In logistics, product loss isn’t always noticeable until it directly impacts your costs. Even a minimal difference in volume during a transload can translate into significant cumulative losses for your operation.
That’s why understanding what shrinkage is and how to implement suitable control measures is crucial, especially in liquid or bulk transload processes. In this post, we explain how losses occur, what levels are acceptable, and what strategies we use at Railport to minimize them.
What does shrinkage mean in logistics?
To understand how to combat shrinkage, we must first clearly define what it is in the logistics environment. In simple terms, shrinkage is the physical loss, in weight or volume, of merchandise during handling, storage, or transport.
Unlike accidental damage, shrinkage is typically a gradual and sometimes imperceptible process. However, the risk increases dramatically during transloading (the moment when the cargo passes from a railcar tank to road transport or vice versa).
Identifying shrinkage early allows logistics managers to adjust their actual costs and avoid surprises in the final inventory.
3 most common causes of shrinkage
In our operational experience, we have identified three main categories of losses that affect the supply chain:
- Mechanical or handling losses. These occur when the product adheres to the walls of storage tanks, hoses, or pipes. This is common with viscous liquids such as oils or greases.
- Physical or environmental losses. These are caused by natural factors such as evaporation in volatile liquids or variation in humidity in grains and seeds stored in silos.
- Administrative or weighing losses. These arise from errors in scale calibration or failures in recording inventory inputs and outputs, leading to a technical discrepancy in inventory records.
How much shrinkage is acceptable?
There is no single answer to this question, as the acceptable loss percentage in each industry depends on the type of product, handling conditions, and industry standards.
In the logistics industry, a margin between 0.5% and 1.5% is considered “tolerable” for bulk products or chemical liquids, depending on the product and the length of time it remains in storage, although the goal is always to achieve 0%.
Exceeding that threshold is a warning sign. Deficient shrinkage control may indicate that the transloading equipment is obsolete or that the cleaning procedures are inadequate, directly affecting the operation’s profit margin.
What actions do we implement at Railport to prevent losses in transfer processes?
At Railport, our infrastructure is designed to minimize product loss. We implement high-precision technical solutions to ensure superior shrinkage control:
Boiler heating
For products that tend to solidify or coagulate, we use steam to restore full fluidity. This ensures that no product adheres to the tank walls, minimizing mechanical loss.
Trained personnel
The human factor is key. Our operators follow strict protocols to ensure that every connection and disconnection is performed without waste. They also monitor every process to guarantee precise execution.
Constant measurement and control
We record scale weights before and after the transfer to ensure traceability and detect discrepancies.
We have both rail and truck scales. This is our primary tool for detecting weight discrepancies. At Railport, every railcar is weighed both upon arrival and departure, as are all trucks.
Thanks to these practices, we achieve efficient loss control that protects both your product and your profitability.
Final tips for successful shrinkage control
To enhance shrinkage control within your logistics operation, consider implementing the following key strategies:
- Partner with specialized suppliers: select vendors who possess the necessary infrastructure to support effective shrinkage management.
- Prioritize staff development: ensure continuous and consistent training for all personnel.
- Establish standardized operations: implement uniform, documented processes across all tasks.
- Document and monitor thoroughly: track and record every logistical operation.
- Analyze for continuous improvement: regularly examine variations and discrepancies to identify and address areas needing improvement.
Optimize your transloads with Railport
At Railport, we understand that every liter or grain of your cargo is crucial for profitability. That’s why we design our processes to offer you reliable and secure loss control, all while aligning with your operation’s demands.
If you’re looking to reduce losses and improve the efficiency of your transfers, you’re in the right place. Contact us today and discover how we can help you optimize your logistics.
