Intermodal Inroads

Intermodal Inroads

New facilities, upgraded equipment, and creative service options are making intermodal transportation more attractive and reliable than ever.

Intermodal traffic is on the rise. This continent saw 13.39 million intermodal moves in 2010, a gain of 14.7 percent over 2009, according to the Intermodal Association of North America (IANA). This year should prove even busier, based on IANA’s figures for the first half of 2011. June, for instance, registered approximately 1.2 million intermodal moves, compared with about 1.15 million during the same month in 2010 and 0.95 million in 2009.

And that’s only part of the story. IANA’s numbers focus on freight that uses rail for one leg of its trip. But by IANA’s own definition, intermodal means “the transfer of product involving multiple modes of transportation—truck, railroad, or ocean carrier.”

IANA’s statistics don’t include, for example, containers that arrive in a port by ship to be hauled by truck or barge to their final destinations. But those are intermodal moves, too, and they account for a good deal of traffic.

Any way you sort the figures, intermodal transportation is growing strong. And carriers, port authorities, and other service providers are working on ways to make it stronger still.

Intermodal Increases

Intermodal loadings and volume continue to grow. Total intermodal volume was up 14.7 percent in 2010 over 2009, according to IANA. After several previous quarters of decline, international intermodal volume surged every quarter of 2010, as retailers rebuilt inventories. 2010 was also a growth year for overall domestic business. Domestic container growth ended the year 13.3 percent above 2009 figures. This increase followed a 7-percent gain in 2008 and 2.9-percent growth in 2009.

Intermodal Graphs

Eye on 2014

At the Port of Brownsville, Texas, some of that work is focused on attracting more cargo when the newly widened Panama Canal opens for business in 2014. Located on the Brownsville Ship Channel, the port is in no position to welcome 8,000-TEU (20-foot equivalents) or larger vessels when they start sailing through the Canal.

“But I believe the port will have opportunities to help transship loaded containers that may be going to Houston or another Gulf port destination, then eventually getting on a larger vessel,” says Eduardo Campirano, chief executive officer and director of the Port of Brownsville.

While Brownsville handles a great deal of bulk traffic, it’s also looking to enhance its container services, says Campirano. Starting in 2010, the port briefly operated a program that received containers overland from Mexico and put them on ocean-going barges bound for Port Manatee, Fla. Called the Gulf Container Expansion Project, the service earned the Port of Brownsville a spot in the U.S. Department of Transportation’s Marine Highway initiative, a program designed to ease highway congestion by moving more cargo on the water.

The Gulf Container Expansion Project transported mainly finished goods, such as floor tile, beer, and wire rods, from Mexico. From Port Manatee, the containers continued by land to distribution centers (DCs) all along the East Coast.

Financial problems forced the service’s operators to shut it after just a few weeks, but port officials hope to reinstate the Brownsville-to-Manatee run, possibly adding a third Gulf port.

In addition to promoting the ocean-going barge concept, the Port of Brownsville is working to ease the transition between ship and highway. For example, it’s participating in a project to build a highway connection between its property and the nearby future Interstate 69. Besides providing a direct route to shipping terminals, this new spur will give the port access to thousands of greenfield acres for new development.

“At one 1,000-acre site, we’re focusing on developing a multimodal facility,” Campirano says. Along with interstate access, that facility would take advantage of rail service from Union Pacific (UP), Burlington Northern Santa Fe (BNSF), and Kansas City Southern (KCS) available at the port.

Local officials are currently negotiating a public-private partnership with “a major logistics company to build that facility,” says Gilberto Salinas, vice president of the Brownsville Economic Development Council. “We are looking to break ground in about one year.”

Many intermodal shipments to or from the Midwest will pick up speed starting in late 2011, when ocean carrier APL opens its new Chicago Global Gateway terminal in Joliet, Ill. The 43-acre container facility will eventually replace APL’s existing intermodal container terminal in Chicago.

The main advantage of the new location is proximity to the intermodal ramps UP and BNSF operate in Joliet. “The terminal will offer the opportunity to increase shipment velocity,” says Gene Seroka, Americas president, APL. The UP and BNSF ramps are just one mile and three miles, respectively, from the new facility.

Advanced technology will also help expedite container transfers between truck and rail, or vice versa. “The terminal’s eight automated gates will speed the transaction time for containers being brought in for export, or empty containers being picked up for loading or stuffing at the shipper’s facility,” Seroka says.

Greater efficiency and speed at the Chicago Global Gateway terminal will allow APL to provide better service to shippers moving time-critical freight, such as materials for just-in-time manufacturing. “Having assurance of service between the intermodal handoffs gives shippers more confidence,” Seroka says.

The Joliet site will provide 1,600 container stalls, plus room for another 400 containers stored off chassis. It will offer 50 outlets for plugging in refrigerated containers, a number that APL eventually plans to double. Other features include a maintenance and repair shop with eight dedicated slots, and a six-bay wash dock for refrigerated and dry containers.

“We also have the ability to prepare reefer containers pre-trip,” Seroka says. “For example, we cool the containers to a certain temperature based on the commodity we’ll be loading, and we ensure cleanliness and food-grade quality for shippers who require it.”

APL already provides similar maintenance and preparation services in the Chicago yard. But the company can offer enhanced services in Joliet, thanks to a more efficient layout there.

As APL starts the transition from Chicago to Joliet, Canadian National Railway (CN) and North America Stevedoring Company (NASCO) are working on a new multimodal steel transloading facility in the Windy City. Located near the Port of Chicago and CN’s Kirk yard in Gary, Ind., the new site will give shippers access to transportation via rail, truck, intermodal container, inland barge, and ocean vessel.

The joint effort with NASCO is one of several moves CN has made in recent months that rely upon collaboration to provide better service, says Louis-Antoine Paquin, CN’s manager of corporate communications.

Working Toward Solutions

Another mark of CN’s focus on collaboration is a series of agreements it recently forged with the Ports of Halifax, Quebec, Montreal, and Vancouver and their key terminal operators. The agreements provide for better exchange of information and institute metrics for evaluating the performance of all partners.

“In the past, supply chain players were a lot more focused on their own performance,” Paquin says. “This led to more finger-pointing than solution finding.”

For example, shipping line officials might complain that it was taking too long to unload containers. “The terminal operator would blame the railway for not having enough cars,” he says. “Then the railway would blame the terminal operator for not having enough staff to handle the boxes.”

CN, the ports, and the terminal operators have developed key performance indicators (KPI) to measure what each partner is accomplishing, so all can better align their efforts. The KPIs show, for example, how many boxes a vessel was supposed to discharge, how many it actually discharged, and how long a specific container sat at a terminal before it was loaded on a railcar.

CN has also added new equipment to meet the needs of key grocery products and consumer goods manufacturers and distributors in Canada. In April 2011, the railroad acquired more than 1,000 domestic containers, mainly to accommodate Kraft Canada, Heinz Canada, and Hopewell Distribution Services. About 80 percent of the containers are heated, providing protection for temperature-sensitive loads in the winter.

Going for a Ride

Along with new containers, CN has augmented its equipment with a container chassis called the EcoRide. CN expects the chassis to reduce fuel on trips to and from its intermodal terminals by eight to 10 percent. The chassis are 15 percent lighter than conventional CN chassis; feature side skirts designed to reduce aerodynamic drag; and use low-rolling resistance tires on each axle, rather than the usual four tires per axle.

“More corporations are trying to limit their carbon emissions,” Paquin notes. It already takes 65 percent less fuel to transport a shipment 1,000 miles by rail than by truck, according to the U.S. Environmental Protection Agency. By using the EcoRide chassis for last-mile delivery, shippers reduce fuel consumption and their carbon footprints even further.

As CN works with its seaport partners to increase the efficiency of intermodal transfers on the coasts, terminal operators in northwestern Ohio have introduced new facilities and equipment to speed freight in and out of the interior. One big development this year was the debut of CSX’s Northwest Ohio Terminal in North Baltimore.

The new facility, which opened in February 2011, is the cornerstone of CSX’s National Gateway project, an $843-million public/private partnership initiative to upgrade CSX’s rail network between East Coast ports and the Midwest so the entire system can accommodate double-stack trains.

“Fuel on the rail is half the price of over-the-road.” Tom Sangalli, logistics and transportation director, The Container Store

“We’re introducing a new connection point between East Coast and West Coast railroads outside the congestion of Chicago,” says Rusty Orben, director of public affairs at CSX. As containers arrive from all over the country, terminal workers can build them into dedicated trains bound for Midwestern cities. By the same token, CSX could bring containers in from those markets, build a train and, on the same day, send that train on its way to a West Coast port.

“The geographic location and efficiencies built into this terminal are game changers,” Orben says.

Among those in the region who are excited about the Northwest Ohio Terminal are officials at the Port of Toledo. Although it’s about 40 miles from North Baltimore, and the port currently handles few containers, the new CSX facility could create new opportunities for Lake Erie shipping.

“The new facility will bring containers farther inland into Ohio, where they can be reloaded by bulk material manufacturers and shippers, and possibly exported through the Port of Toledo,” says Joe Cappel, director of cargo development at the Toledo-Lucas County Port Authority.

Toledo Gets a Lift

The port has made some recent improvements of its own, including last year’s installation of a pair of Libherr LHM 280 cranes at Midwest Terminals of Toledo, replacing cranes that had been lifting cargo there since the 1960s.

“The new equipment operates three to five times faster than the old,” says Paul Toth, the Port Authority’s CEO. “That allows Midwest Terminals to build on business at the port and be more productive and cost-effective.”

The cranes could help attract new cargo to the terminal, including containerized cargo, which currently doesn’t use Great Lakes ports as a general rule. “We specified these cranes with the capacity and speed to be able to handle containers, which we believe presents an opportunity for the Great Lakes in the next several years,” Toth says.

Higher fuel costs make Great Lakes shipping more attractive than highway transportation for containers heading to the Midwest, says Alex Johnson, CEO at Midwest Terminals.

In another move, Midwest Terminals has installed 5,000 feet of new rail and replaced 12,000 feet of existing rail, giving it a total of 17,000 feet served by CSX, NS, and CN. “We’ve expanded our on-dock rail to accommodate additional railcar storage on site, and we’ve built into the plan a loop at either end, so unit trains can run through the facility more efficiently,” Cappel says.

Intermodal transportation will get a further boost in Toledo upon completion of the new Ironville Terminal on 180 acres that the Port Authority purchased in 2008. A former oil refinery, the site will be served by NS with a 100-car rail loop.

“Acquiring and developing Ironville doubles the size of our general cargo operating area,” Johnson says. “We’ll do some general handling, but we’d also like to attract maritime-dependent businesses to locate on the site and move recurring shipments through the terminal.”

Outbound Intermodal

While carriers, port authorities, and intermodal service companies are busy providing more facilities and upgrading equipment, some also are trying to persuade shippers to use intermodal in new situations.

Intermodal service—in the sense of a container transported by rail plus truck—is a good choice because it’s less expensive than a truck move alone, says Steve Branscum, vice president for consumer products at BNSF.

And intermodal shippers worry far less about driver shortages and scarce truck capacity. “An intermodal train can handle 250 to 300 truck trailer equivalents per train with a crew of two, as opposed to having a truck driver for every one of those 250 to 300 loads,” Branscum says.

But because intermodal service was deemed unreliable in the past, shippers have used it mainly for freight traveling into distribution centers, where safety stock provides a cushion against delay. And intermodal often is not the first choice for those inbound shipments. “Even ‘power shippers’—the big users—typically use intermodal for only 25 to 30 percent of their inbound freight,” says Branscum.

Intermodal service, however, has improved a great deal in recent decades. “It has become more consistent, faster, and more reliable,” Branscum contends.

It also reaches more locations. “All the rail networks in the United States have refined their intermodal networks to serve core major markets. And they’ve developed significant new capacity in those lanes,” he adds.

With railroads better able to deliver containers on schedule, shippers should start moving more of their inbound freight via intermodal, Branscum says. And they also should consider intermodal for outbound moves from DCs to customers or stores.

One shipper that has experimented with outbound intermodal is The Container Store, a vendor of storage and organization products with 49 retail outlets in 20 states. The company was already using intermodal to move product from West Coast ports to its DC in Coppell, Texas, when, several years ago, officials decided to try serving three stores in southern California via intermodal as well.

Concerns about tight trucking capacity played a role in that decision, says Tom Sangalli, The Container Store’s logistics and transportation director. So did ever-more-frequent truck breakdowns en route.

“With the economic recession, carriers were pushing equipment further, trying to squeeze out another mile before sending it for maintenance or an upgrade,” Sangalli says. Winter weather delays also posed challenges for some markets served by long-haul truck.

But the biggest factors behind the decision were the chance to cut costs and find synergies between inbound and outbound loads. With J.B. Hunt serving as intermodal service provider in both directions, new backhaul opportunities were bound to emerge.

After running the pilot long enough to establish its success, in 2010 The Container Store started working with J.B. Hunt and BNSF to expand the outbound intermodal concept to other markets. Today, The Container Store uses intermodal to distribute to 16 stores, with plans to add more when it opens new outlets in Indianapolis.

It took a while to expand the intermodal concept beyond the three pilot stores because the strategy created a significant cultural shift, Sangalli says. The Container Store maintains a delivery window of plus-or-minus 15 minutes for each store, so containers must arrive exactly when expected. Officials weren’t sure at first that intermodal could do the job.

To make everything dovetail correctly, The Container Store and J.B. Hunt built some lag time into their delivery strategy. In the San Francisco store, for example, the unloading appointment is at 5 a.m. “The train gets there the evening before,” Sangalli says, leaving plenty of time to get the container from the terminal to the store.

For markets where The Container Store now uses intermodal, the strategy has paid off in lower per-mile charges and, especially, in lower fuel surcharges. “The fuel on the rail is half the price of over-the-road,” Sangalli says.

Concerns about breakdowns have also disappeared. When an equipment failure occurs on an intermodal move, it’s usually a flat tire on a chassis or other minor headache during the short trip from terminal to store. “They’ll just flip the can to another chassis or change the tire, and 99 percent of the time we make the delivery,” Sangalli says.

The Container Store will continue to consider outbound intermodal case-by-case, depending on the distance from the DC and the number of stores in the market. “Indianapolis, for example, is a prime location,” Sangalli says. “As we add stores like that, we’ll definitely consider outbound intermodal.”

Other shippers may well follow suit, choosing intermodal in more situations as carriers, terminal operators, and other partners find new ways to make intermodal service more efficient and more reliable.

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