Making Intermodal Work - What You Need to Know
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Making Intermodal Work - What You Need to Know

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Learn more about intermodal and how to make it work for your company.

Learn more about intermodal and how to make it work for your company.

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Making Intermodal Work - What You Need to Know Document Transcript

  • 1. IDS Transportation Services | 3100 Reeves Rd. Plainfield, IN 46168 | www.idstransportation.com
  • 2. The use of 53’ domestic intermodal servicescontinues to grow as part of an overall business andtransportation strategy. The main focus of this paper is to take a deeper look into the benefits ofintermodal, along with the operational considerations shippers need to understand when executingintermodal.Transits @ Truck, Plus a DayThe first point is intermodal service is no longer a disservice.The folk lore of long transits and damagesstill play in transportation offices today, but the reality is domestic intermodal has evolved to become aworthy alternative to over the road (OTR) options. The investments made by the railroads in people,technology, infrastructure and equipmenthave improved transits to the point where IntermodalMarketing Companies (IMC’s)sell the transits on door-to-door service using the phrase of “truckplus aday”as they compare transits with many truck lanes.In some cases, rail arrives the same day as truckoptions through standard or expedited rail services. For example, expedited rail service from SouthernCalifornia into Chicago and surrounding areas has a 3 day transit,while atruck option hasthe same transittime at a higher cost. As a testament to the improved reliability of intermodal, many IMC’s offershippers the option to go direct to the largest retail chains,as reliability now rivals today’s truck options.Pricing ExpectationsThe challenge of those of us who provide intermodal service is overcoming the misconception held bymany buyers that intermodal is50% less than its OTR competitor. Although intermodal does provide asavings over OTR, in most cases, it does not approach a 50% reduction. The expectation should be anaverage savings for intermodal over OTR to be around 18% to 20%. Yes, there isindeed fuel savings, aswe all see advertised in the media, but there is also the amortized cost of billions of dollars the railroadsput into their infrastructure and technology every year to maintain and continue to improve serviceofferings that is a counterbalance to the fuel.IDS Transportation Services | 3100 Reeves Rd. Plainfield, IN 46168 | www.idstransportation.com
  • 3. Operational EaseToday’s intermodal service looks and plays like OTR for shippers, meaning one call or one electronictender is all it takes. In the past, many shippers avoided intermodal options because it did not integratethrough their transportation management system (TMS)nicely because there was the pick-up, line hauland delivery leg on every shipment the shipper was accounting for. With the technology advancementsof the door-to-door service, this is no longer the case. Also, technology advancements put tracking andtracing details available on intermodal above any OTR shipper.INTERMODAL HELPS ADDRESS CAPACITY ISSUESSome shippers are entering the intermodal market as a way tocombat capacity constrained OTR lanes they have within theirportfolio.Shippers are either doing a full transition to intermodal oraugmenting the lane. When augmenting a lane with intermodal,consider moving via intermodal later in the week to take advantageof the weekend to accomplish similar intermodal / OTR transits. Also,depending on the lane and time of year,same day evening pickups arean option, just as they are in the OTR market.GREATER SECURITYFor shippers looking for increased security,intermodal offers significant advantages over OTR. At arecent TIA panel, one panelist said “have you ever heard of the train stopping at a rest stop, thenrunning home to take care of an issue”. While the example is a little far fetch, the point is thatintermodal equipment is only on the road for the short dray distances. The majority of the intermodaltransit is on the tracks with nowhere else to go or stop until arrival at the destination ramps, thusmaking the security of the load far better than an OTR offering.ENSURING AN EFFECTIVE INTERMODAL PROGRAMWith what has been said about service, competitive pricing, transits, security and capacity, you’reprobably asking yourself what’s the catch. The catch is there are differences between intermodal andOTR, but can easily be overcome through education, which is by far the biggest factor in any newintermodal program. The easiest way for shippers to get educated is to align themselves with a strongIMC. Without a good alignment between shipper and IMC there could be a “train wreck” up ahead forthe shipper, as they transition portions of their business to intermodal.IDS Transportation Services | 3100 Reeves Rd. Plainfield, IN 46168 | www.idstransportation.com
  • 4. Listed below are some of the requirements that shippers needto be aware as they transition to intermodal: 1. There is a difference in intermodal and OTR when it comes to weight. The standard OTR tractor trailer is lighter than the weight of an intermodal container and chassis combination, therefore product weight has to be reduced to ensure the truck does not scale over the gross weight. 2. Another important, but commonly overlooked factor comeswith the blocking and bracing of the product. The shipper is liable for the proper loading of an intermodal container for rail transit. In many cases, shippers have been pushing all liabilities to the truckers when it comes to blocking and bracing of OTR loads and this is not possible with intermodal shipments 3. While the above two factors are by far the biggest issues, there are also commodity restrictions, beneficial owner integrity, document retrieval, and the dreaded PEAK SEASON to deal with.There are solutions to overcome all these areas, butthey cannot be ignored.INTERMODAL MARKETING COMPANIESIMC’s have come up a couple of times within this article, so thought it made sense to quickly explain anIMC and their importance. Today, the railroads do not sell their services direct to shippers. Instead,railroads sell their services wholesale to IMC’s, who then sell to the shippers. There are many reasonsfor this, with one reason being there is no one US railroad that services the entire country. An IMC,onthe other hand,can be that one stop for shippers because they have relationships with all Class Irailroads which allow them to service all rail lanes.Not all IMC’s are created equal. The IMC a shipper chooses will have a direct impact on how successfultheirintermodal program will operate. An IMC is not just in the middle of the transaction,as a broker.The very good IMC’s are worth their weight in gold providing educationto shippers on their loads, asthey transition pieces of their business to intermodal service. In addition to being the educatorin theprocess, the IMC handles all the transactions directly with the railroads to ensure the door-to-doorservice is everything it is advertised to be and to make the transaction function as an OTR shipment inthe eyes of the shipper.With the proper preparation and educationby the IMC, intermodal can be the most cost effective andreliable offering for domestic moves. Just remember two important points as you enter the intermodalmarket … as great as intermodal is, it has the possibility to go sour on the first shipment because all thedetails were not discovered in the initial stages and in transportation community we all know we’re onlyas good as our last shipment. So, as your company considers intermodal treat it as a start-up andunderstand that once it is within your overall transportation strategy it will exceed your expectations.IDS Transportation Services | 3100 Reeves Rd. Plainfield, IN 46168 | www.idstransportation.com