ANAHEIM, Calif. — The transloading of cargo from marine containers into 53-foot domestic equipment near seaports ebbs and flows based on macroeconomic developments. However, the long-term trend is definitely upward, as retailers use the strategy to manage the inventory in their supply chains.
Cambridge Systematics recently completed a study of transloading activities in Southern California, and the top reason why retailers and direct importers engage in transloading is to wait as late as possible in the supply chain to allocate inventory to destinations in the U.S., said John Isbell, senior associate at the transportation research firm.
“Which stores need the inventory the most?” is the question retailers seek to delay answering until the inbound vessel is just offshore, Isbell told the annual Transcomp conference sponsored by the National Industrial League and the International Association of North America.
Flexibility drives the choice
There are also other compelling logistical and economic reasons why transloading is so popular. Transloading allows the importer to bypass its own distribution centers and to move the merchandise directly to rapid replenishment centers. Those are flow-through centers that serve stores within a 500-mile radius.
Transloading near a seaport allows importers to immediately segregate cargo based on urgency of delivery considerations. Hot cargo is pulled out and shipped immediately to destination whereas merchandise that is not time-sensitive can be sent to a distribution center for temporary storage or for value-added services to make it store-ready.
Seasonal cargo is also ideal for transloading. For example, Christmas trees, decorations and wrappings may come into an import center from a number of countries. The retailer then consolidates the varied products into domestic equipment for shipment to destinations.
Although transloading could add at least a day to the transit, moving the 53-foot container via domestic intermodal can recover the time. “When you transload, you become a domestic rail shipment, and domestic moves faster than international,” Isbell said.
Transloading can be cost-cutting tool
Despite the added labor costs, transloading can actually save on the final delivered cost because transportation expenses are reduced. The contents of three 40-foot marine containers can be transloaded into two domestic containers, so $1,000 or more can be saved by shipping only two units inland.
Importers set various criteria for determining which ports will handle their transloading needs. Importers want a port that is the first call in from Asia with numerous ocean services each week. The port should have access to ample 53-foot equipment, and inland routing options should be extensive.
Terminal operators must have a record of efficiently moving containers out of their facilities. Port charges, rail rates and trucking charges must be competitive, Isbell said.
Factors that can cause transloading activity to drop include a significant increase in port costs and fees and rising labor costs or labor unrest. The trend toward the near-sourcing of production in the U.S. or Mexico also weakens transloading at seaports because transportation is usually shifted from ocean to rail or truck.
Isbell said transloading will increase if mid-size importers grow large enough to support a transloading operation, or if the cost of diesel fuel increases to the level where truck services, though faster, can no longer compete with rail’s economics.