Thanks to the COVID-19 pandemic, the global supply chain is currently being strained beyond anything it has experienced in the past. With dozens of ships waiting to be unloaded, major ports are experiencing bottlenecks that are creating massive delays across the industry. One option to help alleviate these issues is transloading cargo to trucks, instead of shipping it to its destination in its original container.

Broadly speaking, transloading is the transfer of freight from one mode of transportation to another while on the way to its ultimate destination. Transloading is most commonly used when one mode of transportation can’t be used for the entire trip. For example, if cargo is being shipped internationally from a port in South Korea to an inland point like Omaha, Nebraska in the U.S., completing the shipment will require multiple modes of transportation. While the longest stretch of the journey will take place on an ocean carrier, the cargo must be transferred at several points in order to reach its final destination.

To fully understand transloading, let’s take a look at an example. Say an LG refrigerator needs to make its way from the manufacturer in Changwon, South Korea to a local appliance store in a small town outside Lincoln, Nebraska. Completing the journey will clearly require multiple modes of transportation.

For starters, a truck will need to pick up the appliance from the manufacturer in Changwon and transport it to the port in Masan. From there, the refrigerator and other appliances from LG will be consolidated with additional cargo that’s headed to the U.S. and loaded onto a shipping container for transit via ocean freighter.

Once the cargo ship has reached Port of Los Angeles, the container is sent to a transloading facility, where its freight is broken down and reorganized based on destination through processes called load deconsolidation and reconsolidation. Cargo –– like our refrigerator –– is then transferred onto various trucks so that it can be delivered to multiple destinations.

While transloading may sound similar to intermodal shipping, there’s a distinct difference between the two. With intermodal shipping, products remain inside the same container as it’s moved between ships, trains and trucks. In contrast, the transloading process involves the removal of cargo from the ocean container before it’s moved to a domestic mode of transportation.  

While transloading is a necessity in some cases, it’s often chosen as an alternative to shipping entire containers because it offers a range of benefits, including:

• Reduced shipping time. Transloading cargo speeds up the supply chain and increases throughput, which helps prevent bottlenecks from forming. Standard shipping times can often be shortened by several days through the practice.
• Improved versatility in the supply chain. With transloading, you’re no longer limited to just one mode of transportation; you now have the ability to choose which combination of transportation methods will be the fastest, safest and most efficient way to move goods to their ultimate destination.
• Lower costs overall. The use of transloading allows large amounts of cargo to be consolidated into smaller loads for easier shipment. The consolidation of loads helps reduce the amount of fuel used throughout the shipment process. Transloading can also eliminate the need for a distribution center, since products are sorted for local shipment at the warehouse. All of these features add up, lowering overall costs.

While transloading can be used at any time to improve supply chain flexibility, reduce costs and shorten shipping times, it’s especially helpful in a few unique situations. For example, the port at Los Angeles is currently experiencing unprecedented backups due to supply chain irregularities caused by the COVID pandemic. In times like these, when bottlenecks are creating shipping delays, it’s important to find ways to move goods quickly –– which is exactly what transloading does.

Transloading is also especially helpful when shipping containers are in short supply, as is currently the case. When goods are moved to inland points, it’s often difficult to retrieve empty containers once they’ve been unloaded, leading to a shortage. This issue can be avoided entirely when using transloading. For that very reason, some ocean carriers may even request transloading in order to better control their supply of containers.    

Technology is a vital component in the transloading process; its use is required to track the vast number of products moving in and out of a transloading facility to ensure they arrive at the right destination on time. Examples of the technology used in transloading include inventory management software with transloading functionality, barcode scanners, and tablets. With these essentials in place, the shipper and carrier can:

• Track all inbound and outbound containers and trailers,
• Create bills of lading,
• Control invoicing,
• Read barcode labels,
• Have access to real-time information on shipments, and
• Share data with logistics partners.

Essentially, technology eliminates the need for manual verification, which greatly improves accuracy and optimizes the transloading process. The speed and efficiency of transloading make it an excellent option for improving supply chain productivity and preventing costly bottlenecks.  

Gabe Grifoni is chief executive officer and co-founder of Rufus Labs.