October 1998 | Commentary | Carriers Corner

Creating and Managing Intermodal Partnerships

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Much has been written about creating "partnerships" in business today. Increasingly, the word implies more than just establishing a close cooperation between two parties and maintaining an acceptable level of service. "Partnership" has become synonymous with forging a true vendor-customer alliance to achieve predetermined objectives and proactively identifying ways to provide the best service at the lowest cost. The vendor, in a sense, becomes an extension of your business. In the case of intermodal providers, however, there's a third party added to this equation: the railroads. Without forming similar alliances with the railroads, the customer-vendor partnership will fail. It has to be a three-way relationship, and all the parties must work in tandem for the partnership to thrive.

If you want to establish a strong alliance with an intermodal provider, you should start by finding one that will invest the time and resources to understand the unique challenges and circumstances that your business faces. Your intermodal "partner" will be one whose personnel know the industry and the railroads' capabilities and schedules, and can determine if intermodal shipping is the right fit for your company.

For example, if you're considering converting over-the-road shipments to intermodal for lanes that exceed 500 miles, chances are that an intermodal provider can prepare a proposal that is very price competitive. Likewise, the intermodal provider can analyze the characteristics of your freight to determine if the weight and timing requirements are a good match for rail transportation.

In order to lay the foundation for a strong partnership, a bond of trust needs to exist between your organization and the vendor. In other words, if you can't expect your intermodal provider's staff to give you an honest evaluation that has your best interests in mind, forming a solid partnership is impossible.

Once the relationship is established, what should you expect? Ideally, you should expect your day-to-day contacts to be proactive in searching for ways to save you time and money without sacrificing service. You should expect to have the ability to reach a staff member at any time so that if there's a potential problem you can avert it.

Finally, you should expect your provider to be forthright in sharing information with you. This includes both positive and negative news, such as "service has dropped off in a particular lane, and you should consider converting the freight to over-the-road until the on-time service improves," as well as the flip side of that situation. Again, mutual respect is a key ingredient in any successful business relationship.

Intermodal providers also work behind the scenes to establish similar alliances with the railroads. Just as you expect your partner to go above and beyond in providing premium intermodal service at a reasonable cost, your vendor will seek rail companies that are willing to do the same. Through improved communication and value-added services, the railroads play an important role in meeting your objectives.

For example, by using Electronic Data Interchange (EDI) for automatically transmitting car locator messages to the intermodal provider and allowing the company to pay invoices via Electronic Funds Transfer, your partner can pass the savings in administrative time on to your organization. Sophisticated information systems that link the intermodal provider with the railroads for real-time tracking and tracing can also enable the firm to be more proactive in the event of delays and to re-route trailers from railcars when necessary in order to meet your delivery requirements. You should rely on your intermodal provider to maintain daily contact with the railroads to discuss service performance and ongoing improvement initiatives.

At Caliber Intermodal, one of our leading clients is RPS Inc., the second-largest ground small-package carrier in North America. By the very nature of RPS's business, every intermodal shipment has to arrive at the carrier's consolidation and distribution hubs on schedule in order to meet stringent sortation times. If even one trailer is late departing from the yard to the hub, it's not just one shipment that's considered late; it's an average 1,200 packages per trailer - each potentially destined for a different customer.

To maintain our objective of delivering every RPS shipment on time, our company receives updated car locator messages for each trailer via EDI every five hours so that our staff can constantly monitor the progress of every train. If a delay is foreseen, the team is empowered to offload trailers at the next checkpoint and send them over-the-road to the destination hub.

We've established solid alliances with our rail providers, enabling us to make requests such as holding a train a few extra minutes so that RPS trailers en route to the railyard will make the run or de-ramping the carrier's trailers in time to meet the scheduled hub sortation times.

We monitor the performance of every intermodal lane to ensure that each one meets predetermined consistency goals and continuously work directly with the railroads to resolve any service issues.

Creating lasting intermodal partnerships takes commitment on the part of the customer, the intermodal provider and the railroads. If all three parties invest the time and effort needed to sustain the alliance, then the odds are in favor of fulfilling the customers' business objectives.

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