruiting, and retaining safe drivers to higher liability risks, there can be significant benefits to partnering with a dedicated fleet provider, allowing you to focus more time and energy on your core business. 

Working with the right dedicated fleet partner can protect your bottom line in the short term and set you up for growth in the long run. 

 

 

Sources:
https://www.trucking.org/sites/default/files/2020-01/ATAs%20Driver%20Shortage%20Report%202019%20with%20cover.pdf

https://www.kornferry.com/content/dam/kornferry/docs/article-migration/2019-3PL-Study.pdf

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