Last In, First Out (LIFO): Loading and Unloading Method in Transport and Storage

In the logistics field, the way products are stored, handled, and rotated has a direct impact on operational efficiency, inventory control, and service quality. One of the most commonly used methods in specific situations is Last In, First Out (LIFO), which means that the «last item in is the first one out.» This goods management approach implies that the most recently stored products are the first to be retrieved or dispatched.

Although it’s not the ideal method for all industries—especially those dealing with perishable goods—LIFO has specific applications and clear advantages in certain contexts, such as storage of homogeneous or fast-turnover products. In this article, we analyze what the LIFO method is, when it is appropriate to use, its pros and cons, and practical examples in logistics operations.

What Is the LIFO Method and How Does It Work?

LIFO (Last In, First Out) is an inventory handling method in which the most recently stored items are the first to be removed. In other words, priority is given to items that arrived last, which are unloaded or shipped out first.

In a warehouse using LIFO, if three product batches arrive on consecutive days (batch A on Monday, batch B on Tuesday, and batch C on Wednesday), the first batch to be shipped out will be batch C, the most recent arrival.

This method can be applied to both physical inventory management and cost accounting, though in this article we focus on its logistics and operational use.

Applications of the LIFO Method in Logistics

Transport and loading of trucks or containers

In loading operations, the LIFO method is common when unloading is done through a single access point. The last pallets or boxes loaded onto the truck will be the first to be unloaded, which simplifies operations when delivery points are arranged in reverse order.

Example in urban distribution: A truck delivering goods to various city locations can load the orders in reverse delivery order. Thus, the order to be delivered to the first customer is the last one loaded.

Storage of homogeneous products

In warehouses storing non-perishable or slow-moving goods, the LIFO system can be implemented when strict control of expiration dates or product age is not necessary.

Stack-based storage use case: When products are stacked without direct access to all units (e.g., cement bags or construction materials), LIFO is natural—the most accessible products are the last ones added.

Advantages of the LIFO System

Operational efficiency in certain loading and unloading scenarios

• Reduces handling time when access is available from only one side of the container, shelf, or truck.
• Useful for organizing deliveries along reverse-sequenced routes, from the last stop to the first.

Space optimization and simplicity

• Does not require multiple access points or complex storage structures (such as dynamic racks or FIFO flows).
• More economical for products that do not require strict rotation, as it reduces handling.

Disadvantages and Limitations of the LIFO Method

Risk of product obsolescence or deterioration

• Not suitable for goods with expiration dates, such as food, pharmaceuticals, or cosmetics.
• Can lead to obsolete inventory accumulation if older stock remains unused at the back of the warehouse.

Lack of visibility over stock age

• In some cases, it is unclear how long a product has been in storage.
• Can hinder traceability and stock rotation in warehouses that require batch or serial number control.

LIFO vs. FIFO: A comparison

When Is LIFO the Best Option?

• Construction Industry: Warehouses for materials such as bags, tiles, bricks, or sand, where quick access is a priority and products have a long shelf life.
• Transport with Reverse Route Logistics: Urban distribution where the truck makes deliveries in reverse order to how it was loaded. LIFO minimizes handling and speeds up the process.
• Warehouses with Limited Access: Scenarios where goods can only be accessed from one point, such as shipping containers or narrow storage chambers.

In conclusion:

The LIFO method is a practical solution for logistics environments where access limitations, operational simplicity, or the physical layout make it more efficient to remove the most recently added items first.

While not recommended for products with expiration dates, LIFO is useful for homogeneous loads, non-rotated storage, and reverse delivery routes.

To decide whether to implement LIFO, companies should analyze their product type, warehouse flow, turnover rate, and traceability needs. Combined with other logistics strategies, it can be an effective component in optimized warehouse management.