Lower Costs, Larger Margin
Moving your merchandise from point A to Z efficiently can be a challenge. Depending on your final destinations, standard drayage and over-the-rail options can add more than a week of transit time to your urgent time tables. Even a few days of unexpected delay can increase costs and obliterate your margin.
For years the cost of diesel, and the notion that shipping over-the-rail is superior to over-the-road solutions, has placed a negative spin on transloading. But we are here to say that the opinion surrounding this method needs to be reevaluated.
When was the last time you gave consideration to Transloading your ocean import full container loads to over-the-road trailers? We would like to share 5 compelling reasons which reveal right now to be the best time for you to reconsider transloading as a more viable, and cost effective solution to your intermodal moves.
Reason #1 – Increased Time Efficiency
If your distribution center, warehouse or final destinations are located outside of regular rail paths, your transit time will increase significantly. When looking at a map your warehouse may seem to be near a railway hub. But if your locaton is in a rural, less populated and out of the way locale, your merchandise will almost invariably be delayed. Being near a rail hub does not mean your freight will be delivered more quickly. The standard rail routes will dictate the timeline. If you fall outside of these paths – you are bound to see delays.
Inclement weather can compound postponements created by the suburban location of your endpoint. For those of us living and working in Hawaii, Guam and Southern California, we often forget that the sun doesn’t shine everyday across the United States. Because of our varied client base we hear about nightmare scenarios which see freight service being interrupted for 5, 7 and over 10 days.
Rail capacity and seasonality can stack even more days on top of this already increasing delay. You are at the mercy of the rail lines when scheduling shipment of your merchandise. This may not be an issue for companies who move a large volume of product; but small to mid-sized businesses may be penalized in the form of delays, if they do not have enough freight to fill a full container.
Tallying all of these possible factors you could see a 10 to 14 day addition to your transit time! Not-so-great when you need product on your shelves — now. Transloading eliminates entire layers of variables from the process. The benefits for these companies could mean significant increases in margin.
Reason #2 – Reduced Fuel Cost
For the first time since the 1970s, the price of diesel fuel has dipped below the price of low grade unleaded fuels. This means the operating expenses of over the road truckers and carriers have significantly decreased. More money in the truckers’ pockets, means more money in yours.
There are a multitude of variables which dictate the cost of over-the-road options — and fuel may be the most significant of all. We often forget how so many seemingly irrelevant details actually affect our costs. According to the U.S. Energy Information Administration (EIA) — at the time of writing this — diesel has decreased nearly $0.60 per gallon in price since 2015. That is a huge reduction of trucker’s costs, which will ultimately benefit you, and your company’s bottom line.
Reason #3 – Increased Flexibility
Understanding your true supply chain cost is fundamental to every business. Recognizing where and when you are spending can become difficult when there are so many points of interaction between carriers and your freight.
- If you have run into any of the following, transloading may be your answer:
- Delays with overseas forwarders & steamship lines
- Problems with container availability
- Difficulties with intermodal carrier capacity
Often — with hours of tedious work and finnagling — you can overcome these obstacles, only to have your freight arrive to your facility or 3PL late. Missing deadlines and delivery times are a margin killer.
Perhaps your freight arrives on your deadline — but now you need the merchandise to be re-worked — your deadline just passed. Your PO is late and the pressure mounts as you try to execute damage control.
If any or (more likely) all of these problems sound familiar — transloading can help.
Of course many transload providers have the experience to de-van & cross-dock material. But they also possess the skill of value added services such as: kitting; product labelling and display pallet building.
Partnering with a Transload Provider allows you to build FTL loads, with multiple stops, going direct to your end point and retail outlets. This saves you time, money and prevents potential loss. Chargebacks from missing the “must deliver by date” with larger retailers will become a distant memory.
Reason #4 – Reduced Waste
If your orgnziation has one or two distribution centers in the United States, perhaps located in different regions, waste can quickly become a problem. Your organization may have conducted costly analyses in an attempt to understand expenditures associated with wasted travel miles.
So you’ve finally found an economical and expedient method through multiple transportation legs, and multiple transportation modes, to have your material and containers delivered to your distribution center or 3PL in the mid-West. The only problem is you realize 50%, 60% — even 75% — of the orders are destined for the Western and Southern regions. This merchandise must be processed quickly (wasted man power), routed back to where it docked in the United States, and on to where it needs to go to on the West Coast (wasted shipping costs).
Finding a transload partner with the ability to store merchandise, and provide value added services for a fair rate, would be much more effective. Transload becomes a timely and attractive option for your routine activity, at a minimum risk of lost revenue, due to waste.
Reason #5 – Better Ocean Rates
Your container rates may be reduced if transloading is an option.
Depending on your inland destination it is possible to negotiate and lower your ocean rates. The steamship lines are always looking to increase container turns. Helping the steamship lines save money will help keep your own shipping costs down – and everyone likes lower costs.
By choosing to transload you gain access to lower shipping prices through obtaining door-to-port, or port-to-port rates. The shift away from the standard door-to-door, or port-to-door, will reveal a more affordable pricing structure. The freight will be offloaded at the port, brought to your transload provider where it will be worked, and the containers can then be quickly returned to the harbor.
Less time = More money
The reasons for Transloading to be (re)introduced to your supply chain abound. Whether your company deals solely in mainland to Hawai’i shipping, or you are a retailer with storefronts and distribution centers across the United States, it is time for you to reevaluate the benefits of Transloading. We hope — like us — you now recognize the incredible possibilities this method presents to your business.