Intermodal: A Means, Not an End
Intermodal transportation has always been an integral part of the supply chain. Around U.S. ports, it’s a capacity aggregator and transshipment accelerator for imports and exports flowing through congested hubs. On the domestic side, intermodal is a freight economizer, reducing transport costs by rationalizing long-haul bulk moves between road, barge, rail—and occasionally air.
For many years, commodity type, globalization, and cost dictated whether a shipment moved via intermodal. Today, however, consumer-facing companies are proactively seeking opportunities to mix transport, create economies of scale, access capacity, and deliver product in a more sustainable way.
Take Welch’s, for example. “We made the move to intermodal three years ago because of high fuel costs,” says Dan Biggs, director of customer logistics, Welch’s. “It was also a green initiative to cut carbon emissions.”
Intermodal isn’t a huge mix for the Concord, Mass.-based food manufacturer famous for its grape juice. But it’s growing. Welch’s uses intermodal in lanes where it makes sense in terms of distribution presence—between Michigan and the Pacific Northwest, and from Erie, Pa., to Florida.
Customers dictate some of this demand, says Biggs. One customer specifies inbound pickups via intermodal, demonstrating how demand-driven practitioners with accommodating suppliers such as Welch’s can gain competitive advantage.
The Container Store is another example. Merrill Douglas’ article, Intermodal Inroads, describes how the “container company” works with J.B. Hunt and BNSF Railway to reduce transport costs by using intermodal for both inbound DC deliveries and outbound moves to retail stores.
Intermodal’s arc has risen sharply over the past few years, for obvious recessionary reasons. Still, there is a learning curve. Faster-moving shippers have to account for longer lead times by accurately forecasting demand, creating better visibility upstream in the supply chain, and working collaboratively across internal logistics functions and external partners.
On the rail side, industry is responding to demand, as you’ll read in Perry Trunick’s article, Improving Rail Infrastructure: On the Right Track. U.S. rails are investing in services and infrastructure, and working with truckers and shippers to create a more viable multimodal network.
Thus far, it’s working. Intermodal moves were up 14.7 percent in 2010 over 2009, according to the Intermodal Association of North America. Early 2011 reports suggest even more growth.
In the past, intermodal was considered merely a bridge between where one mode begins and another ends. Today, it’s a means to strategically gain capacity, improve sustainability, and reduce costs across the supply chain.