It seems like the cost of shipping your goods rises every single day, doesn't it?
Well, that's because it is. With fuel prices skyrocketing across the nation and a shortage of available truck drivers, shipping prices are higher than ever before. And it is you, the shipper, who must eat all those extra costs.
Of course, you have a variety of shipping modes available from most carriers that aim to rectify this very issue. Or at the very least, minimize it. One of the most overlooked, yet most efficient ways of saving some money is through the use of pooled distribution.
If you've never heard of pooled distribution before, just stick with us and read through the rest of this blog post. In this post, we're going to talk about what pooled distribution is and some of the hurdles you may face. More importantly, we'll discuss some ways to get over those same hurdles.
What is Pooled Distribution?
Have you ever heard of the co-op concept in farming? Well, the pooled distribution shipping concept is quite similar. Instead of investing cash or commodities into shared resources with like-minded individuals or companies, you're simply sharing space in a shipping container.
The pooled distribution platform is essentially a form of consolidated freight, combining several independent LTL shipments into a single truckload shipment. The concept also works with receiving products, where multiple companies or individuals in the same region pool their resources to receive products from multiple sources at once.
Let's look at an example of this...
Across the United States, there are nearly 37,000 car dealerships in service.
Those franchised dealerships receive parts shipped via a pooled distribution platform. Each dealership sends in an order for warehoused parts or consumables. This includes things like oil and air filters. The orders are then received by the franchise's distribution warehouse who groups them together for delivery at the same time to one specific region.
The concept is quite efficient, isn't it?
Well, imagine if independently-owned car dealerships could do the same! By working together to receive or ship items they all use daily, instead of setting up individual shipments? By pooling their resources, they save money on shipping (as a group) and reduce delivery times (by combining the shipments into one shipment). Furthermore, it reduces the chances of shipping damage or other errors.
What are the Hurdles Associated with Pooled Distribution?
Like any other shipping mode, the pooled distribution concept has a few hurdles associated with it. We've compiled a list of the top 3 most common pooled distribution issues to give you an idea of what you are up against:
- Reduced Shipping Flexibility
- Finding Compatible Partners
- Locating Suitable Carriers
Reduced Shipping Flexibility
Anytime you partner with others, flexibility goes out the window.
Such is the case with a pooled distribution concept. The pooled concept depends on the cooperation of multiple stakeholders. This can be a bit difficult to pull off as everyone has different delivery times scheduled and customers waiting.
So, if your 4 pallets of products are headed to Denver with 3 other local-based companies, pay attention to the scheduling. Be mindful of the other shippers and their time constraints. Additionally, it is a smart idea to prepare the shipment in advance to ensure you make the scheduled pick-up window.
Finding Compatible Partners
Another hurdle is the process of actually locating suitable local-based partners. Even with the above independent car dealership example, it can be tricky to locate like-minded partners. Even trickier to find those who are willing to work together to pool their LTL shipments. Some local business owners consider working with competitors a bad business decision. Others simply don't want to deal with the ins and outs of a new partnership at all.
This hurdle, and the way to jump it is largely dependent upon your specific situation and various other factors. When faced with this problem, we recommend partnering with a reputable 3PL.
Locating Suitable Carriers
The final hurdle to an effective pooled distribution platform is locating the right carriers to agree to this concept. Some LTL carriers don't get involved with the multiple-stop concept of pooled distribution for one reason or another. Others simply see it as a poor financial decision. In the end, if the local group doesn't have the right carriers to move their pooled shipments, it becomes a moot point.
Final Thoughts
The most effective way to avoid all of the hurdles or risks associated with pooled distribution is to work with Redwood Logistics. Redwood Logistics has dealt with all of these risks and created plans to minimize the challenges. We maintain solid relationships with carriers who see pooled distribution as an opportunity for growth and continued business. See our case studies for examples of how we've helped businesses overcome these challenges. Additionally, we can help locate local shipping partners for you!
If you'd like to learn more about how your business can benefit by activating a pooled distribution network, reach out to Redwood Logistics today.