Cross-docking essentially takes out the middle man. When items are going from point A to point C, via point B, cross-docking reduces the time spent at point B, and in doing so reduces the cost too. In some cases; when high-volumes of freight are involved for instance, arriving trailers are immediately unloaded onto departing trailers for their final destination. In most cases, however, the cross-docking station is specifically set up to operate efficiently in receiving, sorting and dispatching stock in general.
Cross-docking can save money, especially when using cross-docking services. Freight that would not otherwise fill a trailer is consolidated with other shipments, which are going to the same general destination. This process is referred to as truck load (TL), as opposed the much more costly Less-than-Truck-Load (LTL) method of transporting freight. Even if the final destination is not the same, a business can order from various vendors, ship the freight in one trailer, and have the items dispatched to their individual destinations from the cross-dock.
Labour costs are reduced by using cross-docking, too. As shipments spend little time at the cross dock, it takes away the need for unpacking, storage and retrieval at a warehouse. Other than direct deliver, cross-docking is one of the best supply chain solutions to reduce unnecessary costs for freight that is going straight to the customer. Freight should flow freely across the cross-docking warehouse and congestion should be kept to the minimum. The thing to keep in mind is, cross-docking reduces costs by significantly improving the transfer of freight. So time, labour and space are important factors when using a cross-docking system.