What is a Transloader and Why Are They Essential?

What is a Transloader and Why Are They Essential?

With globalization in full swing, transloading has become the industry standard solution – offering unparalleled efficiency, smooth and cost-effective order fulfillment. But even for many logistics managers, understanding exactly what is a transloader and why they are essential to maintaining operations can be a challenge.

What is a Transloader and Transloading?

To start, let’s define the basic concept of transloading. Transloading is commonly defined as the process of transporting goods from one location to another via more than one means of transportation. This can encompass a variety of different logistical modes of transport in various combinations.

The goods generally originate from someplace like a manufacturing center or warehouse. After an order is placed – either by a retailer or, increasingly due to the growing power of ecommerce, a consumer – the logistics provider must look at the destination and identify what shipping method best serves operational imperatives.

This means weighing several different logistics considerations, including:

  • Cost
  • Delivery schedule
  • Route congestion and slowdowns
  • Applicable tariffs and taxes
  • Available portage
  • Good value depreciation over time, i.e. loss of freshness in organic goods.

If after considering these factors results the conclusion is that more than one shipping method is required, a transloader comes into the picture. Managing all the logistics associated with employing multiple shipping methods is a full-time job as it is – one far exceeding the scope and resources of a manufacturer or wholesaler. A transloader is a third-party logistics provider (3PL), like GlobeCon, specializing in managing the combination of new-school technology and old-school logistics infrastructure that is required to ship goods from destination to destination via multiple shipping methods.

When Does Transloading Make Sense?

Traditionally, when goods are shipped nationally from a single point, a single method of transportation is often sufficient. This is because – pending normal loading times – it is simply more economical and faster to pack and ship an item via a single method like rail or trucking.

However, even domestic shipping is often made more efficient through transloading, if only to mitigate some of the limitations of traditional logistics solutions. Take rail transportation for exanple: According to the Association of American Railroads, average U.S. freight rail rates (based on revenue per ton-mile and adjusted for inflation) were 45 percent lower in 2015 than in 1981. This means shipping by rail often represents the fastest, lowest cost and most secure means by which a person can ship goods from Point A to Point B.

However, unless Point B has a functioning, rail-served terminal, the shipper is going to run into a fundamental problem. This is the most basic element of what often makes transloading necessary: Many destinations simply cannot physically be reached by one form of transportation, requiring some other form of transportation to help it finish its journey. Consider, for example, a train shuttling goods to a rail-served pickup point, before being loaded onto a truck to complete its journey.

Containerization

Containerization has made transloading all the more efficient over the last few years. With standard-sized intermodal shipping containers, shifting from one mode of transport – say a rail line that ends near the port – to another – a truck heading to the shipyard before finding its way onto a ship – is fast and easy.

The challenge then becomes managing the different containers and their contents. An assortment of goods may be consolidated into a single container, or a truckload of containers may be broken into several different cars. It’s this consolidation and reconfiguration that poses the biggest hazard for companies, as goods are more likely to get lost or damaged during this process. Having a 3PL transloader monitoring and managing each stop for your goods can help maintain transparency and access to information along the supply chain.

International Shipping

Of course, faced with the prospect of international fulfillment – crossing varied geographical terrain, the borders of sovereign nations and even oceans – transloading goes from an optional consideration to an utter necessity. The logistic challenge of shipping goods over great distances quickly and cheaply requires different modes of transportation and an eye for efficiency.

Even for trade limited to North America, transloading has become very much the norm. JOC reports that more trans-Pacific freight at Mexican ports has led to a rise in transloading at Laredo, the largest U.S.-Mexican truck border crossing. With empty trucks an operational strain for shippers, transloading becomes a way to save on fees and tariffs.

“Almost all shippers of large northbound volumes are being forced to pay to relocate empty equipment to Mexico to keep the supply-chain moving,” Jordan Dewart, president of Yusen Logistics Mexico, told JOC. “If you refuse to transload your cargo at the border, you will start to pay a premium of 25, 30 or 50 percent over everyone else. The difference is huge.”

Once you start shipping goods overseas, the need for transloading – and a qualified 3PL transloader – becomes paramount. Goods going from continent to continent can go through a variety of transportation methods – boat, rail, truck, even plane travel – and tracking and managing the goods can be tricky given all the different localized shipping providers may be involved.

Transloading Versus Cross-Docking

One common point of confusion is the difference between transloading and cross-docking. While both work towards the same end – ensuring goods reach a final destination in as quick and cost effective a manner as possible – there are subtle differences that distinguish them.

Cross-docking seeks to limits the amount of handling needed to ship an item or an assortment of items. Rather than unloading, screening, sorting and reloading items at a docking terminal or port, cross-docking streamlines the process by simply sending products from the inbound mode of transport directly to the outbound mode of transport via a forklift, conveyor belt, pallet truck or another means of transportation to their destined outbound dock. This process is particularly useful when:

  • Products are packed into standardized containers.
  • Products are already sorted and screened.
  • Products delicate and thus should not be handled excessively.
  • The company shipping the products is looking to establish a centralized “hub and spoke” shipping process.

In the end, manufacturers and retailers may rely on a combination of transloading and cross-docking to ensure that goods reach their destinations on-time, intact and inexpensively. The key is relying on a trusted and experienced 3PL transloader who can manage each step in the supply chain, offering transparency, flexibility and cost-savings that can help your bottom line and deliver high quality customer service.

If you need a partner to help you strategically manage and successfully move your products out of the port and onto their final destination, be sure to download our ebook - Speeding Time-to-Shelf and Cutting Costs- a must read for today’s logistics managers.