Intermodal Transportation’s Strategic Advantage
Q: Why are shippers making intermodal more integral to their logistics strategies?
A: Shippers are using intermodal for a variety of reasons. In many rail corridors, intermodal provides a much better value proposition than highway. Rail transportation is often more energy efficient, so "going green" in intermodal means moving freight costs less.
With the driver shortage, increased fuel prices, and implementation of new government policies that restrict hours of service on the road, truck capacity is a challenge. Shippers are always looking for ways to cut costs and improve service. Today’s intermodal products do just that.
Q: What steps should shippers take to implement intermodal in their logistics strategies?
A: First, analyze the lanes. Shippers need to determine which areas of the country their loads are coming into and going out of. The longer the haul, the greater the opportunity for intermodal cost savings.
Next, define and view the rates within those geographic zones—empty miles, total miles, revenue miles, loaded miles, billed miles, and movement miles—all relative to the location of the rail ramp pairs. With this information, shippers can determine where intermodal fits their needs.
Most shippers would say their main criterion for this determination is price. The rails in many locations, however, provide more consistent service, allowing shippers to choose rail over truck.
Once shippers determine where intermodal fits into their overall strategy, they price it and provide a service matrix to their clients. The service matrix offers shippers a comparative analysis of the available rail lines and trucking options in their geographic areas. This makes launching the strategy a much smoother process, with pricing and service laid out in an easy-to-understand format.
Q: What is the business benefit of using intermodal transportation?
A: When rethinking logistics strategies, the primary questions are: "How can this benefit my business? What is the value proposition?"
The benefits of intermodal shipping include:
- Lower costs. Shippers can take advantage of lower rates, more predictable pricing, and the flexibility of loading and unloading goods in a dropped trailer environment, which reduces handling costs.
- Environmentally friendly. Shippers can significantly reduce their carbon footprint by going intermodal, because trains only emit approximately 5.4 pounds of carbon dioxide per 100 ton-miles, whereas trucks emit approximately 19.8 pounds.
- Reliability, capacity, and safety advantages. Shippers have more access to equipment and standardized transit schedules. As companies move their freight to intermodal, there is also the opportunity to streamline their reverse logistics, providing additional savings.