Intermodal transport: finding the right path

According to the Intermodal Association of North America (IANA), intermodal shipments in the second quarter of 2018 increased by 6.2%.

Wednesday, November 14, 2018

Adjusted transportation capacity and continuous improvements in the railways are encouraging shippers to consider intermodal transport. But finding a container, or a truck to transport it to or from the railroad terminal, is not always easy.

Intermodal shipments in the second quarter of 2018 increased by 6.2 percent, compared to the same quarter of 2017, this according to the Intermodal Association of North America (IANA).

The high demand for imported products puts more containers on the rails once they arrive by ship. Many of these imports are transferred to intermodal equipment and transported throughout the country. Likewise, strong retail sales, consumer confidence and industrial production have been key to the increase in intermodal transport.

The restricted capacity in the road transport lanes (OTR) encourages more senders to also consider intermodal. Something important to consider is that the more the demand for intermodal grows, the more it is squeezed by the same capacity problems that affect road transport. This is partly because an intermodal movement, although the majority occurs on the rails, still needs a truck to pick up the container at the source and deliver it to the destination. Carriers face the same capacity pressures as long-haul truck companies.

There is a significant shortage of drivers in the United States and that can make it difficult for carriers to move trucks through intermodal containers. During periods of high volume, it is not easy to place enough containers where the senders most need them. The availability of equipment has continued to be reduced, more now that we are in the peak season of Christmas shipments, and that along with the decrease in drainage capacity in some key markets, will continue to present a challenge for shippers and shippers during the rest of 2018, and until 2019.

Class I railroads are working to make their services more available and more reliable. They have been investing in the purchase of additional containers and in the addition of capacity to their networks, in the opening of new terminals and in other improvements, they are also redesigning their intermodal networks, eliminating and re-routing the lanes to reduce bottlenecks in the gateway in an effort to reduce transit times.

Also, the continuous development of the logistics parks, which put rail terminals, truck terminals and distribution centers within reach, makes intermodality more attractive.

New interior terminals in places like South Carolina and Georgia also give shippers more options for intermodal use, making it a more viable option for shorter trips than in the past.

As the role of intermodality continues to grow, supply chain professionals often find themselves calculating benefits in that way compared to OTR transport for shipments or lanes in particular. Given that intermodality is usually less expensive and the OTR is faster, the senders must weigh what they are willing to pay against the urgency of the shipment.

Shippers must also consider whether a particular product lends itself to rail transport. For example, fragile items that cannot be packaged to avoid shoving in transit could be a better fit for the truck, regardless of the other considerations.

At DICEX we know that intermodality is beginning to play a different role in many supply chains, it is beginning to emerge as something more than a temporary measure that shippers can use when they cannot find trucks. However, the shortage of drivers can be an issue so that the logistics do not fall. But the truth is that the benefits in costs and times make it worthwhile.