Walmart expands LTL truck consolidation program for suppliers

Automated consolidation centers have been part of Walmart’s first-mile network since 2018, but they were previously limited to suppliers using collect freight terms. The new consolidation program expands that network to suppliers that have traditionally managed their own transportation, shipping directly from their facilities to regional distribution centers based on separate purchase orders. With prepaid consolidation, more suppliers have access to the benefits of consolidation, network scale, and more efficient freight flow, according to the retailer.

Walmart currently has three automated consolidation centers: Colton, California; Minooka, Illinois; and Lebanon, Pennsylvania. The retailer plans to grow the number of consolidation facilities as dictated by demand, said spokeswoman Jennifer Chunn.

Suppliers experience longer lead times and higher costs when they ship merchandise to Walmart facilities, but can’t fill an entire trailer. Under the previous process, suppliers might create up to 42 purchase orders, pick 42 cases and load 42 separate pallets onto trucks for distribution to each regional distribution center. Now, those cases can go on a single pallet with one purchase order. Walmart said it is using new technology to optimize inventory allocation across its DC network.

The program will expand in phases and participation will be prioritized based on volume alignment and capacity expansion. 

“We’re focused on making our supply chain simpler, faster and more efficient for suppliers, while also keeping products in stock for our customers,” said Mike Gray, senior vice president of supply chain at Walmart U.S. “By strengthening our first-mile capabilities, we’re reducing complexity and keeping goods moving, so we can deliver even more value every day.”

The prepaid consolidation program is designed to make shipping more convenient for suppliers because Walmart manages the process, which means suppliers don’t need to change their prepaid freight terms. Walmart said vendors can move shipments directly through Walmart or work through company-approved third-party logistics providers C.H. Robinson, Hub Group and RJW Logistics.

Suppliers pay a transparent, price-per-case rate that covers handling at the automated consolidation center and outbound transportation to Walmart’s regional DCs. Pricing varies by region, but there are no additional markups applied by participating providers to services performed by Walmart.

By consolidating inbound shipments and allocating inventory across its regional DCs, Walmart said it improves the consistency of product flow and reduces variability. That makes replenishment more precise and better ensures products are always in stock.

“I think this is part of a larger trend where large shippers are reducing transportation randomness, centralizing network intelligence, consolidating inbound flows and minimizing their fragmented LTL dependency,” said Daniel Garza, who heads enterprise transportation and logistics strategy at AT&T, on LinkedIn. “This could quietly reduce shipper optionality over time because once Walmart controls consolidation logic, freight flow and network timing suppliers become increasingly dependent on Walmart’s network orchestration decisions. Very Amazon-esque.”

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

RELATED STORIES:

Walmart credits fast delivery, third-party marketplace for revenue gains