October 2002 | Commentary | Carriers Corner

What Do You Really Know About Intermodal?

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Remember the Bill Murray movie Groundhog Day? The premise was that his character was trapped in a time warp that had him continuously reliving the same day.

The people who work in the intermodal industry can probably relate—except it's not their industry that's stuck in a time warp. It's their image.

Intermodal transportation can take several paths, but the most common application is a truck on both ends for pickup and delivery, with the long-haul accomplished via railroad flatcar service for trailers. Intermodal, in this context, is rail-dependent.

While railroads have made substantial service improvements in recent years, many shippers continue to hold on to an outdated concept of what moving product via intermodal really entails. As a result, they're missing out on some potentially impressive transportation values.

With that in mind, allow me to suggest five ways your perception of intermodal might be a little off track.

1. You think truck/rail/truck transportation is slower than a straight truck move. Many people labor under the illusion that a straight truck move is the fastest way to get ground shipments from Point A to B. That's not always the case.

Most regional trucking freight is delivered in 48 hours. By contrast, a shipment that travels 1,000 miles or less using a combination of truck and rail will reach its destination in 48 to 72 hours. Tack on an additional day for every 500 miles after that. So the speed difference isn't as substantial as you might think.

2. You think intermodal service is unreliable. Due to a flurry of mergers in the 1990s, the rail industry developed a reputation for being only moderately reliable. Its on-time delivery percentage was miniscule for a time and more than one shipper came away with a horror story to tell about how its rail carrier dropped the ball on making an intermodal deadline.

But times have changed—and so have rail carriers. Simply put, they know why you don't use them as often. And the four major carriers have invested millions of dollars in people, infrastructure, and equipment to improve their service levels and regain your respect.

More importantly, these rail carriers are posting some highly reliable on-time numbers. For example, intermodal service levels are now consistently above 95 percent and they've risen to 98 and 99 percent on the most heavily traveled lanes. That's on par with what an efficient trucking company will do.

3. You think intermodal equals more opportunities for damage.Pure trucking advocates would like you to believe that customers who use a combination of truck and rail experience more shipment damage.

But that's not necessarily true. In fact, if a shipment is properly loaded, it will be subject to no more damage over the rail than it would over the road.

Granted, you may have to use more blocking and bracing. But railroads and intermodal transportation companies address these types of challenges every day and have developed solutions and improved customer service standards to better meet these concerns.

4. You think railroads don't think they have to compete. As transportation modes go, rail is by far the smallest industry in terms of the number of available carriers. Thanks to consolidation and mergers, today there are only a handful of North American carriers, and each specializes in certain corridors because of the track it controls.

But don't let that mislead you into thinking that rail—and by extension, intermodal—is a non-competitive transportation mode. Although they're really not going head to head with each other, railroads are fully aware that almost all of their potential customers (with the exception of captive shippers) could just as easily move their goods via truck—and that most of them do.

As a result, you'll find anything but a "take it or leave it" attitude when dealing with rail carriers. In addition to offering different levels of speed and service, most are working closely with trucking companies to develop a variety of flexible road/rail combinations in an effort to better meet their customers' intermodal needs.

5. You think intermodal has to equal extra trouble. Common wisdom would have us believe that the more often shipments change hands, the more complex the logistics involved—a fact that has deterred some companies from taking advantage of intermodal economies.

These companies do not relish the possibility of having to arrange for an origin, dray, line haul, and a destination dray—or having to manage the dispatching, tracing, and accounting for each. Often, their accounting departments aren't very keen about intermodal either, because they get three separate bills of lading, rates, and invoices.

This may be true of "traditional" intermodal services, but the industry is changing. Today, there are service providers that offer single-source alternatives for truck/rail/truck transportation. Your materials still change hands, but you don't have to sweat the details, and that can be worth a lot. The shipper sees a truck at origin and the consignee sees a truck at destination—all on one bill of lading—just like a trucking company.

The Intermodal Alternative

There are times when a strict over-the-road move is still the best transportation solution. But there are some unique advantages to bringing intermodal and rail back into your transportation mix. For example, because trains are always running, intermodal transportation is a plausible alternative for shippers when demand for trucking services is high. Any shipper who has found it nearly impossible to find a trucker in the busy fall shipping season can relate to this. And when there are fewer trucks, the ones that are left charge more for their services. Yet, intermodal rates are more constant.

If we, as logistics professionals, truly want to provide our customers with the best counsel and value, we must continually keep our eyes open for the best ways to move and manage goods. Just as important, we must keep our minds open to the fact that some of the most valuable solutions may be in our own backyards—railroad yards, that is.

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