How do smaller shippers compete?
A year ago someone told me they thought the mega companies of the world we're trying to completely dominate the markets. At the time, I didn't agree but, now it seems that the Walmart's and Amazon's of the world are destroying anything anyone in their wake.
The global freight backup
As of today, there are 62 ships anchored off LA/LB waiting for a berth. Container terminals are full of imports, warehouses are full of imports, truckers are running back and forth frantically trying to move as much freight as possible, and railroads are stuffed to the brim with cargo.
These imports can't get to their warehouse, factory, or distribution center because there just aren't any people to move the cargo or space to stash it. Eighteen months ago, there was capacity in warehouses and empty chassis available for short term storage. Today, that's all gone.
It's not a chassis shortage
Rumors are circulating that there is a chassis shortage in the US, specifically on the West Coast and in the Mid West, and that's why we are in this crunch. I personally, don't buy it - at least not in the way it is described. There are plenty of chassis available for truckers to move containers around. There are not as many chassis available to stash cargo in trucker facilities any more.
Previous to the crunch, truckers would pull cargo from the terminal into their yard for storage for a few days while the warehouse was making space. Chassis were used as a storage/staging device. A surge in container volume without a surge in chassis available has eliminated this practice and created this perceived shortage.
Across the entire US and throughout the world, there is a backlog of cargo that simply cannot move. That is a bad thing for the smaller shippers. When the supply chain gets tight, the big guys become creative in how they move their freight. They flex on the smaller shippers and buy out the supply chain.
Ships, trains, and planes for hire
In August, Walmart announced they were chartering their own ship to get their freight moved. It's a Walmart leased ship to move exclusively Walmart cargo to load a Walmart leased train to jump in line in front of everyone. They aren't the only ones doing this either. The big brands like Amazon, Walmart, Target, Home Depot, and more are all practicing this jump to the front method because they have the volume to afford it. When the big brands lease the ships and trains, the capacity for other cargo to move goes down.
The Big Brand Volume Advantage
The bigger brands also have advantages in terminals, where space is at a premium. They can move their cargo much faster than everyone else because they have more to move. It sounds backwards until you look at terminal operations. At the terminal level, big shippers make the operators lives easy. Terminals can stack all Big Brand containers together for a trucker to come pick up. Terminals deliver the first container out of a stack to the first driver for the brand and it goes on like this. The containers go to a big brand dedicated warehouse, transload facility, or distribution center and the trucker repeats the process a few hundred or thousand times. In just a few hours, all of their containers are off the terminal and into an internal supply chain. Big brands, have the flexibility and power to move the cargo quickly so they get preferential treatment.
Smaller shippers however, are placed in piles with other shippers, all for different truckers, all for different destinations. Small shippers suffer tremendously from higher truck turn times and reduced efficiency an capacity.
How to compete as a smaller shipper
Small shippers can compete by improving their own internal efficiency as much as possible and can benefit from joining with other shippers. Get in touch with the other shippers that use the same transload facility or warehouse as you do, use the same trucker and communicate with the terminals that the containers can be stacked together for greater efficiency. Truckers will be able to complete more transactions in a day and get your freight moved faster.
We are working launching a new platform to help small shippers and truckers move freight faster and to take advantage of the same Big Brand Volume Advantage after the ship discharges. We invite you to sign up for announcements and to join the waitlist for our launch in the near future.
