The transloading of merchandise from marine containers to domestic containers and trailers isn’t a new phenomenon in supply chain logistics, but for a variety of reasons, its use by retailers and direct importers is increasing faster than imports in general, especially in Southern California.
While transload volumes rose 6.6% in 2012, total containerized imports through Los Angeles-Long Beach increased only 2% over 2011.
Transloading volumes are affected by developments in the transportation industry, so they can accelerate or decelerate from year to year. For example, if railroads increase their IPI (inland point intermodal) rates for moving containers intact to inland destinations, retailers will normally increase their use of transloading.
Generally, the contents of three marine containers can be transloaded into two 53-foot containers, so there is an immediate savings in transportation costs.
Still, the long-term trend has been for transload traffic to increase at twice the rate of containers that move intact from Southern California, said John Doherty, CEO of the Alameda Corridor Transportation Authority. Transloading grew 5% a year on average from 2000 to 2012, compared with 2.5% per year growth for intact containers.
Overall, almost 46% of the containers that leave Southern California by rail were transloaded first, up from 33% 10 years ago, Doherty said.
Since the beginning of transloading, the core constituency of the sector has been large retailers and importers with multiple distribution centers across the country. These larger companies stop their imported containers from Asia on the West Coast and transload the merchandise into domestic containers destined for their distribution centers.
Small and midsize shippers that had moved all of their containers intact to one import distribution center recently have begun to open additional distribution centers. They are delaying allocation of their inventory until it reaches a West Coast port, and then they transload the cargo and ship the domestic containers to the distribution centers where they’re needed.
Jeff Lindner, Pacer’s vice president of sales cited two examples of how delayed allocation can reduce supply chain costs and increase the velocity of shipments. An importer that had shipped all of its imports through the West Coast to its import DC in, say, Columbus, Ohio, only to ship 40% of the merchandise back to its stores on the West Coast, can stop the containers in Southern California, strip out the local cargo and ship the remainder to the eastern half of the country.
A second example involves an importer that designates merchandise for Dallas before the shipment leaves Asia, only to discover the product is selling better in Chicago. By delaying allocation until the container arrives in Los Angeles-Long Beach, the shipment is sent directly to Chicago. “They ship to the right DC the first time,” Lindner said.
To learn more about the effects of transloading on the U.S. supply chain, attend the JOC’s Inland Distribution Conference, September 18-19th in Kansas City, MO. To learn more about how PIERS can help you track U.S. import and export shipments register online for free demo.