Changing Ports Pays Dividends

It often pays to re-evaluate the way you’ve always done things. By taking a long overdue look at our transportation network in 2011 and changing our destination port, we were able to save $324,000, reduce related carbon emissions by 31%, and realize some important efficiencies – all during a 10-month period.

A little background.

More than 60% of our clothing and gear is made in Asia. When a factory completes an order, our freight forwarder schedules a pick up, and has the container trucked to the nearest port. From Haiphong, Shanghai, Manila and a raft of other coastal cities, containers loaded with Patagonia products travel by ship to California.

When we were a much smaller company, our distribution center was located in Ventura, California, home to our corporate offices. We would have products from Asia shipped to the Port of Los Angeles/Long Beach. There they were offloaded, put on a truck and driven a hundred or so miles to our warehouse on Colt Street.

We outgrew the Colt Street facility after a few years, and in 1996 built a new distribution center in Reno, Nevada. Though Reno is 523 miles from the Port of Los Angeles/Long Beach, the busiest port in the U.S., we continued to ship there. We had our reasons, which included such things as a long history with the people and processes in Los Angeles, reasonable port costs, a large number of vessel sail times to choose from, and the flexibility of having three different trucking routes to Reno should inclement weather or some other event close a highway.

Long-distance shipping by truck, as opposed to ship, has some downsides. Road miles are more expensive and CO2 emissions 4 to 7 times as high. Truck drivers are required to rest for 10 hours after 11 hours behind the wheel, which can result in delivery delays. Trucks break down more frequently. To complete a truckload, we often had to combine shipments, which also delayed deliveries and complicated things at our warehouse. We even had a couple of shipments stolen enroute to Reno, when drivers parked their rigs to spend the night.

So in 2011, we asked Expeditors®, our Seattle-based freight forwarders, to take a look at our situation. Their consulting arm informed us that by changing our receiving port from Los Angeles/Long Beach to the Port of Oakland, we could realize some significant savings. We made the shift in October 2011.

Expeditors® recently analyzed the results of our port change for the most recent 10-month period. (At the time, we didn’t have a full year’s worth of data.) They found we had saved $324,000 mostly in transloading and transportation costs and reduced our carbon footprint by 135,000 kilos or 31%. In addition, we no longer have to co-mingle loads, and drivers can make the 229-mile trip to Reno in well under 10 hours.

We now have just one viable truck route from Oakland to Reno (Interstate 80), which goes over Donner Pass and is subject to closure in severe winter conditions. But other than that, the change was extremely positive.

“There are a lot of legacy operations companies don’t question because it’s the way they’ve always done it,” said Tony Ferguson, who oversees Patagonia’s U.S. import activities. “Shifting our port of importation from Los Angeles to Oakland was an easy fix that is paying dividends.”