Shouldn't you be transloading? (page 2)

-- Logistics Management, 5/1/2005

Page 2 of 3

The Capacity Challenge

For a company seeking to break into a new market that's some distance from its base, forward positioning of product is the name of the game. Transloading can provide the means to do so economically.

"If a supplier is 1,500 to 2,000 miles away from a marketplace it wants to break into, but that [market] also requires consistent, quick response to replenishment of inventories, and that supplier needs to keep its transportation costs to a minimum, transloading is the solution," suggests Keith Reardon, Chicago-based assistant vice president of transload and cargo flow for the Canadian National Railway.

That ability to facilitate replenishment is another of transloading's strengths and a prime reason why it's no longer limited to bulk commodities, say proponents. In many cases, the use of transloading is being driven by retailers' desire to minimize inventory, says Dave Yocom, vice president of customer solutions at Lansdale Warehouse Co., a transload operator in Philadelphia. "The norm today is for companies to build only as much as they need to store one shipment of goods that can then be put out on the shelf," he notes. "A major benefit of a facility like ours is that we virtually manage the inventory of our customers through our transloading warehouse. So they can do what they do best—manufacturing or selling—and not have to tie up expensive real estate with inventory."

To accommodate the changing needs of their growing customer base, transloading companies have continued to expand their portfolio of value-added services. Many now offer such services as consolidated invoicing, combined product shipments in LTL quantities, and bar-coding and private-labeling capabilities, says Patricia Schlaeger, executive director of the Transload Distribution Association (TDA) in Azle, Texas.

Many shippers see transloading as a possible solution to another of today's most challenging problems: the shortage of truckload and rail capacity. "In plain language, there are far more loads than there are single-mode carriers to take those loads," says Carole Wink, senior vice president of the Transportation Division of Ancon Marine, Inc., in Carson, Calif., and TDA's president-elect. "More and more shippers will move to transloading because long-haul trucking is no longer an option."

Philip Penkrot, general manager of logistics services for Georgia-Pacific's Building Products Group in Atlanta, agrees that total reliance on long-haul trucking is no longer practical. Rail infrastructure, moreover, is stretched too thin to handle all of his company's transportation needs. He expects customers' demands for larger inventories at consolidation and distribution points will push his company and others to increase their use of transloading.

In particular, transloading has emerged as a viable option for hazardous materials shipments, a sector where the driver shortage has been especially acute, says Curt Warfel, manager of customer service and logistics for Atlanta-based Eka Chemicals Inc., a supplier to the pulp and paper industry. "With more stringent requirements being imposed on drivers applying for a hazmat endorsement on their commercial drivers licenses, along with fingerprinting and extensive background checks, there has been about a 20 percent reduction in available hazmat drivers because they simply don't want the hassle," he explains.

Eka now ships some products by rail to a point that's centrally located for several customers that order regular but small volumes. The transload facility converts bulk commodities to LTL shipments for delivery to those customers, which are situated within a 150- to 200-mile radius of the facility. Continued...

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