Wal-Mart, like Amazon, tests direct intermodal relationship with railroads; introduces purpose-built containers

RELATED TOPICS: SHIPPERS | INTERMODAL | WEST | CALIFORNIA
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Wal-Mart purpose-built 53-foot containers for rail intermodal service.
Wal-Mart is testing a direct intermodal relationship with U.S. railroads and now rosters a fleet of purpose-built 53-foot containers.
Wal-Mart
BENTONVILLE, Ark. — Walmart is expanding its use of rail intermodal and doing it with new custom containers.

Walmart launched a new rail strategy in 2018 when, with its own specially-designed containers, the big retailer began a pilot program using rail between Southern California and Midwestern distribution centers. In the past Walmart’s rail use was minimal and focused on trailer-on-flatcar movements.

“Sometimes we would use it if we had regional trailers that were out of balance in terms of location,” Walmart Vice President for Transportation, Supply Chain, and eCommerce Ken Braunbach tells Trains.

In addition to introducing containers, Walmart replaced some third-party logistics companies with its own private truck fleet to dray containers from intermodal terminals to Walmart distribution centers or stores. Typical operations of third-party logistics providers with railroads stymied Walmart’s efforts at effective inventory management, a function that has long been a corporate priority.

“We looked at levels of precision and found variability in rail lanes,” Braunbach says. “We took control of a few lanes and reduced variability. This is important to our merchants because they need products on their shelves at the right time.”

Besides predictability, the pilot program was designed “to cut costs and increase margins. And we found that it works,” he says.

The new containers are similar to standard-sized truck trailers (53-feet long, 8.5-feet wide, 9-feet high) and can be double-stacked. Walmart designed the new containers in-house, and instead of the rear swing doors that are standard on shipping containers, Walmart’s containers have rollup doors similar to those on its fleet of dry van truck trailers.

That allows truck tractors to quickly fit the containers snugly against terminal doors of Walmart distribution centers and stores, allowing for protection from weather and, if needed, for immediate access for forklifts.

“The rollup doors are a standard for retailing, although we lose a bit of cube (capacity),” Braunbach says.

Walmart’s new rail venture is adjusting to increased application of Precision Scheduled Railroading.

“PSR increases rail reliability for shippers,” according to Braunbach, “But reduces flexibility.” Using its own truck fleet allows Walmart to better meet train schedules, he says.

U.S. railroads have always treated intermodal as a wholesale product, according to Larry Gross, president of Gross Transportation Consulting.

“I suspect Amazon had a lot to do with cracking open the door to working directly with the railroads by virtue of the large potential volume that was available,” Gross says. “Once they established the precedent, it became a matter of fairness to offer Walmart the same kind of access.”

Transport Topics reports there is a trend by large shippers to move more management of their freight operations in-house.
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