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More Shippers Turn to Transloading to Streamline Supply Chain

September 21, 2010

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Industry experts report an increase in a tool known as transloading on the West Coast over direct shipping to the Midwest via intermodal rail,
according to the cover story in this week's edition of The Journal of Commerce.

By repacking inbound container shipments into larger domestic containers, shippers save on inland transportation costs and gain more inventory flexibility. Various goods can be combined in a shipment to one store, and decisions on where goods should end up can be made later in the distribution chain. The tactic adds some handling costs and complexity at the front end when imports arrive, but more companies are saying the trade-off works because they end shipping fewer containers inland, and the ability to postpone destination decisions is important in the fragile economy.

There is a troubling trade-off for U.S. exporters, however, because the practice leaves fewer ocean containers available at inland distribution points, exacerbating a shortage of equipment for agriculture and light manufacturer companies looking to send goods abroad.

The Intermodal Association of North America estimates 29 percent of U.S. import shipments were transloaded into 53-foot containers last year, up to 30.2 percent in the first half of 2010. Carriers -- who often end up responsible for the repositioning costs -- are encouraging the shift by lowering ocean rates from Asia to the West Coast.

Stronger growth of the method, The Journal of Commerce reports in this week's Cover Story, will depend on strategic management of equipment to avoid costly container repositioning, increase of customers with a year-round commitment to transloading and generating two-way traffic to balance the flow of equipment.

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