What is Pool Distribution and What are the Benefits?

Published on
May 8, 2018
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You might already be aware that using pool distribution for your company’s shipping needs can save you a ton of money, but did you know there are several other benefits that you can be enjoying as well? Not only is pool distribution less costly, but it can also improve your shipping times, allow you to move more product (which will improve sales), keep your product safer due to less handling, and even help your company do its part for the environment by going green.And there’s so much more! In this post, we’ll go over the many benefits of pool distribution and how your company can take advantage of the pool distribution process right now. But first, perhaps you could use a little refresher on what pool distribution is and how it works.

What is pool distribution?

We have a full post on this very topic that you should check out, but we’ll give you a more concise version here.Pool distribution is a process in which product is sent to multiple destinations (typically retailers or stores) within a specific geographic region. Companies that would most benefit from using this shipping method are those who send a high frequency of consistent shipments in LTL quantities, meaning those that generally fall under 4,000 pounds per shipment. Pool distribution slightly differs from standard LTL shipping in that the truck is not typically shared by multiple companies. With pool distribution, the shipments that share the load will all be from your company and heading to retailers in the same general area. In pool distribution, products will be collected at your distribution center and shipped to a regional terminal, where they will then be offloaded, scanned, sorted, and reloaded into local delivery trucks that will take the shipments to their final destination. It can be a much more cost-effective shipping method for many companies, reduce transit times, and even keep your shipment safer since it will be handled less. Though pool distribution today does involve a lot of technology, the process itself is not anything new. In fact, pool distribution has been around since the 80s, although the modern version has evolved greatly. Early pool distribution involved using a regional pool point within an LTL network. Now, it is a more unique shipping model in which retailers share a common network of logistics services providers for distribution. The company’s provider or network will manage the flow of their shipment from the pick up at their distribution center all the way to final delivery. Modern pool distribution has risen along with the rapid growth of e-commerce, as stores aim to compete with online retailers. Pool distribution can help stores compete by keeping their shelves stocked with the product due to the increased speed of shipment. For example, instead of multiple stores in a single shopping center having separate LTL or parcel deliveries in the same day, the stores can share a single delivery in which they will all receive their shipment in one stop. In this way, by using pool distribution, companies will use the network effect to leverage the shipping market for more savings. Since more product is moving through that particular delivery lane to the shopping center, the store will be able to replenish their stock more often. And the more density and frequency of shipment, the more a company can save on its shipping, while providing better service. Shipments will use a cheaper mode of transportation for most of the shipment journey. On top of all of that, companies are also working together to keep fewer trucks on the road.

How pool distribution works

Let’s break the pool distribution process down a bit further.Within a typical pool distribution, multiple shipments from one shipper will be collected together at a single point of origin — most often the shipper’s own distribution center. The shipment is consolidated and loaded onto a trailer, typically from floor to ceiling to maximize the trailer space. Since the individual destinations of each shipment are within the same geographical region, the entire shipment will then be sent to a single regional terminal, or a pool point facility. The pool shipment is offloaded, scanned for tracking purposes, and organized at this terminal. It is then reloaded onto local delivery trucks or vans and sent to their final delivery. While normally a pool distribution shipment involves product from a single company, there are times when multiple shippers can share the cost of a truckload. In these situations, the truck collects product from both distribution points, then delivers them to a shared final delivery point. This most often involves products from different shippers that are going to the same retail store. An experienced pool distribution provider will have a network in place to handle every step of the shipment. This includes vehicles, workers, and relationships with local delivery companies to carry out the final steps. By using pool distribution, fewer workers will actually be required to receive shipment, and fewer trucks will be on the road.

Benefits of pool distribution for LTL shipping

We have another post that covers the many benefits of pool distribution in length, but we’ll give you a brief overview here. The numerous reasons to utilize pool distribution extend far beyond lower costs on shipping and faster service, but it certainly starts there.

Reduced Costs Associated With Shipping

Simply put, combining multiple orders into a single truckload can massively reduce a company’s overhead for shipping. You’ll have much greater control over the cost of your shipping because you’ll be sending out one pooled shipment rather than multiple LTL orders. Pooling shipment onto a single truck also means you’re not paying for multiple trucks — just the one. This reduces the cost of transportation for the shipment, including gas, drivers, and other fees, because pool distribution has fewer legs in the shipping lane.The improved efficiency of pool distribution also helps with the first and last miles of the shipping lane, which are usually the most expensive. Since a single truck brings your shipment from your facility to the regional terminal, there is no higher cost associated with pick-up. Likewise, using a network of local delivery trucks for final delivery comes at a lower cost, meaning you’ll be saving at both ends of the journey. Other companies may have been using their own fleet of trucks for shipment and can get rid of them by switching to pool distribution. This eliminates the costs associated with owning and maintaining a fleet of vehicles as well. And since pool distribution cost is typically just based on weight and miles, the process is much more simple to understand, and it will be easy to do the math and find out your potential savings. This makes pool distribution incredibly attractive right off the bat, but when you add in the other benefits beyond the cost savings, you’ll really want to dig in and see if this is a better option for your company.

Reduced transit times

Companies can also reduce their transit times by switching to a pool distribution model. This is for the simple reason that there are fewer transfers and trucks involved in the shipping lane. You simply load up a truck at your facility, it goes to a regional terminal, and then is offloaded and sent to its final delivery. Two loads, two offloads, two trucks — that’s it!

It makes your shipping more efficient

By pooling your individual orders, you are making your shipping much more efficient. Rather than loading each individual order onto an LTL truck over and over even though they are all going to the same area, you will instead load all of the shipments into a single truck. This reduces the number of trucks you use per day.These truckloads will then go from your distribution center to a regional terminal that is centrally located and able to serve all of your shipment retailers. The shipment is then offloaded, organized, and sent on local, short-haul trucks to final delivery. It’s a much smoother and more efficient process that allows you to use fewer trucks, fewer carriers, and pay fewer workers.

Less handling of freight

Since there are fewer transfers involved in pool distribution, it means product will be handled less, which means there is a significantly reduced risk of damage. This is on quite a literal level, as workers will need to load and unload your product only twice. An LTL shipper like Flock Freight® reduces this risk even further since they do not unload your freight until it reaches its final delivery. Pool distribution also ensures there will be minimal product losses and claims, which is a benefit to both the shipper and retailer, as well as the pool operator. Any time a shipment within the pool goes missing, is damaged, or has any other issue, it will be flagged at the touchpoint where it is discovered. This allows you to stay ahead of any issues and notify your retailer while you fix the situation.

Easier to track your shipments

Not only is pool distribution easier to understand, but it is also completely transparent to track. You see your product being loaded at your own facility, and will receive an update when it is scanned at the regional terminal. Then, you will receive a final confirmation when your product reaches its delivery point. Having products scanned at every touch point allows both the shipper and retailer to know exactly where the shipment is at all times. Moreover, this helps the retailer know exactly how much product they will be receiving and when, so they can put the appropriate people in place to offload the shipment.

Improved flexibility

Not only does pooling shipments onto a single truck save time and money, but it also allows you to be more flexible with shipping. You’ll be able to monitor your inventory more efficiently, which allows you to stage product for delivery at upcoming dates. This is known as a “trap and hold” approach to pool distribution, and allows you to cater to your retailer’s specific inventory requirements as needed, which also helps to optimize inventory on both ends.

Optimized inventory

Through pool distribution, retailers should be able to minimize running into situations of overstock or running out of stock of your product. This is because when retailers know how quickly shipment can reach their store, it will help them to better optimize their inventory. This allows companies to understand how much lead time they need to keep product stocked on their shelves, which has the added benefit of helping you know how much product you need to produce and have ready for shipment. All of this leads into the next benefit, which can add to your savings in a very big way by improving relationships with your retailers.

Higher customer satisfaction

Consider what your customers (the retailers to whom you are sending your product) will think about having your product arrive reliably sooner and for less money, allowing them to keep their store inventory healthy and readily available to customers. They’ll probably be pretty happy about that, right? This gives you a much-improved customer satisfaction because of your reliability, thanks to using pool distribution.

It Improves your company’s environmental impact

Has your company been struggling to find ways to go green that make financial sense for the business? Here’s one that saves your company money without any overhead costs. By placing fewer trucks on the road, you are actually going green with your shipments. By reducing your carbon footprint and helping lower fuel consumption, you are effectively improving your company’s sustainability efforts.

Choose the right LTL shipping partner

Perhaps the biggest benefit of pool distribution is partnering with a shipper you can rely upon to make the whole process run smoothly. A company like Flock Freight uses a more direct LTL shipping model to get your product to its destination faster, cheaper, and with minimal risk. Flock freight pools shipments through shared truckload, which can be accessed through the STL platform FlockDirect™️.Utilizing sophisticated algorithms and cutting-edge logistics, Flock Freight works with companies large and small nationwide, and delivers product on time, every time. Get a free quote online today to see how Flock Freight can help with your shipping needs.