3PLs see transloading shift
Transloading between international ocean shipping containers and larger domestic containers and trailers has gained in popularity during the past year as shippers react to the economic downturn, according to several third-party logistics service providers.
The practice has typically been used more for import operations, but there are signs that shippers are increasingly using this form of consolidation for export shipments.
In the past several months 'we're seeing more exports transload because with the downturn in trade there are fewer containers at domestic origins,” Jeff Lindner, vice president of sales for Pacer Distribution Services, said last week in an interview at the company's warehouse in South Gate, Calif., outside Los Angeles.
The company conducts most of its transloading at its 195,000-square-foot facility in nearby Carson because the dock configuration is optimal for flowing cargo between shipping containers.
One of the key reasons companies repack inbound container shipments in domestic equipment is to reduce inland transportation costs by taking advantage of the fact that the contents of four 40-foot containers can fit into about three 53-foot domestic containers or trailers.
Others change to domestic equipment to better control inventory costs. Rather than ordering full containers for shipment to a predetermined distribution center, a shipper can re-sort contents near a port and send them to parts of the country where demand is greatest or remix products from multiple suppliers before final delivery to different stores.
Inbound transloads still outnumber outbounds, but the difference is narrowing because there are fewer international containers at inland locations where shippers need them, Lindner noted. The short supply of international containers is a function of fewer containers moving inland as consumption of imported goods decreased and ocean carriers encouraging shippers in recent years to turn empty containers back to West Coast ports as quickly as possible so they can be used for much more lucrative import cargo.
'We've seen the numbers of transload containers creep up over the last 10 to 12 months,' Chad Thomas, director of intermodal for J.B. Hunt Transport Inc., said in mid-November at a major freight industry conference in Anaheim, Calif.
Although companies are finally ready to refill depleted inventories, they plan to carefully target shipments where they are needed based on the latest sales data.
'They don't want to make that final routing decision at the China origin. They want to make that deployment decision at the California transload point,' despite some incremental cost for extra handling, Thomas said.
'The real savings come from reducing inventory over the entire supply chain. That's the value proposition of transloading and we believe more consumer importers' are moving in that direction, he added.
Jeff Hoy, senior transportation manager for Home Depot, said the retailer keeps intact containers that arrive at West Coast ports and intermodally ships them to DCs in Chicago and Dallas, but is in the midst of developing a transload strategy for the future.
Schneider Logistics, which offers a full range of services including port warehousing and drayage, is also seeing a small trend towards export transloading, said John Ferguson, vice president for international logistics, in a phone interview.
Some customers on the West Coast are using transload to counter a growing container scarcity for exports as carriers rationalize ocean services to cut costs, he said. The export sector, powered by the low value of the dollar, has been one of the strong parts of the U.S. economy during the recession, and Ferguson said many shippers trying to grow into new international markets are 'ratcheting up their export supply chains, and that includes transload.'
On the import side 'we're seeing interest from companies that are breaking into new retail channels that need faster transit from the West Coast. Often they want the option for team trucks for peak season and special events. They want that control and flexibility right away to move onto different modes of transport,' including less-than-truckload consolidation and splitting international containers between local consumption and transcontinental distribution, Ferguson said.
Shippers are also starting to consider transload as a way to counter the impact of new clean truck initiatives in Los Angeles and Oakland, which have reduced local shuttle fleets by several thousand older trucks, he added.
West Coast ports such as Los Angeles and Long Beach during the last few years have lost container market share to ports on the East Coast, Canada and Mexico. But Ferguson said some shippers are considering moving supply chains back through those ports because domestic truck rates are so low. Many shippers, however, shifted their transportation networks for strategic reasons and won't simply be influenced by price. ' Eric Kulisch