Improving Cross-Country Freight Shipping with a Multi-Warehouse Strategy
Freight shippers have e-commerce to thank for the fast delivery norms everyone expects now. These conditions make it challenging for businesses to meet service levels and compete in areas where delivery might take more than two days. Speed limits on highways aren't changing any time soon, so businesses need to find new ways to move pallets faster.
Here, we explore the benefits of branching out with new operational locations and how a multi-warehouse distribution model can keep businesses in the game.
Wait. Open a new warehouse? No way!
When thinking about multiple warehouses, a shipper's first thoughts might be around logistics challenges, costs and a lack of control. We get it, it's scary. But ask yourself if there's a better way, right now, to move pallets large distances in one or two days. Air freight moves fast enough, but is it a sustainable strategy over the long haul? And with carrier capacity issues driving coast-to-coast full truckload transportation costs into five figures, shippers should be exploring all options.
Until delivery via rocket ship becomes a real (and affordable) thing, a multiple-warehouse strategy is worth consideration. Setting aside skepticism for now, let's look at some of the benefits:
Reaching new markets with a multi-warehouse strategy
The reality is that if you're physically far away from customers, it will be hard to compete. You're out-positioned and out-priced by other businesses. The antes – shipping costs and the expectation for rapid delivery – typically make cross-country fulfillment too expensive.
Operating from a second warehouse, however, closes the gap. This brings your brand and products within reach of customers. There's a lot of potential for growth as you expand your physical presence. However, there is a tricky chicken-or-egg scenario: Businesses hesitate to branch out when they don't have a foothold in a market – yet it's difficult to gain purchase without proximity to these customers.
Shippers don't need to make a leap of faith – nor should they for such a large investment. Partners are out there to help businesses evaluate the viability of opening new warehouses and select new geographies based on cost, risk and opportunity. For example, a third-party logistics (3PL) company such as Worldwide Express can help you compare shipping costs from a new location versus your original fulfillment center. These data points will help you understand how much you can save on shipping – which will be a key factor in determining if a multi-warehouse strategy works for your business.
Also consider whether expanding your business with multiple warehouses would give you the advantages of port access. Not only would it put you in new domestic geographies, it would allow you to look across the sea for import and export opportunities.
Regional freight shipping carriers have an inside track
Operating from a new warehouse, you can tap into local resources. Regional carriers won't go from New York to California, but they're highly effective within their footprint. What does this mean for your shipment?
- Lower freight costs – Cutting down the mileage and fuel consumption nets you lower transportation costs.
- Less stops – Thanks to smaller footprints, regional carriers require less terminals to manage their networks. Without a need to consolidate freight at larger breakbulk terminals, these shipping partners often move freight with less stops along the way – even achieving one- or two-day deliveries depending on the route.
- Safer freight – The cross-docking process at terminals is when most freight damages occur. By reducing cross-dock handling, regional carriers keep freight safer.
- Local knowledge – You wouldn't ask a tourist for directions, but a local will give you the scoop or maybe even a shortcut. Regional carriers know the lay of the land, weather trends, traffic patterns and other tidbits that remove stress from a shipment.
We love national carriers and have many decades-long partnerships with them. As you expand your warehouse footprint, though, you gain more options to move loads. This gives you operational agility, which always helps with managing your budget and meeting delivery timetables.
Multi-warehousing creates business continuity
What do they say about putting all your eggs in one basket? Don't do it. Separating your inventory across multiple warehouses is a great way to protect the business during emergencies. Sometimes, warehouses have to close and offices need to shut down. Even challenges like labor shortages – which will continue to be an issue in warehouses for some time – can cause disruptions to fulfillment.
When you're operating from separate locations, you build elasticity into the business. Maybe that's not enough justification to invest in multiple warehouses today, but waiting until the next emergency to hit to expand your operations could be too little, too late.
The journey starts with a single step
Multi-warehouse shipping isn't the right for every business – it comes down to fit based on the opportunities, risk, costs and other factors. But, it's a strategy many shippers are utilizing to stay competitive as freight shipping expectations continue to rise.
A 3PL can help with the evaluation process. In fact, you could take a small step today by taking a look at the transportation costs we negotiate with LTL and truckload carriers . Our partner network covers national and regional transportation companies, giving shippers a feel for the transportation costs and options available in the regions you need to serve.
While you're looking at carrier quotes, let us know if you have any questions. We're here to build a winning fulfilment strategy with you.