What is a break of bulk point?
In shipping, supply chain and logistics, the break of bulk point refers to the location where goods are moved from one mode of transportation to another mode of transportation. Traders can analyze these nodes to find cheaper or more cost effective transportation routes. They can do this by reviewing the cost of transportation between each break of bulk point and the cost of activities at each node.
Common break of bulk points:
Common break of bulk points are places such as airports, rail stations, container yards and Free Trade Zone warehouses. Traders can expect supplementary industries to grow around these nodes and hence in addition to shifting the transportation mode, redressing or postponement services such as repackaging, over labelling or conducting quality assessments may also be available.
Let’s look at an example to understand this better:
Country A may ship containerized cargo to Country B. At the first port of Country B, the containers may be loaded onto railway trains for further transport inland into Country B. The trains may head towards distribution facilities. Once the trains arrive at their final station, the cargo may be offloaded and then reloaded onto several large trucks. The large trucks then proceed to make the last mile delivery to the distribution facilities.
At each node in the above flow the mode of transport changed and in most cases, the cost of transportation would have decreased.
At each node in the above flow the mode of transport changed and in most cases the cost of transportation would have decreased. However, if the cost of transportation also requires security arrangements, this will typically increase along the route.
Notes for traders:
- Break of bulks points cannot be arbitrarily planned, because cargo offloading, repacking and on-loading activities will require facilities and equipment. Hence, trader should not be surprised that their cargo route does not take the shortest and most direct route from source to destination.
- The cost of using facilities for specific types of cargo may influence the forwarder to transport the shipment over a longer route, hence resulting in a longer lead time – but incur lower transportation costs.
- If cargo is containerized or easy to hook up, traders may consider sourcing for transportation providers that have geared vehicles so that there is less dependence on a suitably equipped location for cargo transfer to take place.
- Traders must be aware of risk transference points and the Incoterms they choose to use must be suitable for multi-modal transport (if so required).
- There may be a case for relocating a trader’s facility to the breaking of bulk point if possible, to reduce overall transportation costs.