Wal-Mart Seeks More Control of Its Transportation

BENTONVILLE, AR - Wal-Mart Stores aims to take over U.S. transportation services from suppliers in an effort to reduce the cost of hauling goods and achieve efficiencies to cut its own prices, according to BusinessWeek.

Believing it "has the scale to allow it to ship everything from dog food to lawn chairs more efficiently than the companies that produce the goods," Wal-Mart is contacting manufacturers that provide products to its more than 4,000 U.S. stores and Sam's Club membership warehouse clubs, said Kelly Abney, Wal-Mart's vice-president of corporate transportation, BusinessWeek reported.

Manufacturers would compensate Wal-Mart by giving the retailer lower wholesale prices for the goods it transports.

Until now, suppliers made most deliveries to Wal-Mart's distribution centers. The retailer then used its fleet of 6,500 trucks and 55,000 trailers to ferry goods between the regional centers and individual stores. Under the new program, Wal-Mart will increase its use of contractors, as well as its own vehicles, to pick up products directly from manufacturers' facilities.

That will allow Wal-Mart to carry more per truck and improve on-time delivery rates, in addition to boosting its fuel price negotiations thanks to its larger purchasing volume, said Leon Nicholas, a director at consulting firm Kantar Retail, reported BusinessWeek.