What is Pool Distribution and Why do Businesses Use It?
by Troy Searle, 18 January 2022
Pool distribution is a tried and true method of distribution that is popular around the world. This method combines freight headed in similar directions in order to fill up otherwise empty truck space - saving time and money in the process.
This article will take you through the basics of pool distribution, who it’s useful for, and the benefits it may be able to provide for your business.
What is Pool Distribution?
You can think of pool distribution as the equivalent of carpooling for inventory. In a carpool, different people who are heading in a similar direction make their journey together in the same car. Even though the journey may be slightly longer for each person, they each ultimately save money on petrol - which in turn is better for the environment. In pool distribution, freight from the same area or warehouse are shipped together to the same geographic area and are let out at different stops along the way.
Pool Distribution offers an alternative to another popular distribution method: Less than truckload (LTL) shipping . Whilst LTL shipping generally fills up a truck with goods from a variety of different sources or businesses, pool distribution generally ‘pools’ together freight from the same organisation.
How Does it Work?
Pool distribution combines multiple LTL shipments into a single, full truckload. These truckloads are then allocated to a certain direction or area, and along the trip the driver will make a stop to deliver each piece of inventory at its destination.
For example, if 10 grocery stores in different suburbs of Sydney each ordered one pallet of cereal, all 10 pallets could be loaded onto the truck and delivered in a single trip.
Who uses Pool Distribution?
Pool distribution is used by a number of different businesses, and its feasibility depends on both the frequency of orders to the same areas that a business receives, and the size of the goods that need to be transported.
The method makes the most sense for companies that distribute a large amount of LTL size shipments to similar areas, for whom there exists a large potential for saving time and money when they consolidate the shipments into full truckloads. This can be true for a business of any size: for example, a local furniture store may be able to pool together a truckload quite easily with larger goods, or a popular retailer may pool together over 100 clothing orders to the same city or town in the same period.
Whilst pool distribution can make sense for both small businesses and large businesses, so long as they are receiving enough LTL size orders to the same area to fill a truckload, businesses with less frequent orders and / or very small items to ship may find that pool distribution negatively impacts their delivery times. For example, if a business would have to wait several weeks to fill a truckload with their own inventory, then the impact on total delivery times may make LTL shipping a more attractive option.
Benefits for Businesses
Pool distribution offers a wide range of benefits to businesses who are looking to improve their costs, transit times, and corporate social responsibility.
- Transit Times
In comparison to alternative methods, pool distribution offers vastly improved transit times for goods. No business, no matter how large, has an unlimited fleet, which means that it’s not an option to send each piece of inventory out on a separate journey (not to mention that this would probably lead to some pretty nasty traffic congestion). Therefore, the fastest way to get inventory delivered is to group it by the area it’s headed towards rather than making repeat trips. Additionally, pool distribution, by nature of being freight from the same organisation, typically has faster delivery times since inventory is leaving the same warehouse. Compared to a solution such as LTL shipping, where LTL loads must be compiled from different locations - pooled distribution gets freight on the road faster.
- Saves Money
Pool distribution can help cut costs by eliminating the unnecessary labour and fuel costs associated with repeated trips or unfilled cargo space. Over time, these costs can add up to become substantial.
For example, if half of one truckload is travelling 80km south but the other half is travelling 100km in the same direction - a pooled distribution of this freight would incur the fuel costs of only 200kms total, whereas two LTL loads would accrue the fuel costs of 360km in addition to several more hours labour.
- The Greener Alternative
Pool distribution is often touted as a ‘greener’ option because it essentially makes sure that trucks are both leaving warehouses completely full, and that trucks aren’t unnecessarily repeating trips over the same roads - ultimately reducing the carbon footprint of the shipping process. Over time, the difference that this makes can be significant.
Pool distribution operates on a very simple formula: taking into account just the weight of the load and length of the journey. Additionally, businesses are saved the extra admin time that may be spent coordinating with third party logistics companies or agents in order to execute multiple LTL loads.
Pool distribution is one of the world’s most widely used shipping methods for a reason, and offers a range of benefits to businesses both large and small. Using a Transport Management System such as TransVirtual makes distribution a breeze, however you choose to do it. Get in touch or book a free demo, and we’ll get you on the road in no time.