Walmart targets transport costs

US retail giant Walmart is reportedly evaluating factory-gate pricing and taking over transport arrangements from its suppliers in order to save on transport costs.

Walmart has evaluated many of its suppliers’ transport costs and has contacted those where it believes it can make savings. The company’s justification is reported to be to allow its suppliers to focus on their core competencies, i.e. manufacturing goods for Walmart.

The move is an extension of the retailer’s current trasnport operations, which to date have mainly focused on DC to store deliveries. Walmart will both expand the size of its own fleet and increase the number of subcontractors used. It is also expected that the company will gain better utilisation out of its existing 6,500 trucks and 55,000 trailers.

According to analysis by Analytiqa.com, the net result of the move may be increased costs for other retailers: with Wal-Mart pledging to cut prices on 22 items for an average savings of 30%, manufacturers may face increased transportat costs on deliveries to other retailers as they lose scale. These increased overheads are likely to be passed on to other retailers.

Source: T and L News