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The Intermodal Sector is On the Fast Track for Growth

The future is bright for shippers making the shift from road to rail or increasing intermodal shipping.

The year so far has already shown strong volume growth in intermodal shipping. Upcoming regulatory changes that may tighten truckload capacity could tip the scales toward intermodal even further. For shippers considering making the shift from road to rail or increasing intermodal shipping, the future is bright.

Ongoing Investments in Infrastructure and Technology

The past five years have seen railroads heavily investing capital in their intermodal offerings. They recognize that in the next 10-15 years, intermodal will be a large growth driver for their businesses and are readying for it by enhancing infrastructure and integrating new technology. Those investments go toward a wide range of improvements:

Network expansion. There are already over 70 intermodal ramps in North America and more ramps continue to open. In addition, many railroads are enlarging existing ramps that may be too small for growing volumes. These expansions are not just happening in the United States either; intermodal is also responsible for many improvements in Mexico’s rail system.

Automated gate systems (AGS). As security is a growing concern for many shippers, railroads have begun implementing AGS at their intermodal ramps. Instead of a manual process to verify a driver’s license, AGS can feature optical character recognition, biometric driver identification and high-definition video imaging. These tools promote efficiency when entering the facility and enhance both safety and security for the entire terminal.

These changes mean that there will be solid and efficient intermodal infrastructure in place for the railroads to handle a considerable amount of growth without being overly strained.

Steady Improvement for Intermodal Shipment Visibility

Whether traveling by road or rail, there’s one thing shippers are asking for more than ever: visibility. Knowing exactly where a shipment is in transit has quickly become the expectation rather than the exception. Companies and consumers alike want to know the name of every facility and town their product travels through to reach them. And just like truckload service, intermodal providers are working hard to deliver.

Railroads have very robust tracking systems. The tracks themselves have scanners across the country. One shipment traveling from Chicago to Los Angeles may receive as many as eight tracking updates per day while on the rails. This type of accurate location tracking certainly appeals to shippers, especially those with high-value and high-risk products.

Tracking isn’t as prevalent off the rails. But that same level of visibility isn’t always possible when the containers are on a ship or a trailer. There are two main technologies used for tracking intermodal containers in these situations: mobile apps and container trackers.

Mobile apps can track a driver’s smartphone while loads are in transit. They often rely on some human interaction in order to start and stop tracking. The automated alternative—satellite tracking on the intermodal container itself—removes the human element. Instead, a targeted geo-fence around the pickup or delivery destination will automatically trigger status updates.

Adoption of the technology options is increasing, albeit slowly. Railroads need to find a cost-effective way to retrofit 80,000-100,000 intermodal containers that do not currently have GPS tracking—a sizeable investment to be sure.

Intermodal is for Transactional and Strategic Shippers

In an equally-priced market, transactional shippers tend to choose truckload for reliability and service levels, but as soon as capacity starts to dwindle or truckload prices rise, shippers that haven’t embraced intermodal in the past begin to consider all their options. And there are certainly times when intermodal service is more cost-effective than seeing route guide failure.

At a more strategic level, shippers looking to elongate their transit—a common need for some inventory management strategies—have found great success with intermodal service. They not only apply strategy to their inventory, they can sometimes better protect themselves against sudden truckload capacity shifts.

The “Right Freight” for Intermodal Shipping

Intermodal service can add efficiency, flexibility and cost savings to a supply chain, but many factors—like location, product and timing—can impact the effectiveness of intermodal. It’s important to ask these questions when considering intermodal service:

Where do shipments originate and terminate? Location is vitally important for intermodal service. A remote location—away from an intermodal terminal—can mean unnecessary backtracking and line changes, ultimately adding days and costs to the shipment. The effectiveness of intermodal service is greatly improved for shipments with origins and destinations close to intermodal terminals and moving 500-1,200 miles. Transloaded or imported shipments from Mexico are a good fit for security and speed across the border.

What product is shipping? Despite many misconceptions, fragile products may be a good fit for intermodal service. Even temperature-sensitive products—like fresh produce—can move via intermodal. Restricted products are largely limited for safety reasons. Explosives, chemicals, poisons and other hazardous materials are often banned.

When will product ship? When products move also matters. Products with seasonal volume surges are often particularly good candidates, as supplemental intermodal service can help avoid potential supply chain disruptions when capacity is tight.

Important Facets of Intermodal Shipping

Industry-leading shippers view intermodal as a unique mode within their freight network and not simply a substitute for over-the-road trucks. And as such, there are a few things to remember about intermodal shipping:

Securing freight for transit is the shipper’s responsibility. In the truckload world, carriers are responsible for all aspects of securing the load within the truck. But this is not the case for intermodal. Instead, shippers must ensure their freight is properly blocked and secured. Helping shippers understand this and learn how to secure their own freight is often the biggest potential barrier to converting to intermodal service, but one that is quickly remedied. Shippers can rely on help from a logistics provider or the railroad itself—often provided free of charge.

It’s greener and more sustainable than other modes. Intermodal service offers a more environmentally friendly shipping option than truckload. For instance, transferring 1% of truck freight to rail each year would reduce greenhouse gases by 1.2 million tons. Intermodal rail can meaningfully reduce a supply chain’s environmental footprint and help businesses meet their sustainability goals.

Intermodal can complement existing modal choices. Intermodal is not an all-or-nothing choice. Many businesses successfully supplement their over-the-road shipments with intermodal capacity when the time is right. Proper modal selection—and an established intermodal plan—can protect the supply chain and defend against seasonal, environmental, regulatory and industry factors that could negatively impact the transportation network and the organization’s bottom line.

A Flourishing Future for Intermodal Shipping

Shippers are more aware than ever of the advantages intermodal can bring in terms of cost, visibility, cross-border, capacity and sustainability. It’s safe to say that these types of advantages are helping intermodal volumes rise. And thanks to the foresight of railroads across North America, the infrastructure is already in place—or will be soon—to support whatever growth the future may hold.

As more shippers turn to intermodal shipping—whether transactionally due to market conditions or strategically to meet their companies’ goals—and integrate it into their supply chain strategies, we’ll quickly see the question shift from, “Do you do intermodal?” to “How much intermodal do you do?”   

Phil Shook is director of intermodal with C.H. Robinson, a provider of multimodal transportation services and third-party logistics, where he has worked since 1997. He has served on the board of the Illinois Trucking Association and served on the board of the Intermodal Association of North America, the industry’s largest trade association, for six years, including two as chairman.

TAGS: MHL Magazine
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