Transloading has become the industry standard solution for loading and unloading transoceanic cargo from container ships, and moving it out of drayage to carriers (and eventually on to customers). But even the best technology and most thoughtful planning by logistics managers has been impacted by the COVID-19 pandemic.
Like the supply chain as a whole, drayage has been impacted by pandemic-related challenges. From staffing shortages to service disruptions and backlogs at the dock, let’s discuss some of the biggest drayage and transloading challenges shippers face – and how to overcome them.
What is transloading?
Before we start, let’s define what transloading means and how it operates. Transloading is best understood as the process of transitioning cargo, now commonly handled using standardized shipping containers, from one location to another using more than one means of transport. Transloading is designed to use systemic standardization to be more reactive and flexible to changing economic factors and may encompass a variety of different combinations of transportation modes to maximize efficiency. Advanced transloading systems use software enablement to plan for transfers with maximum efficiency.
At the port, a transloading system will guide cargo through a series of transportation networks – from drayage to a freight forwarder or an intermodal rail yard or a portside warehouse – to find a route that is timely, cost-effective, and tax and tariff efficient. It will also plan for and guide deconsolidation and reconsolidation – the processes of breaking shipments from large containers into smaller, more nimble shipping containers to reduce cycle time.
It’s a complicated and delicate system of processes that are individually vulnerable to disruption, especially by the combination of rapidly changing pandemic conditions and spikes in demand.
Congested ports necessitate careful planning
No one factor is solely responsible for congestion at the ports.
Since the beginning of the pandemic two years ago, record-high consumer demand – especially through eCommerce channels – has strained port infrastructure with record high import rates. To ensure safety, many supply chain businesses were required to adopt social distancing or reduced staffing practices, which only slowed down operations further. At various points, more containers were lined up at major ports than could be processed using existing practices (a key motivating factor resulting in the Port of LA and Long Beach transitioning to 24/7 operations during this time to help manage drayage demand).
To make matters worse, ocean freight providers tend to want their containers back on the ship for a return journey ASAP. Unexpected shifts in consumer buying trends have recently led to either shortages or stockpiles of shipping containers in all corners of the supply chain – leading to higher pressure to unload and process cargo quickly. To prevent further congestion, pallet sourcing and storing now needs to be done far ahead of time, otherwise, there will be additional delays (and possibly fines for lingering containers).
If this sounds like a headache for supply chain companies, you’re right. Fortunately, working with an experienced transloading partner ensures that this pre-planning is done and your shipments keep moving.
Warehouse space and labor are in high demand
Increased eCommerce activity due to the pandemic has driven the demand for warehousing sky high. That shortage in commercial real estate has only increased as more retailers hunt for smaller, more convenient warehouse hubs nearer to urban centers (versus the traditional fulfillment hubs in distant exurban areas). As a result, it’s now very difficult and expensive to secure warehouse space anywhere near major U.S. ports.
Costs for labor have also gone up in the past twenty-four months. Labor shortages have cropped up throughout the pandemic but, as unemployment rates have gone down, wages have risen. That adds another layer of difficulty for shippers looking to handle their own warehouse operations. Fortunately for shippers, many drayage partners own and operate warehouse space, so you don’t have to purchase your own space or hire your own teams.
Optimization requires advanced technology
As eCommerce increased during the pandemic, more and more businesses had to step up their logistics game to keep up with high expectations set by companies like Amazon, Walmart, and Target. Consumers expect fast shipping with real-time visibility, and companies that couldn’t provide that started at a distinct disadvantage.
Transloading has given retailers an edge when it comes to expediting shipping, reducing the impact of labor shortages, and streamlining inventory management and visibility. By using IT systems to manage information flow and track shipments, these companies have been able to improve coordination between customers and logistics providers.
However, to optimize shipping in this way, those same companies need to have a strong IT infrastructure that’s supported by automated systems — a tough investment challenge in an uncertain economy.
Working with a 3PL provider at the port can unlock opportunities for streamlined customer experiences without taking on a massive and costly in-house build-out.
The pandemic has impacted drayage, but by working with a 3PL partner like GlobeCon which provides drayage, transloading, warehousing services, and the latest logistics technologies, you can overcome the challenges and keep your shipments moving.