The term signifies the division of a large shipment into smaller lots for distribution to various destinations. This process commonly occurs at transportation hubs such as ports or warehouses. For instance, a shipload of mixed goods arriving from overseas might be separated into smaller consignments based on the individual orders of different retailers before being transported inland.
This practice is vital for efficient supply chain management. It reduces transportation costs by enabling economies of scale in the initial leg of the journey, followed by optimized distribution in smaller quantities. Historically, this was a labor-intensive process, but advancements in logistics and technology have streamlined operations, leading to increased speed and accuracy in goods handling. This contributes to lowered costs, improved delivery times, and better responsiveness to market demands.