Make Room for Twins

The popularity of supply chain digital twins is rising. These virtual replicas or simulations of a physical supply chain—created using real-time data and advanced technologies such as the Internet of Things, artificial intelligence, and machine learning—enable organizations to better understand, analyze, predict, and optimize their supply chain processes.

How great is the demand? According to Market.us, the worldwide supply chain digital twin market is projected to reach a value of $8.7 billion by 2033—a compound annual growth rate of 12% during the forecast period from 2024 to 2033.

The increasing complexity of supply chains, the need for greater visibility and control, and the rising demand for predictive analytics in supply chain management is driving the growth in this market, according to the report.

Top Trade Disruptors

While the pandemic is firmly in our rearview mirror, a new batch of disruptions have popped up to challenge the supply chain. The Q1/Q2 2024 Retail Sourcing Report from TradeBeyond outlines the top trade disruptors that are likely to throw a wrench into global sourcing plans and buying decisions in 2024. Here are the key highlights:

• Rate fluctuation: Extreme shipping rate volatility with attacks in the Red Sea have sent shipping rates surging since December, more than doubling the rates on some European lanes and creating substantially longer transit times.
• Looming uncertainty: The shipping crisis has made supply chain disruptions more likely, elevating fears of a return to the bottlenecks, component shortages, and product delays that supply chains endured in recent years.
• Tech spend coming: The pace of digitalization continues to accelerate in retail supply chains, with more than 90% of supply chain managers saying their companies are actively engaged in digital transformation. And 46% of supply chain executives anticipate that AI, cognitive computing, and cloud applications will be their greatest areas of investment in digital operations over the next three years.
• Manufacturing slump: The most recent GEP Global Supply Chain Volatility Index warned of continued downturn in global manufacturing through at least the first quarter of 2024 amid softened demand, especially in Europe.

Mega Money for Intermodal Projects

In a win for intermodal infrastructure, the U.S. Department of Transportation (USDOT) recently selected 37 projects to receive funding through the Bipartisan Infrastructure Law’s Mega and Infrastructure for Rebuilding America (INFRA) grant programs. Several of the projects will boost intermodal infrastructure across the country.

The Mega Program, also known as the National Infrastructure Project Assistance program, funds large, complex projects that are difficult to fund by other means and likely to generate national or regional economic, mobility, or safety benefits. Congress established the program in 2021 through the Bipartisan Infrastructure Law and dedicated $5 billion to the program over five years. The most recent awards were the second round of funding, worth roughly $2 billion.

INFRA is a competitive grant program that provides funding for multimodal freight and highway projects of national or regional significance to improve the safety, efficiency, and reliability of freight movement in and across rural and urban areas. The most recent annual program funding amount is $3.1 billion and the annual award amount is $1.5 billion.

Intermodal projects receiving grants in this round of Mega and INFRA funding include:

• America’s Green Gateway: Pier B Rail Program Buildout, Long Beach, Calif. The project will complete the Pier B On-Dock Rail support facility program by significantly enhancing container-on-rail service to and from the ports of Long Beach and Los Angeles.
• St. Lucie River Railroad Bridge Replacement Project, City of Stuart, Fla. The project will replace the existing 100-year-old St. Lucie River Railroad Bridge with a new double-track structure. By diverting freight traffic to rail, the project will increase safety for marine traffic, decrease the potential for blocked grade crossings and vehicle collisions, and shift single-occupancy vehicles to passenger rail travel.
• East River Berth Replacement Project, Garden City, Ga. The project will replace a port berth and two vessel berths at Georgia Ports Authority’s Port of Brunswick’s East River Terminal and will also reduce greenhouse gas emissions by supporting a modal shift from truck to rail for transporting commodities to the Port of Brunswick.
• Louisiana International Terminal Project, St. Bernard Parish, La. The project will construct a new container terminal on the Gulf Coast for the Port of New Orleans that is not air-draft restricted and can accommodate larger vessels.

Walmart Wings It

The nation’s largest retailer will soon boast the retail sector’s largest drone delivery footprint. Walmart recently unveiled plans to dramatically expand its drone capabilities across the Dallas-Fort Worth metroplex, adding more than 30 municipalities and towns in North Texas.

The expansion will enable the company to reach up to 1.8 million additional households—the most ever by a retailer offering drone delivery in a single market—and cover as much as 75% of the metro area.

Individuals who live within 10 miles of participating stores will be able to order thousands of items, ranging from snacks and beverages to baby wipes and over-the-counter medications, for delivery by drone in 30 minutes or less and potentially in as fast as 10 minutes.

The retail giant is partnering with drone delivery companies Wing and Zipline for the service; both are authorized by the FAA to fly drones beyond the line of sight of operators.

Walmart says it has safely completed more than 20,000 drone deliveries over some two years of test flights.

AI in Transportation: All Talk, No Action?

While artificial intelligence (AI) is one of the most buzzed-about topics within the supply chain sector, AI adoption is lacking severely in the U.S. transportation and logistics (T&L) market, according to new data from HERE Technologies and Amazon Web Services. In a multi-country survey of transportation and logistics professionals in the United States, Germany, and the United Kingdom, HERE found a significant gap in the adoption of basic data analytics.

The survey results underscore the untapped potential of AI—from data analytics supported by machine learning to optimized fleet routing, predictive maintenance, and streamlined processes for strategic decision-making.

Here are the report’s key takeaways:

• Only 50% of T&L professionals across the three countries say that their organizations utilize basic data analytics in their operations. At the same time, 25% of all respondents state their organization leverages AI capabilities.
• Cost (23%) is the leading barrier to tech implementation.
• Potential disruption to existing services (12%) and lack of internal expertise (11%) were the second and third most cited barriers to technology implementation.

Somewhat conversely, survey participants were optimistic about their progress toward supply chain visibility, with 86% reporting notable progress toward supply chain visibility and 18% considering their progress significant. Among modes, 50% indicate truck freight has the highest visibility, while 45% cite ocean freight as the least visible mode of transportation (see chart).

Manufacturers: .ru Prepped Against Cyber Attacks?

The manufacturing sector faced an unprecedented 165% surge in cyber attack attempts last year—many coming from Russian and Chinese actors, according to Armis, an asset intelligence cybersecurity company. Its new report reveals that the industry faces severe safety, production, and critical infrastructure risks if security gaps aren’t urgently addressed.

Key highlights include:

• Global attack attempts more than doubled in 2023, increasing 104%. The manufacturing industry weathered a much higher-than-average rate of attacks at a 165% increase.
• In 2023, manufacturing was one of the top industries exposed to attack from Chinese and Russian actors. Compared to other industries, manufacturing experienced an intensified threat landscape, with .cn and .ru domains contributing to an average of 30% of monthly attack attempts.
• The concerning trend of operational technology (OT) devices accessing the internet highlights further potential vulnerabilities, with around 80% of engineering workstations and 60% of supervisory control and data acquisition (SCADA) servers having internet access over the past year. The vulnerabilities in these devices increase the potential entry points for bad actors.
• Data further highlights a concerning number of exploitable devices owing to usage of end-of-life or end-of-support operating systems that are no longer actively supported or patched for vulnerabilities and security issues by the manufacturer. Additionally, 12% of utilities and 11% of manufacturers are still using legacy operating systems—exacerbating cyber weaknesses.

As 2024 gets underway, leaders at U.S. ports view the concept of eco-friendly port operations as a vital element in nearly every aspect of operational decision-making. In short, sustainability is a primary focus.

“It’s definitely at the top of the list,” says Eric Caris, director of cargo marketing for the Port of Los Angeles, which is at the forefront of national and international sustainability efforts with initiatives such as the world’s first transpacific green shipping corridor connecting Southern California with Shanghai.

Other strategies for the new age in port leadership include increased collaboration among intermodal partners as well as other ports, plus ambitious infrastructure enhancements and greater use of digital tools to provide advanced visibility throughout the supply chain.

Sharing Goals

In addition to the ports’ own sustainability objectives—which are consistent with White House initiatives to achieve climate-resilient supply chain infrastructures and operations—many shippers are likewise motivated to improve sustainability in their operations. The ports, therefore, seek to partner with their customers to bolster individual sustainability efforts.

The move toward sustainability is not without challenges, however, notes Mike Bozza, assistant director of commercial development for the Port of New York and New Jersey. Specifically, it’s difficult to acquire sustainable equipment that operates with zero or low emissions.

One example is battery-operated straddle carriers, which are used for container loading and unloading. Electric straddle carriers require scheduled charges, Bozza notes, causing the equipment to be temporarily out of service, which is not ideal. The technology for sustainable equipment is steadily improving, however.

The Port of New York and New Jersey, as well as other ports, is moving resolutely toward a more sustainable future. “We are working with our terminal operators and we’ve got our own net-zero roadmap,” Bozza says.

The Port Authority’s goals include getting to net zero by 2050 as well as achieving a 50% reduction in greenhouse gas emissions for Scope 1 and Scope 2 emissions between now and 2035. (Scope 1 refers to direct emissions from sources an entity owns or controls while Scope 2 means indirect emissions from purchased electricity, steam, heat, and cooling.)

To accomplish these goals, “We’re doing things like solar installations and investing in electric vehicles for our light-duty and medium-duty fleet,” says Bozza.

The Port Authority of New York and New Jersey has also announced a “green gateway” for goods as part of the agency’s overall commitment to reducing emissions from its own operations as well as its operating partners, including marine terminal operators, oceangoing vessel operators, railroads, and trucking companies.

To date, 89 of the port’s 91 ship-to-shore and rail-mounted gantry cranes are electric, with a mandate for full electrification by 2026.

Through a marine terminal tariff, the agency is phasing out old equipment and requiring terminal operators to move to zero-emission material handling equipment as new models become commercially available.

Partnering for Progress

The Port of Los Angeles (opposite) and the Port of New York and New Jersey (above) have both embraced “green shipping corridors” for goods as a way to reduce carbon emissions.

The Port of Los Angeles continues to provide national and international leadership with its initiatives around green shipping corridors, which the U.S. State Department defines as “maritime routes that showcase low- and zero-emission lifecycle fuels and technologies with the ambition to achieve zero greenhouse gas emissions across all aspects of the corridor in support of sector-wide decarbonization no later than 2050.”

In partnership with the Port of Long Beach, the Port of Los Angeles is working with the Port of Shanghai and the C40 Cities global network of mayors to reduce greenhouse gas emissions from cargo movements. One goal is to transition to zero-carbon-fueled ships by 2030.

Collaboration with shipping lines is essential to the success of these initiatives. “Without shipping line participation, you have no green shipping corridor,” says Caris, adding that the fuels of the future must be made available in sufficient quantities to meet the needs of shipping lines.

In December 2023, the ports of Los Angeles and Long Beach also unveiled a partnership strategy with the Maritime Port Authority of Singapore to establish a green and digital shipping corridor between Singapore and the San Pedro Bay port complex in Southern California.

Collaboration was a central theme of the announcement, made at the United Nations Climate Conference in Dubai. “Our success requires the resolve and dedication of the three partnering ports as well as our industry partners,” said Gene Seroka, executive director of the Port of Los Angeles. “Together, we will model the collaboration necessary to achieve our climate and efficiency goals.”

Port of Long Beach CEO Mario Cordero echoed Serkoka’s comments. “Over the past two decades, we’ve learned that collaboration between maritime industry partners is the key to making meaningful progress in reducing emissions and cleaning the air,” Cordero said. “This transpacific green shipping corridor takes this concept global.

“The strategies we develop here can be used as a roadmap by a larger network of seaports and supply chain companies to invest in programs, technologies, software, and infrastructure to decarbonize international trade everywhere,” he added.

In his annual State of the Port address to stakeholders in January 2024, Seroka reiterated the LA port’s commitment to sustainability and the environment, bolstered by the fall 2023 announcement of up to $300 million in federal grant funding for the development of “hydrogen hub” operations in the San Pedro Bay port complex.

Stronger Infrastructure

Top-priority infrastructure developments at the Georgia Ports Authority include the newly opened Mason Mega Rail, the largest marine terminal rail facility in North America.

Across all political lines, port infrastructure has also been a perennial theme of discussion among state and federal government leaders—and those discussions are expected to intensify in the 2024 presidential election year. National and state infrastructure priorities include waterway projects designed to strengthen supply chains, speed the movement of goods, and reduce costs.

U.S. ports are leading the way in these efforts, exemplified by initiatives at the Port of Galveston, Texas, where years of groundwork are expected to reap progress with developments including major cargo infrastructure improvements and free-trade zone expansion.

Located on the deep-water Galveston Harbor and ranked as one of the Top 50 U.S. Water Ports by the U.S. Department of Transportation, the Port of Galveston is a major cargo hub that also boasts three cruise terminals.

Guided by its 20-Year Strategic Master Plan, the port is maximizing its assets for aggressive growth.

“A major focus of the master plan is expanding our cargo business by increasing acreage and improving infrastructure at our West Port Cargo Complex,” says Rodger Rees, the port’s director and CEO. “A top priority is improving decaying waterfront infrastructure after decades of neglect.

“We’re also nearing completion of a two-mile-long interior roadway to move cruise and cargo traffic more efficiently, while helping to alleviate congestion on nearby downtown roadways,” he adds.

Infrastructure is also a top priority for the Georgia Ports Authority (GPA), which represents a network of both coastal and inland ports. Included among the GPA’s ports is the Port of Savannah, the single largest and fastest-growing container facility in America.

“The infrastructure development at our Garden City Terminal West facility and the upgrade and expansion of Ocean Terminal as a container facility will be exciting developments to watch,” says Ed McCarthy, GPA’s chief operating officer.

Another central theme commanding the attention of port leaders in 2024 can be expressed in a single word: linkage.

One example is the Council of Port Performance at the Port of New York and New Jersey. The council is a group of critical stakeholders including the Port Authority, the Shipping Association of New York and New Jersey, marine terminal operators, and labor.

“This group was formed about 10 years ago to deal with congestion challenges at that time, and it has been a critical element of our success at the port,” Bozza explains.

Creating Key Linkages

The Port of Galveston, Texas, is expanding its cargo business by increasing acreage and improving infrastructure, including a new interior roadway, at its West Port Cargo Complex. The road will help to move cargo traffic more efficiently and alleviate congestion.

“We learned from our challenges during the pandemic that you have to look at the entire supply chain,” he adds. “The council and our port efficiency team are trying to create linkages from the ship all the way out to the warehouse—and every point in between—so we understand all the individual nodes.

“By doing that, when the next cargo surge comes, we will understand where those bottlenecks are and hopefully work to address them quickly,” Bozza adds.

Data transparency has helped the port augment existing relationships with trucking and rail partners with links to warehouse and distribution facilities via a weekly dashboard developed with input from all elements of the stakeholder community.

Strengthened relationships at U.S. ports also extend beyond direct business partnerships. For example, the Port of Los Angeles regularly exchanges information and insights with ports around the globe. Among other benefits, Caris says, the ports have learned from one another about ways to improve their “shore power” infrastructure. This strategy helps them reduce emissions by enabling vessels to turn off their engines and plug into the local electricity grid to power auxiliary systems while at berth.

This new age of port leadership and the increased emphasis on sustainability and other forward-thinking priorities at ports across the country benefits not only supply chain stakeholders, but the U.S. economy and businesses as well.

Spending Billions to Boost Shipping on Great Lakes, St. Lawrence Seaway

Initiatives to address the needs of the next generation in maritime shipping extend from the coasts to the vital U.S. inland port network. Especially noteworthy are investments in the St. Lawrence Seaway, which enables oceangoing vessels to travel to and from the Atlantic Ocean and to reach ports in all five of the Great Lakes via the Great Lakes Waterway.

From 2018 to 2027, $8.4 billion will have been spent to enhance marine shipping on the Great Lakes and St. Lawrence Seaway, estimates an independent survey of public and private investment firms. The survey was developed as part of a project that was requested by a public/private sector committee of American and Canadian maritime organizations.

Prepared by economic and transportation consulting firm Martin Associates, the survey quantifies ongoing investments in the navigation system to help support long-term planning and economic development goals, while also building confidence in the system’s future viability.

The survey shows that as the world undergoes a shift toward more sustainable practices, the marine shipping industry and the U.S. and Canadian governments are partnering to actively invest billions to lead the transition. In addition to identifying the level of investment, the survey also reveals investment in specific aspects of the Great Lakes–St. Lawrence Seaway system.

Expressed in U.S. dollars, this includes investments of:

• $636 million in vessel enhancements between 2018 and 2022, with at least another $328 million planned by 2027.
• $2.1 billion to enhance port and terminal infrastructure between 2018 and 2022, with at least another $1.1 billion planned by 2027.
• $3 billion for waterway infrastructure such as locks, breakwater structures, and navigation channels between 2018 and 2022, with at least another $1.2 billion planned by 2027.

The size of these expenditures illustrates broad recognition that economic growth and greenhouse gas reduction ambitions can be achieved through significant investment in maritime shipping, say port leaders.

“The survey’s conclusion is clear,” said U.S. Transportation Secretary Pete Buttigieg. “Both the public and private sectors recognize maritime commerce on the Great Lakes and St. Lawrence Seaway remain essential to the economies of the United States and Canada, and both the public and private sectors are investing to protect this irreplaceable system.

“Through President Biden’s infrastructure law, we are investing in marine shipping, which will continue to support high-quality jobs, strengthen America’s supply chains, and drive sustainable economic growth.”

Featuring everything from inspirational keynote speakers to intimate breakout sessions, product demos, and vendor expos, these shows help put attendees at the forefront of the latest industry happenings. (Bonus: mingling with peers and colleagues during the shows is great for business development and career advancement.)

So, mark your calendars and get ready for these key supply chain events in 2024.

TRUCKING/SMALL PACKAGE

TMC 2024 Annual Meeting & Transportation Technology Exhibition

Mar 4-7, New Orleans
tmcannual.trucking.org

Who Should Attend: Trucking fleet professionals, vehicle manufacturers, component suppliers, and other commercial trucking professionals

What to Expect: A technical conference focused on helping attendees maximize fleet performance and efficiency.

Highlights: Task force meetings, new TMC member orientations, study sessions, Trucking Technology Marketplace

Truckload 2024

Mar 23-26, Nashville
tcaconvention.com

Who Should Attend: Truckload professionals

What to Expect: Education and insights on the latest truckload issues and industry best practices, committee meetings, networking functions, and exhibition hall.

Highlights: Executive leadership panels, keynote speech by “Mr. Wonderful” Kevin O’Leary of Shark Tank, Young Trucking Executives discussion

Home Delivery World USA

Jun 5-6, Philadelphia
bit.ly/HomeDelivWorld24

Who Should Attend: Retail logistics and supply chain professionals, autonomous technology companies, delivery services, grocers and manufacturers, warehousing operators, final mile providers

What to Expect: Technologies, strategies, and best practices for the full scope of retail logistics from inventory management and fulfillment to delivery, customer experience, and returns.

Highlights: The Middle Mile, a co-located event dedicated to middle-mile logistics; 300+ exhibitors; speakers from top retailers including Macy’s, Walmart, IKEA, Best Buy, and others

Last Mile Delivery Conference & Expo

Jun 27-28, Las Vegas
lmdconference.com

Who Should Attend: Shippers, e-commerce retailers, transit and fleet operators, 3PLs, professionals from academia and government, and courier, express, and parcel companies

What to Expect: A summit to explore last-mile logistics and the cutting-edge technologies that are disrupting the status quo in warehousing, delivery, and customer service.

Highlights: Hosted buyer meetings, panel discussions, vendor demos

Parcel Forum

Sept 16-18, Dallas
parcelforum.com

Who Should Attend: Shippers, distributors, parcel logistics providers, freight auditors, and other small-package supply chain professionals

What to Expect: Attendees will explore innovations in last-mile delivery, e-commerce logistics, and shipping technologies.

Highlights: Top-rated conference program, peer-to-peer networking, exhibit hall experience with dedicated hours

Accelerate! Conference & Expo by Women in Trucking Association

Nov 10-13, Dallas
bit.ly/AccelerateWIT

Who Should Attend: Motor carriers, 3PLs, manufacturers, retailers, truck-driving schools, financial and insurance providers

What to Expect: “A unique event with a critical mission,” Accelerate! seeks to elevate, empower, and level the playing field for women in all facets of the trucking industry.

Highlights: Six different educational tracks, career-development seminars, featured trucks and trailers, 150+ exhibitors

AIR CARGO

Air Cargo Conference

Feb 11-13, Louisville, KY
aircargoconference.com

Who Should Attend: Shippers, airlines, airport authorities, freight forwarders, expedited providers

What to Expect: Insights on how to navigate today’s complex, global air cargo challenges including cargo theft, global regulations, congestion, and emerging technologies.

Highlights: A keynote speech from Captain Houston Mills, UPS President of Flight Operations & Safety; exhibit hall with 83 booths; women’s networking event

IATA World Sustainability Symposium

Sept 24-25, Miami
bit.ly/IATAWSS24

Who Should Attend: Shippers, airlines, airport authorities, OEMs, ANSPs, solutions providers, policy-makers and regulators, banking/financial institutions

What to Expect: Air cargo sector and government experts exploring ways to successfully execute on the industry’s commitment to decarbonize aviation by 2050.

Highlights: Sessions on how to finance the transition to sustainability, how to comply with sustainability regulations, what to expect next

Air Cargo Forum

Nov 12-14, Miami
bit.ly/AirCargoForum24

Who Should Attend: Shippers, freight forwarders, ground handlers, airports, airlines, manufacturers, solutions providers

What to Expect: Conference sessions covering key air cargo issues including sustainability, education/training, and technology.

Highlights: 15,000+ sq. ft. expo space with 220+ exhibitors, comprehensive networking program including golf tournament, receptions, pre/post event excursions, and after-parties

MARITIME/PORTS

CMA Shipping

Mar 12-14, Stamford, CT
cmashippingevent.com

Who Should Attend: North American maritime professionals

What to Expect: Three days of sessions on key maritime issues, challenges and opportunities, as well as insights on the future of the maritime supply chain from top industry leaders.

Highlights: Networking Gold Card, comprehensive expo hall, Commodore Gala

AAPA 2024 Smart Ports Seminar & Expo

Jul 9-12, Seattle
bit.ly/AAPASmartPorts

Who Should Attend: Maritime professionals, technology providers

What to Expect: A detailed exploration of how smart technology is transforming ports as well as insights on facilities engineering and port security.

Highlights: Port tour, exhibit hall showcasing emerging technologies and solutions providers

Breakbulk Americas

Oct 15-17, Houston
americas.breakbulk.com

Who Should Attend: Logistics and supply chain managers involved in the movement of breakbulk products; specialized service providers

What to Expect: 5,000+ attendees sharing the latest breakbulk and project cargo strategies and exploring emerging industry trends and technologies.

Highlights: More than 280 exhibitors, Women in Breakbulk breakfast, other networking events

AAPA Annual Convention and Expo

Oct 27-30, Boston
bit.ly/AAPAAnnual24

Who Should Attend: Port professionals, terminal operators, service providers, transportation leaders, supply chain partners

What to Expect: Key takeaways on the latest industry trends and innovative solutions impacting the future of American ports.

Highlights: Full slate of sessions, speakers, and exhibit hall; port tour

INTERMODAL/RAIL

IANA Intermodal Expo 2024

Sept 9-11, Long Beach, CA
intermodal.org/intermodalexpo

Who Should Attend: Intermodal professionals from shippers, railroads, motor and ocean carriers, ports, technology suppliers, equipment manufacturers, leasing companies, 3PLs

What to Expect: Intermodal topics to be tackled include terminal design, transloading, driver productivity, sustainability, regulatory risk, and chassis provisioning, among others.

Highlights: 21 hours of educational content, nine hours of exclusive exhibit hours, 10 hours of networking

20th Annual Southwestern Rail Conference

Apr 15-16, Dallas
bit.ly/SWestRail24

Who Should Attend: Public- and private-sector freight and passenger rail professionals

What to Expect: Key inputs and discussions from across the rail sector concerning transportation planning, government affairs, emerging technologies, freight logistics, supply chain management, and sustainability.

Highlights: An expanded program of sessions, key networking opportunities

North American Rail Shippers Annual Meeting

Apr 30-May 2, Chicago
https://bit.ly/RailChicago24

Who Should Attend: Rail shippers, transportation providers

What to Expect: Speaker and panelist lineup consisting of high-profile rail transportation executives and experts from academia and government; ample networking opportunities.

Highlights: Co-located with the Traffic Club of Chicago’s annual golf outing and gala dinner

SUPPLY CHAIN & LOGISTICS

MODEX

Mar 11-14, Atlanta
modexshow.com

Who Should Attend: Manufacturing, supply chain, and transportation professionals

What to Expect: A focus on how to future-proof your supply chain via sessions about emerging technologies and equipment led by practitioners across the supply chain and manufacturing ecosystem.

Highlights: 150+ free education sessions, exhibit hall with 1,000+ providers, networking with 45,000+ attendees, keynote speakers including actor Jeremy Renner and comedian Colin Jost

ISM World 2024

Apr 29-May 1, Las Vegas
bit.ly/ISMWorld24

Who Should Attend: Procurement and supply chain management professionals

What to Expect: More than 2,000 attendees coming together to exchange insights and strategies on top procurement and supply chain issues

Highlights: ExecIn, a conference within the conference for senior leaders; post-event 90-day access to a comprehensive library of all the breakout sessions

WERC 2024 Annual Conference

June 2-5, Dallas
bit.ly/WERC2024

Who Should Attend: Warehousing, distribution, and logistics professionals

What to Expect: Explore new ideas, tools, and techniques with front-line innovators and thought leaders, covering topics ranging from labor and inventory challenges to digital transformation within the industry.

Highlights: Roundtable discussions, peer-to-peer sessions, facility tours, networking events, WERC Sponsor Showcase

CSCMP EDGE 2024

Sept 29-Oct 2, Nashville
cscmpedge.org

Who Should Attend: Logistics, transportation, and supply chain management professionals

What to Expect: Actionable takeaways from 100+ educational sessions spanning the end-to-end supply chain. The event is hosted by The Council of Supply Chain Management Professionals (CSCMP).

Highlights: Supply Chain Exchange featuring demonstrations, equipment, systems, and technologies; pre-conference Academic Research Symposium; 15 Continuing Education Units

AUSTIN – Oct. 18, 2023 – CEVA Logistics engineered a rail transport solution in North America for Scuderia Ferrari’s F1 racing team. In a first for Formula 1, Ferrari equipment is traveling by rail between three of the North American F1 grand prix races in an effort by the two companies to reduce carbon emissions.

CEVA has been transforming the Scuderia Ferrari logistics program since the beginning of their partnership in 2022. The flow of the six separate 45-ton equipment kits that traverse the globe has transitioned away from air freight to a primary combination of ocean and road freight as CEVA ensures the equipment reaches each of the 23 Grand Prix racing venues on time.

CEVA combines road transport from rail terminal points with rail transport for Scuderia Ferrari in North America.

For the 2023 season, the global logistics player proposed a new solution—to transport the equipment kit by train in North America to reduce the transport’s carbon emissions.

Packed in six 53-foot containers, the race equipment traveled approximately 2,000 miles from Montreal, Canada, to Austin, Texas, and will travel another nearly 2,000 miles from Austin to Las Vegas, Nevada.

CEVA’s project team calculated that the solution incorporating rail segments between the three F1 races reduced carbon emissions by 90% compared to the equivalent journey by air and 32% versus an all-road, trucking solution.

Intermodal Solves an Intricate Logistics Puzzle 

Finding the right routing to connect the various kits between races is an intricate logistics puzzle, but the extensive rail network across the United States makes the solution possible. CEVA’s project team is working closely with rail companies to synchronize the rail transport precisely with the Formula 1 Grand Prix schedule.

Specialized handling, coordination, and contingency planning are needed to ensure the equipment arrives on time.

The rail transport for Scuderia Ferrari in North America is being combined with road transport from the rail terminal points. Coordination between these different modes requires strict management to ensure the smooth transition of goods from one mode to another.

Moving equipment by train also calls for specialized handling, coordination, and proactive contingency planning on the part of CEVA’s project team to ensure that everything arrives on time.

For example, the equipment traveling from Montreal to Las Vegas via Austin required storage and road transport between CEVA’s Dallas hub location and the Austin Grand Prix venue and will require the same treatment between CEVA’s Los Angeles facility and the Las Vegas Grand Prix racetrack.

Traversing more than 130,000 miles in 2023

As Scuderia Ferrari’s logistics provider since 2022, CEVA expects the various F1 equipment kits to travel more than 130,000 miles in 2023.

Choosing more sustainable transport options means CEVA is supporting Ferrari’s emission reduction efforts and promoting more sustainable business practices. As part of the CMA CGM Group, CEVA is committed to reaching net zero by 2050. Ferrari aims to reach carbon neutrality by 2030.

About CEVA Logistics

CEVA Logistics provides global supply chain solutions to connect people, products, and providers around the world. Headquartered in Marseille, France, CEVA Logistics offers a range of end-to-end, customized solutions in contract logistics and air, ocean, ground, and finished vehicle transport in 170 countries worldwide with approximately 110,000 employees at more than 1,300 facilities. CEVA Logistics is part of the CMA CGM Group. www.cevalogistics.com

Yet in 2022, U.S. rail intermodal shipping volume accounted for approximately 27% of revenue for major U.S. railroads, more than any other rail traffic segment.

One driver behind the drop is lower demand, as companies correct after having expanded their inventory levels during the recent supply chain disruptions. Respondents to the National Association of Manufacturers Outlook Survey for the third quarter of 2023 expect inventories to dip 1.8% over the next 12 months.

“It’s a flip from the past couple of years,” says Dennis Anderson, chief strategy officer with logistics company ArcBest. The shift has prompted a drop in import container numbers and excess transportation capacity.

Also playing a role is the growing number of ships heading to ports on the East and Gulf Coasts. Container volume at the Port of New York and New Jersey, for instance, jumped about 25% between 2020 and 2022.

Many Gulf and East Coast ports are relatively close to consumer markets, making trucks more competitive.

Conversely, “intermodal boxes that come into Los Angeles or Long Beach and are headed for Chicago or Dallas have to travel several thousand miles,” notes Todd Tranausky, vice president, rail and intermodal, with FTR, a freight transportation research provider.

Typically, rail transportation offers significant cost savings when compared to over-the-road transport. “But in the current deflationary market and slow peak season, that is not the case,” says David Spencer, vice president of market intelligence at freight brokerage firm Arrive Logistics.

Moving freight by rail instead of truck can reduce greenhouse gas emissions by up to 75% on average, according to the AAR.

Intermodal Shipping Challenges

Another factor is that “trucks are easy,” says Rob Russell, senior consultant with PLG Consulting. Many trucking companies provide good service and can use the highway system to serve any shipper.

For rail to be cost-effective, the rail trip typically needs to be at least 550 miles, Russell says. In addition, shippers need multiple runs each day to make the overall product most efficient.

Rail’s generally slower speed when compared to truckload shipments likely will become more of a challenge as younger consumers who’ve grown up with ecommerce and rapid delivery times gain more buying power, says Matt Dolly, research director with real estate firm Transwestern.

Another obstacle is the number of “disparate and often conflicted entities required to move freight intermodally,” says Karl Hatt, vice president with Tompkins Solutions. Given a lack of investment in systems, it takes considerable effort to coordinate the myriad touch points required to move containers from the dock through rail yards, to a chassis, and on to the consignee.

“Each touch point increases the risk of delay, damage, and shrink,” Hatt says.

One factor behind the drop in intermodal use is the growing number of ships heading to East and Gulf Coast ports. Container volume at the Port of New York and New Jersey, for instance, grew 25% from 2020 to 2022. Proximity to consumer markets makes trucking more competitive.

How to Ensure Efficient Intermodal Shipping

The challenges are real, yet intermodal rail can play a valuable role in many shippers’ logistics operations. “Rail performance is at a high level, making it a good time to consider intermodal, particularly for longer haul moves,” Anderson says.

By leveraging intermodal transportation, shippers can reign in both costs and carbon emissions. Moving freight by rail instead of truck lowers greenhouse gas emissions by up to 75% on average, the AAR reports.

“The rails are more versatile than many people give them credit for,” says Christopher Brach, senior vice president, general manager with Radiant Road and Rail. Contrary to some perceptions, rail lines can move many—although not all—hazardous materials, as well as refrigerated goods. Properly blocking and bracing shipments cuts the risk of damage.

Shippers can take steps, such as partnering with intermodal partners and leveraging technology, to ensure their intermodal shipments move as cost-effectively and efficiently as possible. The following strategies can help.

Research. Once shippers understand the intermodal network and the locations of the nodes and lanes served, they can determine if their shipping patterns overlap with the available lanes, Russell says.

“You’ve got to look at the lanes,” Brach says. This is something of a moving target, as the distance at which intermodal makes sense fluctuates with changing truck rates. As truck rates drop, trucking becomes more competitive with intermodal.

Shippers within about 150 miles of a metro area, however, typically will find a viable intermodal option, as most drayage networks are built to support intermodal movement within about that distance. In larger markets, such as Chicago and Los Angeles, drayage networks can extend to about 200 miles.

Leverage technology. One key to successful intermodal operations is a transportation management system (TMS) that incorporates disparate data sources and provides automated functionality to provide the user end-to-end shipment visibility.

A cloud-based TMS that provides shipment execution and visibility across multiple modes means “shippers stay in the know the entire time their shipments are en route,” says Lisa Flohr, director of operations with Nexterus, a supply chain solutions provider. They can respond quickly to unexpected delays because they’re notified when they occur.

Forecast. The better shippers can forecast their supply chain needs, the more applicable intermodal transportation can be, Brach says. Shippers that know they will have an extra day or two of lead time might be able to consider different options.

For instance, because railroads often operate 24/7, a shipper might use Friday and Monday for drayage and truck, and then Saturday and Sunday for the rail portion of the trip.

Transload. Transloading—or transferring goods from one mode of transportation to another during shipping—can be a way to overcome logistics challenges, such as a lack of direct shipping routes.

With intermodal, transloading often includes shifting imports that arrive in 40-foot containers to 53-foot boxes. This can lower transportation costs.

The 53-foot containers typically move on higher priority trains, accelerating transport time, says Danny Dever, senior product manager of TransmetriQ, a business unit of rail technology provider Railinc.

To transload, shippers typically need to find a warehouse or transloader that can accommodate the freight along their routes. They also need to decide whether they want to own their containers. This decision will, in some cases, determine what rail routes or carriers they can use.

Consider both containers and chassis. Shippers that decide to own a container fleet also need to build their chassis inventory. “It’s an additional expense, but it’s worth the investment to be able to control how your goods move,” Tranausky says.

Partner with IMCs and carriers. Intermodal marketing companies (IMCs) provide multiple services, typically including organizing purchases with railroads and trucking firms to help shippers bypass some steps within the intermodal process. Some third-party logistics providers (3PLs) are also IMCs.

Shippers should consider partnering with an intermodal company to help them manage the complexities of this kind of transportation.

The partner should be able to use software to connect to the rail lines, and then evaluate the rates and lanes to determine what will work best for each shipper. “The provider should make heavy use of data analytics and software optimization,” Anderson says.

IMCs or 3PLs often provide visibility and data. “The more data you have, the better you can build out different lanes and see what makes sense for your organization,” Dever says.

In addition, a partner that can provide estimated times of arrival for your shipments can help you plan and build network efficiencies.

Much work is underway in analytics and machine learning, as well as assessing the history of different intermodal trains to help in forecasting their current operations, Dever says.

This information can help shippers more accurately schedule their own work of unloading or moving shipments from, say, distribution centers to retail stores. Shippers should ask to see the reports and determine which analyses best fit their needs.

Ideally, the intermodal partner can assemble the data and analytics in one place. This way, the shipper doesn’t have to scour multiple websites to determine where a container is, says Andy Adams, senior solutions engineer with Railinc.

To ensure they’re getting competitive rates and services, most shippers benefit by working with several intermodal providers. This may mean engaging a primary IMC that handles, say, 70% of their business, and then a few others to handle the rest. Then, the shipper can benchmark each provider’s service and have a replacement option if the primary fails.

“Don’t chase just price,” Russell says. “Chase service and price.” Service plays a critical role, especially for shippers who need a truck-like product.

Shippers also should build relationships with their rail carriers. “Make sure the railroad knows who you are and why it’s important they move your freight,” Russell says. “Hold them accountable when they don’t and praise them when they do.”

Prebook drayage. Prebooking drayage services prior to the arrival of the shipments results in fewer delays, Flohr says. Depending on who is responsible for each component of the transaction, the shipper, the 3PL or the IMC could prearrange drayage.

Watch for new lanes. To build volume, the rail lines are starting to react to port shifts and launching new services, Tranausky says. Shippers might find new lanes that make sense for their distribution networks.

For instance, starting in June 2023, Union Pacific Railroad expanded its services at Port Houston to allow intermodal containers to be loaded directly onto railcars and transported by rail to inland markets (see sidebar).

Aim for consistent shipment flows. The more regular the shipment flows, the better the likely intermodal outcome. “The intermodal network struggles with variability,” Russell says.

If shipment volumes vary, consider level loading with intermodal, Russell says. (Level loading refers to balancing production to attain consistency.) If surges occur, consider adding truck transport to the solution set, unless you negotiate surge capacity into your intermodal contract.

Monitor port negotiations. In 2024, the International Longshoreman’s Association contract that governs many port workers on the East and Gulf Coasts will expire. Shippers using these ports should keep an eye on negotiations.

Consider rail for nearshoring. Cross-border intermodal options are improving. Shippers that operate across Mexico, the United States, and/or Canada will want to explore intermodal as an option, Anderson says. For example, the newly formed CPKC railway (Canadian Pacific Kansas City) connects North America from Mexico to Canada.

When a pre-clearing process has been completed, intermodal shipments typically experience fewer delays than over-the-road transport for cross-border shipments, Dolly says.

Try intermodal. With intermodal volumes and prices currently down, shippers can try intermodal at a low price point and see if it works for their supply chain, Russell suggests. To gain a solid handle on the role intermodal might play in their logistics initiatives, shippers should aim for about 30 test loads for a given lane.

Intermodal service options for moving cross-border shipments are improving. For example, the combined Canadian Pacific Kansas City Southern network spans across both coasts of Canada, and moves through the U.S. Midwest to reach several points in Mexico.

Syncing People, Equipment & Systems

While intermodal rail could be a viable option for many shippers, currently about one-third of containers coming into the United States end up using rail out of the ports.

“This is the age-old chicken or egg scenario,” Hatt says. Shippers are leery of moving to rail because it initially impacts service levels, and intermodal carriers won’t invest unless there is more market share.

More automation also will be key. “The ports need to invest in technology to turn ships faster; rail companies need to invest in rail, equipment, and systems to process faster and more reliably; and distribution centers need to invest in equipment to quickly turn drivers and containers to reduce delay and demurrage,” Hatt says. All the touch points need to be in sync in terms of people, equipment, and systems.

Rail lines in the West should consider developing viable shorter hauls, such as from the West Coast ports to Phoenix, Las Vegas, and Salt Lake City. “Rail lines need to embrace these new short-haul markets and provide regular services,” Russell says.

Yet all is not gloomy, Hatt notes, as positive movement in creating the infrastructure for more intermodal traffic is happening.

Among other changes, more chassis are being manufactured, locomotives are being upgraded, and monitoring and sensor capabilities are being added to railcars to increase safety.

Intermodal will continue to grow in importance and in terms of overall share of the domestic transportation market, due to its lower cost and environmental impact.

“That said, intermodal needs to continue to prove itself,” says Geoff Anderman, president and chief operating officer with STG Logistics. “Intermodal needs to be able to provide a consistent service that can be a truly reliable solution day-in and day-out for shippers.”

Union Pacific Expedites Inland deliveries

Union Pacific Railroad has expanded its services at Port Houston to allow intermodal containers to be loaded directly onto railcars and transported by rail to five key metropolitan markets in the United States without being trucked.

The service, which started June 1, 2023, allows international shippers to deliver TVs, cell phones, and other consumer goods quickly and more efficiently to consumers.

Union Pacific’s new service at Barbours Cut Container Terminal at Port Houston provides customers direct rail access to five of the nation’s fastest-growing metropolitan intermodal markets in Denver, Salt Lake City, Oakland, Los Angeles, and El Paso, reducing truck traffic and greenhouse gas emissions.

It also eliminates the need for containers to be trucked approximately 30 miles from the port to the nearest rail facility in Houston for loading onto rail cars, reducing highway congestion in the Houston area.

Why Use Intermodal Shipping?

Rail intermodal is the long-haul movement of shipping containers and truck trailers by rail, combined with a truck or water movement at one or both ends. Intermodal can yield several benefits, according to the Association of American Railroads.

Fuel efficiency. On average, railroads are three to four times more fuel efficient than trucks. Because greenhouse gas emissions (GHG) are directly related to fuel consumption, moving freight by rail instead of truck reduces GHG emissions by up to 75%, on average.

Easing infrastructure. One intermodal train can carry up to several hundred containers and trailers, which removes that many trucks off the road and helps shippers eliminate wasted time and fuel from their trucks sitting in traffic. Shifting freight from trucks to rail also reduces the pressure to build costly new roads and helps cut the costs of maintaining existing roads.

Trade connector. Intermodal helps U.S. firms connect with the rest of the world. About half of the U.S. rail intermodal volume consists of imports and exports. Experts predict continued growth in international trade in the years ahead.

Relieving truck driver shortages. Hiring and retention is a constant challenge for trucking companies. Truck driver shortages are less of a problem when rail intermodal is used because intermodal rail service takes millions of trucks off the highways each year.

Challenges Impact Intermodal Volumes

As of late April 2023, intermodal volumes were off the five-year average by approximately 28,000 carloads per week, says Todd Tranausky, vice president, rail and intermodal with FTR Transportation Intelligence.

A big reason is the drop in imports, and particularly those arriving at the West Coast, where more imports leave via rail. During the first three months of 2023, the Port of Los Angeles handled about 1.8 million twenty-foot equivalent units (TEUs), down 32% from 2022, which was the best first quarter in the port’s history.

Conversely, over the past few years, the ports in the southeastern and northeastern regions of the United States have gained modest amounts of market share, Tranausky says.

This matters to the intermodal market, as imports arriving in, say, Savannah or New York, must travel only about 500 miles to reach midwestern markets, while those coming from the West Coast might travel a few thousand miles, making rail more competitive.

Approximately 85% of imports arriving at the Port of New York and New Jersey leave via truck, while about 85% of those leaving the ports at Los Angeles and Long Beach travel via rail.

The diversion of cargo away from the West Coast is likely to last at least until the labor contract situation at the West Coast ports is resolved, Tranausky estimates.

The longer the impasse continues, the more likely shippers will have developed relationships at other ports, “making it harder to just flip a switch and go back,” he adds.

Reduced buying by retailers, many of which are holding high levels of inventory, means lower import numbers, says Shelli Austin, chair of the Intermodal Association of North America and president and co-founder at InTek Freight & Logistics. The value of imported consumer goods dropped by $3.7 billion in February 2023, the U.S. Bureau of Economic Analysis (BEA) reports.

Factors internal to the intermodal market also have affected its performance. When volumes roared back after the pandemic lockdowns, the intermodal market was able to cope for a time. Then equipment shutdowns and chassis shortages interrupted operations.

With fewer chassis on which to place containers, the system slowed.

“Intermodal was capacity-limited at a time when demand was surging,” says Larry Gross, president and founder, Gross Transportation Consulting.

In the meantime, the over-the-road trucking market was scaling up to meet demand, Gross says. The result? Intermodal lost market share to the truck market.

More recently, the challenges have flipped. Among other changes, the domestic container fleet has grown by about 12% and equipment velocity has improved, “creating capacity out of thin air,” Gross says.

Yet demand is down. The shift benefits shippers, but isn’t as positive for the intermodal ecosystem.

Recent train derailments, like the one in East Palestine, Ohio, have “shined a serious light on the rail industry from both an infrastructure and a regulatory standpoint,” says Michelle Comerford, project director and industry and supply chain practice leader at Biggins Lacy Shapiro & Co., a site selection and incentives advisory firm.

Taking Another Look at Intermodal Solutions

The Association of American Railroads says that more than 99.9% of all hazmat moved by rail reaches its destination without a release caused by a train accident.

In addition, the Biden administration has been pushing for greater investment in infrastructure, including in the nation’s rail systems. In June 2022, the administration announced $368 million in grants to improve rail infrastructure and strengthen supply chains.

Even for most truckloads traveling 500 miles or more, intermodal’s market share is less than 10%. “It’s small, but it can be a very useful tool,” Gross says. “It’s time to take another look at intermodal.”

For shipments of non-perishable goods that will travel more than 500 miles, intermodal can be a great way to cut transportation costs, Comerford says. This will be key if the economy tightens.

Shifting some trips from truck to rail can help organizations reach sustainability goals, Comerford says. The average carbon dioxide emitted per ton-mile of freight in 2019 was .4 for truck and .05 for rail, according to a December 2022 Congressional Budget Office report.

Debunking Misperceptions

What’s more, the perception that intermodal is slow and more prone to damage often doesn’t hold true, Austin says, noting that most intermodal lanes are truck plus one or two days. And cargo often is protected more in a rail move than during over-the-road transportation because of the blocking and bracing requirements.

Shippers sometimes assume that to use rail services, their shipping location needs to be railsided—that is, next to or connected to the railroad tracks. That’s not the case, Austin says, as the intermodal solution is a truck-like product and picks up at a dock just the same as a truck pickup.

The recently completed merger between Canadian Pacific and Kansas City Southern, now CPKC, creates a 20,000-mile network connecting Canada, Mexico, and the United States, the company said in its pres announcement.

The merged company should be well positioned to participate in the nascent nearshoring initiatives occurring closer to American markets, Gross says.

Effective Intermodal Transport

Several steps can help shippers ensure smoother intermodal transport. As in all areas of the supply chain, visibility tools can help shippers keep tabs on their cargo.

Over the past few years, more intermodal service providers have offered the ability to track shipments, Comerford says.

Collaboration is essential, given the complexity of the solutions and the number of entities involved. Intermodal shipments “can run very smoothly with the proper communication and participation from each of the stakeholders,” Austin says.

Shippers that haven’t tried intermodal solutions or are looking to return to intermodal solutions will want to give it a try.

“The rail network has plenty of capacity, and the railroads are excited for new opportunities to keep the trains moving on consistent schedules,” Austin says.

Maryland Port Administration: A Top Cargo Port

In 1963, or about one year before the other Beatles landed stateside, the Volkswagen Beetle made its U.S. debut through the Port of Baltimore. Today, Baltimore has become the top automobile port in the United States.

One reason is its stellar automobile service and handling capabilities. A barcode scanning system captures detailed information about every vehicle that moves through the Port of Baltimore, as well as the drivers handling them, accurately tracking inventory and reducing damage.

The Quality Cargo Handling Action Team (QCHAT) program is recognized across the globe for its successful port-wide quality care program. In addition, the port has dedicated more than 700 acres to handling automobiles and roll-on/roll-off (RoRo) cargo.

Indeed, Baltimore handles more roll-on/roll-o​ff farm and construction machinery than any other U.S. port. This cargo typically is expensive to move and requires special care. The port’s highly skilled and trained labor force ensures all RoRo cargo is carefully handled.

Because the Port of Baltimore is about 150 miles farther inland than other Mid-Atlantic ports, it’s closer to many factories that are exporting goods, while imports coming through the port can more quickly reach the Baltimore-Washington consumer market. More than one-third of the U.S. population is within an overnight drive from Maryland.

These features have helped drive growth at the Port of Baltimore. It ranks 11th among major U.S. ports for foreign cargo handled and ninth for total foreign cargo value. Through its six public marine terminals, the Port of Baltimore handles roll-on/roll-o​ff shipments, container and breakbulk/project cargo, and forest products.

The port also handles specialized cargo, like machinery used to build power plants, transit systems, airports, and other massive, complex projects.

Direct Connections

When it’s time to move cargo from the port, two Class 1 rail carriers, Norfolk Southern and CSX, offer on-dock services. Both offer direct connections to Midwest markets.

Interstates I-95 and I-70 are minutes from the port. About 250 trucking companies, including many specialized heavy haulers, can transport nearly any type of cargo and offer connections across the United States and Canada.

The Port of Baltimore’s proximity to major farm and construction equipment manufacturers in the Midwest has helped it become a leading port in the United States for exporting combines, tractors, and hay balers. It also leads in importing excavators and backhoes.

Balterm, the port’s terminal for forest products, is a top handler of imported forest products. This is due in large part to its exclusive stevedoring company, Tartan Terminals. Tartan has more than 180 employees who have received extensive training in the specialized needs of the forest products industry. The terminal also offers more than 1.1 million square feet of warehouse space.

Just a handful of East Coast ports can handle ships carrying 14,000-plus TEUs and Baltimore is one. Its $220-million Seagirt terminal boasts a berth that’s 50-feet deep, as well as 11 cranes, including four Neo-Panamax cranes that can reach 22 containers across.

Seagirt can process 1.5 million TEU containers annually. Because cargo moves efficiently from the dock, the impact on truck traffic and the environment is mitigated.

In June 2022, the Port of Baltimore announced it would receive a $15.6-million grant to reconstruct and update the Seagirt Terminal’s intermodal rail yard infrastructure to support increased demand for double stacked trains of containerized cargo.

The improvements will include new rail tracks and two crane rail beams.

“This is terrific news for the Port of Baltimore,” said William P. Doyle, executive director, Maryland Port Administration and Port of Baltimore, in a statement. He notes that improving intermodal rail operations is a top priority, as rail service from the Port of Baltimore to the Midwest is increasing, as the port gains shippers diverting around congested gateways.

There are several factors to consider when choosing between over-the-road and intermodal transportation. Does the rise in online shopping mean that companies should fortify their trucking strategy? Or would intermodal help offset increasing last-mile expenditures? How do fuel prices figure into transportation decisions? What about balancing costs and service levels?

The answer depends on a variety of criteria that differs from one scenario to the next. Shippers must evaluate their individual needs and priorities to determine an optimal strategy.

Here are five factors to weigh when deciding between over-the-road and intermodal.

1. Cost vs. Lead Time.

Typically, intermodal is the go-to option for cost savings, while over-the-road trucking tends to prevail when there’s a time constraint. Products moved on trucks often spend less time at rest and have fewer handling points, which translates into shorter lead times.

“Our shippers typically select over-the-road transportation based on transit time and consistency,” says Frank Hurst, president of Roadrunner, an LTL carrier headquartered in Downers Grove, Illinois. “They need to know how long it will take to get from point A to point B so they can plan their operations accordingly.”

When delivery speed is less of a concern, intermodal offers robust capacity with a smaller price tag.

Over-the-road pricing is calculated, in part, based on length of haul, while rail utilizes flat rates. Freight that’s traveling at least 700 miles is a good candidate to convert to intermodal.

“Typically, intermodal will be $300 to $500 cheaper door-to-door than over-the-road,” says Luke Simendinger, vice president of intermodal services at Chicago-based 3PL and freight brokerage, Coyote Logistics. “Instead of one truck moving across North America, you might get 200 loads on a train. There’s significant savings, not only in transportation costs, but in accessorials, such as fuel surcharges.”

The spread between over-the-road and intermodal costs shrank as the trucking market cooled in 2022. Trucking spot rates fell by 31.8% in the third quarter, according to Coyote Logistics’ Q4 Truckload Market Forecast for 2022. And national van rates averaged $2.39 per mile in mid-November, seven cents below the October average, according to DAT’s Trendlines Report.

Declining rates could convert some freight from intermodal to over-the-road transportation.

“Over-the-road costs are so low now that shippers might be able to get a higher service level at a price that’s nearly competitive with intermodal,” notes Christopher Thornycroft, executive vice president of procurement at 3PL Redwood Logistics.

2. Shipment Volume.

With its high capacity and standardized transit schedules, rail transportation is best for shippers who move consistent large quantities of freight.

“The decision tree a shipper uses differs for a rateable high-volume lane that moves every day of the year versus a single shipment or single pallet quantity,” says Andrew Lynch, group vice president of domestic marketing and sales at Norfolk Southern, a Class 1 railroad based in Atlanta. “Those are two drastically different freight decisions.”

One consideration is economic order quantity. Every organization has an optimal order size. This allows them to meet demand without paying to hold excess inventory.

Rail is suited to move large quantities of freight, but that doesn’t mean customers are prepared to handle those volumes. “You’ve got to consider your customer’s behavior,” notes Ken Sherman, president of IntelliTrans, a technology-enabled transportation management service company headquartered in Atlanta. “Do they want the whole railcar to show up at once, or will they need one-fourth of a railcar to show up one week apart?”

On the other hand, over-the-road shipping is a better fit for spot freight.

“Intermodal typically works best when there is consistency in order to keep containers moving,” says Jake Schnell, vice president of sales operations at RXO, an asset-light transportation provider and freight brokerage based in Charlotte, North Carolina. “When volume is sporadic or it is a short-term project, over-the-road can provide more flexibility as volumes ebb and flow.”

3. Flexibility.

The pandemic highlighted the need to adapt to rapidly changing circumstances. Shippers had to constantly be prepared to work around unanticipated chokepoints. This need for resilience applies whether operating in pandemic conditions, or dealing with another unforeseen event.

Take weather conditions, for example. “A major tropical storm hit Florida and Georgia recently,” says Schnell. “How will that impact ports in that region?” .

When a storm hits, trucking offers the possibility to take alternate routes. For example, by using RXO Connect, a visibility tool that provides insights into weather or traffic, carriers can shift to a corridor with fewer disruptions.

“We might see something happening on a particular corridor and decide to reroute a driver so we don’t miss a delivery,” Schnell explains. “That applies whether there’s a tropical storm or a product launch. Obviously if there’s a blizzard, it doesn’t matter if freight is traveling by rail or highway. There will still be disruptions. However, the flexibility to take alternate routes doesn’t happen with rail.”

4. Complexity.

Not every origin or destination point is located in the vicinity of a rail yard. Intermodal widens access to rail by including a drayage service to or from an origin or destination point. But the additional moves add a layer of complexity.

“You typically have ramps plus a dray move in this process,” says Sherman. “First, a truck picks up the container or trailer at the origin. The container is then driven to an origin ramp, where it’s brought into a rail yard. Next, the container gets put on a well car.”

That process happens in reverse once a container reaches its destination. “Rail service will get as close as it can to the destination point, but then the container must be deramped, and taken away by truck for the final delivery,” Sherman explains.

“Over-the-road, in contrast, is the easy button,” he adds. “It has an origin and destination in just about any market, and there are thousands of carriers across North America.”

Intermodal’s additional moves can be further complicated by a lack of available equipment. “Chassis availability is important to understand when using intermodal,” says LeAnne Coulter, vice president of freight management at Penske Logistics, a logistics services provider based in Reading, Pennsylvania. “You don’t want to be in a situation where you’ve run out of free days at a port and you don’t know how you will get that container unloaded and returned.”

To mitigate some of these complications, companies might enlist the help of an intermodal marketing company, or IMC. “The process looks almost as easy from the shipper perspective,” Sherman says. “The IMC picks up the freight, just like in truckload, but it goes to a ramp. All the shipper sees is a different rate and transit time.”

What to Consider When Selecting a Freight Mode

Source: BlueGrace Logistics

5. Capacity.

Most commodities that could be shipped via intermodal transportation could also move on a truck. But certain products have specific requirements that an organization needs to take into account.

One is equipment availability. “What kind of equipment does the product require, and what’s the best way to get it?” asks Anne Reinke, president and CEO of the Transportation Intermediaries Association, a professional association of third-party logistics providers. “Is the commodity over-dimensional? Does it require special handling?”

Refrigeration is one example. If you transport strawberries, you need to work with specialized reefer equipment that is held at a precise temperature.

“Refrigerated moves generally require additional technology, such as sensors that can detect any changes in the temperature of the container or reefer van,” Reinke adds.

It’s equally important to understand how regional activity impacts freight capacity. For example, carriers might gravitate toward California during produce season, or haul large orders of bottled water from the Northeast during the summer months.

“Looking at capacity on a national level doesn’t tell the whole story,” says Reinke. “You miss a lot of opportunities if you don’t spend time planning in regional areas.”

There are many factors to consider in mode selection, and the tumult of the past three years has not made the decision any easier. The good news is that companies that plan ahead and employ an agile mindset will be prepared for the next freight cycle, whatever form it comes in.

How Much Truck Do You Need?

When loads are too small to fill a 53-foot trailer, a shipper may choose to haul them using less-than-truckload, or LTL, service instead. In this method of transportation, multiple shipments are loaded onto a single truck and transported across a multi-stop route.

A benefit of LTL is that instead of paying for an entire truck, shippers are charged only for the space they use.

“There are generally weight or cube requirements from an LTL standpoint,” explains Scott Schara, chief commercial officer at BlueGrace Logistics, a third-party logistics provider headquartered in Tampa, Florida. “Up until roughly 10,000 pounds, there’s a cost benefit to shipping LTL versus truckload. One pallet is much more cost effective to ship LTL than it is to ship truckload because you’re paying for the entire truck.”

Transit time is an important consideration in LTL. Shippers must be cognizant of their schedule requirements, as freight typically won’t move along a direct route.

“LTL freight traditionally goes through breakbulk,” Schara says. “It might get loaded from Los Angeles to Dallas, get broken down, travel from Dallas to Atlanta, get broken down once more, and then shipped out again. The nuance of lead time comes into play.”

That process means loads are touched more frequently than full truckload freight—a service that can come with accessorial charges.

“If there’s a driver touch that wasn’t specified at the time of the quote, if there’s an inside delivery, if there is a lift gate required, there can be accessorial costs,” says Christopher Thornycroft, executive vice president of procurement at Redwood Logistics.

“Eventually those charges add up,” he says. “What may start as a quote for $325 could go up to $600 one week later. You can lose the sense of visibility and control that comes with over-the-road truckload.”

As freight costs continue to rise, regardless of drops in oil prices, every supply chain executive is trying to pare down those expenses. “One way to cut freight costs is to consider less-expensive alternatives to truck,” notes Richard Thompson, international director, supply chain solutions at commercial real estate company Jones Lang LaSalle (JLL) in Chicago.

Intermodal also offers alternative capacity when high demand, supply chain volatility, and the ongoing driver shortage make it hard to find a long-haul truck. “Intermodal allows an organization to ship a load and not utilize a driver for the entire trip from the shipper to the consignee,” says Luke Simendinger, vice president, intermodal services at Coyote Logistics in Chicago.

In addition, shifting some volume from road to rail can help a company get closer to its environmental goals. “Depending on their freight network, the move to intermodal can reduce a company’s carbon footprint anywhere from 30 to 60%,” Simendinger says.

In the face of supply chain disruptions caused by everything from COVID lockdowns in China, to war in Ukraine, to labor disputes in North America, to natural disasters around the world, modal diversity makes a supply chain more resilient. “Companies are focused on supply chain risk mitigation,” says Thompson. “What will we do if we can’t get a truck or there’s no driver?”

Rail can offer a solution.

Reasons To Resist

In the past, many shippers avoided rail because they thought it was neither fast nor reliable enough to meet their needs. “Rail wasn’t a viable consideration for many companies, and some companies today still believe that’s the case,” Thompson says.

“Because there are more handoffs in the execution of an intermodal load—between an origin dray, a rail move, and a destination dray—there are more opportunities for exceptions in the process,” says Simendinger.

In addition to dodging a threatened strike, rail transportation poses some additional challenges.

For one, recent events have made shipping by rail more complicated and expensive. That’s partly due to the impact of Precision Scheduled Railroading (PSR), an initiative among Class I railroads to boost profits through greater efficiency.

Rail carriers have scaled back schedules, staffing, and other areas to achieve better operating ratios. Those lean operations make it hard to maintain top-quality service in the face of disruption, whether caused by hurricanes, labor shortages, or volatile consumer demand.

“Potentially, they can cut too thin,” says Ken Sherman, president of IntelliTrans, an Atlanta-based provider of logistics technology and managed supply chain services.

When demand for transportation exceeds service capacity, a railroad may limit volume by imposing a temporary embargo on some freight bound for certain locations.
For instance, from June through early September 2022, BNSF limited some westbound carload—but not intermodal—shipments into California.

“It’s complicated to manage your way around those embargoes when you ship thousands of cars per day,” says Brian Cupp, director of operations at IntelliTrans, whose rail-shipper customers use mainly carload services.

Rail shippers also face the same kind of congestion that has famously plagued ocean ports. “Congestion is not as bad at the rail terminals, but it’s still a bad situation,” says Andrew Sobko, CEO of CDL 1000, a company in Lyons, Illinois, that provides technology-based services focused on container drayage.

Not only do traffic jams in terminals increase total transit time, but they can trigger large storage fees for shippers that can’t get their containers out. “One of our largest customers recently spent $12 million on port and rail storage charges,” Sobko says.

With the right tactics, however, shippers and their third-party partners can overcome the challenges connected with rail transportation and use that mode to save money and improve operations.

A company’s best first steps are to analyze its freight, study the North American rail network, and look for places where need and capacity coincide.

“If the length of haul is greater than 750 miles, and the shipper and consignee are within 100 miles of a rail ramp, that provides good opportunities to understand what freight in the shipper’s network can be converted,” says Simendinger.

The Intermodal Association of North America (IANA)’s website offers several helpful educational resources for shippers who want to evaluate intermodal options.

Intermodal Best Practices

Here are some other best practices to consider:

Get dynamic in procuring transportation. Don’t simply assign a lane to certain carriers or a specific mode. Instead, make continuous adjustments as shipping needs, network conditions, and carrier performance fluctuate.

“Put some of that business onto the rail and start to build out a few of the capabilities within your organization,” Simendinger says. “Then work to feather that on and off, based on the service requirements of the product you’re moving in that lane.”

Route creatively. “When we see the network starting to gum up in a certain area, we make suggestions about alternative routings that might be longer in transit time, but, because of capacity issues, end up being shorter,” says Cupp.

Rail experts at IntelliTrans might also point out certain days when portions of the network are especially slow, using artificial intelligence (AI) and machine learning to spot those anomalies, he says. “For instance, we might say, ‘You should never ship to this particular location on a Thursday,’” he says.

Lose the demurrage charges. An intermodal terminal generally gives a shipper 24 to 48 hours to retrieve a container before the railroad starts applying storage charges, at $150 to $200 per container per day. CDL 1000 recently pledged to pull customers’ containers out of ocean and rail terminals within 24 hours, or else it would pay shippers’ late fees and storage costs for them.

The company has offered this guarantee to its biggest customers in the largest rail centers for some time, as long as those shippers give all their drayage business in a market to CDL 1000. Now, the company is extending that pledge to customers of all sizes. “If you fully outsource your entire market to us—let’s say in Chicago, or Memphis—we guarantee that you will pay zero in storage costs,” Sobko says.

CDL 1000 fulfills this pledge by getting containers out of terminals even when no appointments are available at destination warehouses. The company uses its own container yards to store the boxes. “We have massive infrastructure near the biggest rail terminals in the country,” Sobko says.

CDL 1000 soon plans to extend its guarantee across the entire United States by acquiring some drayage companies with a widespread terminal footprint.

Take a hybrid approach. If you need a faster transit than standard rail service provides, but don’t want to pay over-the-road freight rates, premium rail service can offer a happy medium. A premium load often rides on the same train as standard-priced loads. But a premium shipper might be allowed to drop containers at the origin terminal later than other shippers and pick up containers at the destination sooner.

Coyote Logistics used a premium service, for example, to get one customer a shorter transit time from the West Coast to Pennsylvania. Normally, Coyote would have booked an intermodal shipment to the East Coast and then drayed the container to its final destination, for a total transit time of seven or eight days. Instead, Coyote put the freight on a premium service to Chicago and then arranged for a longer dray.

“We were able to put together a six-day transit, which is just slightly longer than truck,” Simendinger says.

Maintain strong communications. Because a rail shipment takes longer and is more complicated than a truck haul, it’s especially important to keep everyone informed about mode shifts.

“Identify the stakeholders who will be involved,” suggests McKendry. “Bring challenges to the surface and talk about them. Connect your logistics partners directly with the shippers and receivers, or their customers, so they’re aware of what this modal shift can look like.” For example, if you ship product to a retail chain that imposes penalties for late deliveries, that customer needs to know how a transition to intermodal will alter the distribution schedule.

Remember the special needs of rail transport. Freight on the rails endures different stresses than a load on the highway. It’s important to block and brace loads accordingly.

While some shippers seek alternative solutions to help them temporarily in a tough environment, others might ask how to weave rail and intermodal transportation into their longer-term strategies. If so, they should include the railroads in their calculations as they decide where to site factories and/or distribution centers.

“For example, say you need x number of facilities in certain locations,” Thompson says. “You might decide to move a facility 45 miles to the west to be close to an intermodal terminal that might provide an opportunity to use that kind of service.”

It’s easier to develop a supply chain with intermodal in mind than to try to layer intermodal transportation onto an existing supply chain network.

Intermodal Marketing Companies Play A Role

Companies that want to use intermodal strategically would do well to form relationships with intermodal marketing companies. For instance, NFI and other third-party partners manage entire freight moves for shippers, reselling capacity they purchase from railroads and trucking companies. They can help shippers secure capacity for the long term.

“Intermodal is not a spot business,” McKendry says. Railroads would rather give capacity to long-term customers than to “fair weather friends,” and they would rather turn freight away than reduce their prices.

“If you ship canned foods, as an example, and you have volume, you can protect yourself by working directly through NFI with the railroads, ensuring that you have a certain amount of capacity per week,” he adds.

Shippers who want to include rail in their long-term plans can also be encouraged by the operational improvements the railroads are making to make the mode more reliable.

“As shippers think about their planning horizons, now is a good time to start utilizing some of these services,” recommends Simendinger.

One-Stop Shop for Rail Management

Shippers who want to shift volume from road to rail may find that a daunting prospect, in part because they lack a central source of information about their freight. Shippers often have to use several software solutions, plus multiple railroad websites, to get the data they need.

To make rail shipping more inviting, TransmetriQ, powered by Railinc, an Association of American Railroads subsidiary that provides rail data and messaging services to the North American freight railway industry, has been rolling out a new Rail Management System (RMS) that integrates data from a wide variety of sources in a single interface.

RMS currently includes a dashboard for tracing shipments, plus modules for issuing bills of lading and performing data analytics. In 2023, TransmetriQ will add asset management, rate management, and yard management, plus a route optimization tool that uses AI and machine learning to help choose the best way to ship a load.

“Shippers can give the RMS an origin-destination pair and ask it to provide five different ways to get a shipment there, with information about the transit time and cost of each route,” explains Danny Dever, product manager at TransmetriQ. “They can then look at transit time and cost to make informed modal decisions.”

Both carload and intermodal shippers have embraced RMS. One ocean carrier uses the tracing dashboard to keep tabs on its containers as they move through the rail network.

“We built the ocean carrier a special module in the application, called Quick Trace, which allows them to quickly pull up—with integrated data from the railroads—items such as the last free day, the pickup number, and the ETA,” Dever says.

This feature should prove helpful to intermodal shippers in general. “Hopefully, shippers will get more data, and containers can flow a little faster through the terminals,” he adds.

Intermodal Picture Improves

Total intermodal volumes fell 4.3% year-over-year in the second quarter of 2022, according to the Intermodal Association of North America’s (IANA) Intermodal Quarterly report. Domestic shipments held positive ground at 4% growth, while international containers dropped 8.4% and trailers 25.2%.

“Despite this quarter’s losses, it was an improved picture relative to the first quarter,” says Joni Casey, president and CEO of IANA. “Q2 volumes exceeded Q1 by 7.4 %.”

The seven highest-density trade corridors, which collectively handled more than 60% of total volume, were all down in Q2. The Midwest-Northwest led the losses with a 20.1% decline, followed by the South Central-Southwest at 14.5%. The Intra-Southeast, Southeast-Southwest and Midwest-Southwest dropped 7.8, 5.5 and 5.3%, respectively. The Northeast-Midwest dipped 3.1%, and the Trans-Canada corridor held losses to 2.2%.

Total intermodal marketing company (IMC) volume rose 1.3% year-over-year in Q2, with intermodal traffic down 7.4 %. Highway loads, two-thirds of total IMC volume, were up 6.3%.

Where the Rubber Meets the Railroad

Bridgestone Americas has been an intermodal user for more than 15 years, utilizing the transport mode to optimize cost and service for cross-regional and long-haul moves along its distribution network.

Bridgestone Americas is the U.S. subsidiary of Bridgestone Corporation, which develops, manufactures, and markets a wide range of Bridgestone, Firestone, and associate brand tires. Bridgestone and its subsidiaries address the needs of a broad range of tire customers, including consumers, automotive and commercial vehicle original equipment manufacturers, and users in the agricultural, forestry and mining industries.

In addition to an expansive network and an abundance of lane offerings that complement Bridgestone Americas’ freight flow needs, intermodal also provides scalable capacity, helping to ease the constraints that Bridgestone and many other shippers face in the current trucking environment.

Addressing Supply Chain Challenges

Bridgestone Americas uses nearly all transportation modes, including truck, less-than-truckload (LTL), intermodal, traditional rail, ocean, air, and parcel.

These modes must accommodate the movement of both raw materials used at production facilities and finished tire products that need to be distributed across Bridgestone Americas’ network to various customer locations. Bridgestone Americas has a heavy freight footprint across long-haul lanes, representing a significant cost and lead time to manage, and this has been an important area of focus for the company.

Bridgestone Americas’ main supply chain challenges include:

• Managing logistics costs to align with overall company expectations
• Contracting and securing transportation capacity, and overcoming localized and macro constraints
• Providing a high level of service to customers who depend on consistent, reliable delivery of tire products

Intermodal services are incorporated into Bridgestone Americas’ daily planning models to source tire products to the markets served by its plants and distribution centers. When considering conversion from highway to intermodal rail, the company factors in cost, lead time requirements, intermodal service levels and capacity. To overcome misperceptions that service levels may be sacrificed by using intermodal rail, Bridgestone Americas often provides transportation manifests to its customers and counterparts to assure them that intermodal services are consistent, reliable and able to meet the demands of inventory and on-time shipment performance.

CSX Transportation (CSXT) Intermodal works with Bridgestone Americas to convert additional freight from highway to rail by reviewing overall volume commitments in the Bridgestone Americas network and highlighting freight flows that can provide cost savings and capacity that over-the-road alternatives cannot match. This review homes in on long-haul solutions to meet Bridgestone Americas’ supply chain needs of positioning inventory within its distribution network.

The Results

In addition to reliable capacity, Bridgestone Americas experiences truck-like transit times on long-haul moves, with the same or better service measurements across modes. Further, relationships with preferred carriers and intermodal marketing companies to secure rates and capacity that meet its network requirements has driven Bridgestone Americas to use more intermodal rail over time.

When considering transportation options, Bridgestone Americas assesses what mode and provider will yield the greatest value in terms of overall cost and service performance. Using intermodal has helped the company manage its large supply chain by providing the ability to plan and secure its capacity in advance through intermodal carriers. By doing so, Bridgestone Americas can eliminate bottlenecks and delays that are often experienced in the trucking market. The company values the loyalty and experience of its carriers and sustains relationships that are mutually beneficial for their business and for the selected carrier.

Bridgestone Americas considers intermodal options to be more service competitive with truckload alternatives due to improvements in rail transit times and growing hours of service constraints, which limit over-the-road drivers. In addition, Bridgestone Americas experiences savings in fuel costs for long distance moves when it uses intermodal rail.

The company’s intermodal journey has evolved over many years into a core component of its distribution network. It continues to expand upon opportunities to utilize intermodal transportation, and relies on its partnership with CSXT Intermodal to identify additional freight suited for intermodal rail conversion.

–Source: CSX

Intermodal falls into four general categories: Truck, rail, sea, and air. 

Trucks can easily transport steel freight containers. They are usually the first mode of transportation that intermodal shipping relies on and uses to get the process underway. 

Additionally, trucks are typically the last mode of transportation to handle the freight on the way to its final delivery. 

Trains are an even more gainful means of transportation within intermodal transportation. Trains can transport hundreds of steel containers across thousands of miles with low transportation costs. 

But air and sea are the only modes with the potential to move freight containers between continents and across bodies of water.

Intermodal transportation has a growing list of benefits, including speeding free trade, lowering costs for consumers and economies, and reducing carbon dioxide impact on the environment compared to other transportation means.

Despite its upsides, intermodal transportation does also have some setbacks that draw some shippers to other transportation solutions. 

Sometimes intermodal transportation delivery times can be less than reliable, as weather can affect all transport means. Additionally, though it can reach far, intermodal is not the ideal solution for some rural parts of the United States or other countries. Additionally, it cannot avoid using fossil fuel at some stages of transportation, which is a disadvantage due to current high energy costs.  

Though its transportation modes are not new, the practice of intermodal transportation is. Before the 1960s, trains and ships did most of the shipping in the United States and internationally. 

The development of new vehicles with new capabilities changed freight transportation in that decade. Intermodal transport has gone on through the next 60 years to continue improving, becoming more efficient, and introducing more possibilities for freight delivery. 

To see more of the effect, benefits, drawbacks, and history of intermodal transportation, keep reading, as this article will detail it. 

What Is Intermodal Transportation?

Intermodal transportation starts before shipping begins, especially as intermodal providers begin planning, loading, and determining the type of intermodal shipping process needed.

Logistics companies and intermodal shippers alike use two broader categories of intermodal freight. 

Shippers decide between domestic and international intermodal transportation depending on the shipment. Domestic is what it sounds like: shipment within a country, province, or region.

For domestic transportation, most shipping services will use the railroad for reduced costs or over-the-road truck transportation to get cargo to customers for a reduced price. If the receiver needs the items faster, the intermodal service will use other modes of intermodal shipping.

Typically aircraft can get cargo delivered faster than over-the-road services and fulfill overnight or next-day deliveries. Aircraft are used in domestic shipping in large countries when the supply chain may be too long because it stretches across the entire country.

Air transport is included in international intermodal transportation, especially if cargo needs to move between countries quickly. 

Air transportation is typically reserved for small cargoes in international intermodal transportation, as planes are limited in the weight they can carry. But nothing can compete with their speed, and thus they are used for urgent cargo. 

More typically, for less urgent cargo in international intermodal transportation, a truck or train will get the cargo from its origin to a port. The freight will proceed onto a barge or a large freighter. 

This ship will then take the cargo to another port, where a train will likely transport it to a destination where a truck can take over and get it to the final destination. 

But before this process can even begin, intermodal transportation has to undergo containerization.

Containerization is packing the cargo into standard-sized steel containers equipped to hold it without damage. Intermodal containers are large steel containers that look like train cars but do not have wheels. 

Loaders pack the cargo so its weight can distribute evenly across the container’s floor. This keeps the container stable in transit and keeps its contents from spilling out. 

Usually, the intermodal transportation process itself begins by taking these loaded containers and putting them onto chassis so a freight truck can carry them.

History of Intermodal Transportation

Before intermodal freight transportation, shipping cargo involved a heavy labor cost in a process called “break bulk cargo.” Logistics companies and shippers shipped cargo by packing it by hand in small packages into ships, trucks, and trains. 

With no intermodal container to package the items and with none of the various modes of transit having reliable capacity, the packages had to be loaded and unloaded one by one at each transfer during the entire transit process. 

Packages were constantly lost. It did not matter how fast the rail traveled or how efficient the supply chains were; this process was not cost-effective and seriously slowed transportation. This constant slow loading and unloading even composed the majority of transportation costs.

That is until logistics companies began applying logic used by both the United States Military and by English rail car owners to create containers that would reduce transportation costs and increase the capability of intermodal shipping.

Development of Containers

The innovators who gave us intermodal freight took container processes already in place and refined them. In late 19th century England, rail companies used large containers to move luggage from trains to ships. 

English companies also used rail and ships together to ship coal in large containers, marking perhaps the first historical use of intermodal transport.

The United States Navy took this forward by developing steel containers during the Second World War to transport ammunition and supplies. By the 1950s, logistics companies started designing bigger steel containers to keep cargo in the same container as it traveled by rail, truck, or ship.

The 1960s: Intermodal Shipping Becomes Popular on the Seas

We will discuss containers further and why they are crucial to intermodal freight shipping. For now, we will mention this part of their history: as containers developed over the late 1950s, they became standardized. By making their standard size 8 feet and 6 inches, steel containers had a reliable capacity that shippers could anticipate.

Intermodal transport quickly became more feasible and popular with the rail industry and many logistics companies for its potential to significantly reduce costs. There was no more unloading and reloading onto the next ship or the next step in the supply chain. Instead, you only had to move the container to the new mode of transportation.

This phenomenon coincided with the ongoing development of container ships specifically outfitted for more efficient shipping. In 1931, the first container ship made its debut, but it had yet to meet the standardization of future intermodal and multimodal transportation. In the 1950s, United States shippers started using old oil tankers from the Second World War in tandem with the development of containerization.

By the 1960s, container ships and standard-size containers made international bulk shipping more efficient. This efficiency meant railroads like Union Pacific could reach even more people via rail. 

The possibilities of intermodal transport increased exponentially when the regional manufacturing facility and hub became a fixture in the supply chain. These institutions, linked to the rail yard at a specific point on the route, allowed freight to transfer between different modes and allowed trucks to add more cargo along a shipping route while removing congestion from seaports or larger ports.

With these combined developments, intermodal transport became the premier means of transit for freight on the seas and railroad tracks by the late 1960s.

The 1980s: Further Development of Rail Intermodal Freight Transportation

Intermodal transportation processes and containers improved over two decades. However, the innovators in charge of the transport still thought something was lacking in efficiency, and it was possible to ship more freight at lower costs. In 1977, intermodal transport innovator Malcom McLean started encouraging the use of “double stack cars” on rail lines.

While they did not become standard until 1984, these cars are now standard in intermodal transport.

The key difference between normal rail cars and double stack cars for intermodal transport is easy to see. Double stacks carry two stacks of intermodal containers in a “well” car, as opposed to a flat car, which lowers the height of the containers and concentrates the center of gravity more safely.

This development significantly increased the efficiency of intermodal transport exponentially by enabling intermodal shipments to carry more cargo and avoid highway congestion entirely. Due to this development, final delivery sped up, and rail transportation became a particularly efficient means of cargo transit.

Today: Development of Intermodal Freight Shipping Ramps

As intermodal transport continued to progress and containers continued to improve, there was still one glaring problem interfering with the entire progress of this phenomenon: the underdeveloped intermodal ramp system and the lack of technology for proper data analysis regarding freight transportation.

Ramps in the earlier days of intermodal transport were called “circus style” ramps, and they were less efficient than current ramps because they required trucks to pull containers down, and they could not move containers using cranes as they started doing in the 1980s. This improvement in intermodal setup made it easier to remove containers from trains and move them between two or more modes of transport.

Then: Tracking and Inventory

But even in the 1980s, technology still was not equipped to trace intermodal transport and give customers, moving companies, or partners accurate delivery times. Companies used paper and pen and kept a paper trail to keep track of massive loads of cargo. This inefficient means of keeping track of cargo and confirming arrivals at ramps meant that inventory costs could still be high, and there would have to be a change.

Today: Tracking and Inventory

That change came with the enhanced development of shipping software in the first two decades of the 21st century, which used the internet and enhanced computer systems also to foster lower costs for inventory and information tracking. 

Now, when a container arrives at a ramp, it is easy to enter into a shared system between companies. Based on location and means of transport, shippers can now provide an accurate estimate of when a container will arrive at its final destination.

Companies and intermodal transportation analysts can also use the data from these information systems to track arrival time and fuel efficiency, and even estimate carbon footprint.

Containerization

Containerization is the most important milestone in the history of intermodal transport. Without the development of standard containers, today’s multimodal or intermodal transportation for cargo would not have emerged.

The Start of Containerization

We briefly mentioned the beginning of containerization by discussing England’s coal containers, but now we can go into more detail. In the 19th century, coal companies used large timber boxes to begin transporting coal between modes of transport. 

As this started to profit several companies and improve the industry’s efficiency because it did not require the complicated sorting that break bulk shipping needed, companies tried to emulate this first means of intermodal transport.

Some companies even started employing stronger metal containers to use in multimodal transportation, while in Poland, the first attempt at standardizing containers came to life.

But the First and Second World Wars both got in the way of furthering the development of containerization. Thus it was put on hold until after World War II.

Containerization after World War II: The Start of Standardization

The United States began using standard-size steel containers to transport supplies and weapons during the Second World War on oil tankers that would later become container ships.

But these were not the standard-size “ISO containers” we see today. They were smaller and yet to be internationally standardized according to certain quality and size customs. They were also different sizes than the containers other countries were using.

In the 1950s, Europe began trying to create standard containers to use for shipping around the continent and saw some success. Still, intermodal transport became possible in 1955 when the first intermodal container appeared on the scene, developed by Malcom McLean and Keith Tantlinger.

These first intermodal containers were 8 ft x 8 ft x 10 ft and had a locking mechanism at their corners so they could stack high, and cranes could easily lift them. After McLean used a retired oil tanker to ship containers from New Jersey to Houston to prove the efficiency of this system, this container size became the de facto of intermodal transport for a long time.

Intermodal Containers in the 1950s and 1960s

The US government began using the 8 x 8 x 10 box to ship supplies to Vietnam, but within the United States, several companies were using different sizes of containers. While it meant intermodal transport could still develop, it meant there was no standardization, and the capacities of containers were wildly different.

Many companies used 24-foot long containers, others used 35-foot long containers, and others even tried to develop bigger containers.

Without any standardization, there was no way to rely on the capacity of the container itself, and shipping became a guessing game according to the company you partnered with.

Additionally, cranes, trucks, and other equipment could not always accommodate the different containers. Thus, international shipping companies, the railroad companies of the United States and many European countries, and trucking companies met to standardize containers in the late 1960s.

Standardized Containers: ISO

The International Standardization Organization came up with the dimensions and standards that transport containers must meet today. Containers must meet these standards so they can be used in shipping, and once they do, they become certified “ISO containers.”

Container Sizes and Weights

The five standard container sizes used today are as follows:

• the 20-foot long unit
• the 40-foot long unit
• the 45-foot long unit
• the 48-foot long unit
• the 53-foot long unit

All containers are generally 8’6″ high and wide. The ISO’s capacity term for the volume of these containers is the TEU – the “twenty-foot equivalent unit” – and it measures how much cargo can fit inside the container.

All sizes can hold a maximum of 36,000 kg, including the weight of the container itself.

Container Markings

All shipping containers approved by the ISO must have several codes marked on their outside that indicate the manufacturer, the port of origin, its owner, and its use. With such markings, each person managing the steps in the entire progress of the shipping process can register the information and help others track the containers if needed.

Other Standardization

Containers include corner locks developed in the 1950s to make moving them easier. Though the ISO does not standardize any method of securing steel container cargo, the standard sizes of the containers allow the shipping or moving companies who use them to secure them and secure the cargo inside with measured straps and lashing.

Modes of Transportation

Though there are four standard methods of intermodal transport, they differ greatly among the countries that use this method of cargo transport.

Rail intermodal

Rail transport is the shipment of masses of packages in containers using pre-existing railroad tracks to shuttle cargo between destinations. It is often used to get items between distant ports quickly, but it can also be used to get cargo from one hub to the other, where cranes can transfer the loads to truck-based transportation.

In 2020, there were 10,800 billion tonne-kilometers of train freight traffic.

At the moment, rail intermodal generally uses the standard 20-foot long containers, though there are other cases where it uses the other four containers to ship greater volume. Rail is used more in Asia than it is in other markets, though it boasts strong performance in the United States.

The ability to contain twice the load with double stack well cars and the rail and truck network offered by companies like Hub Group and Union Pacific means the United States can ship efficiently overland via rail and avoid delays due to traffic and congestion.

Within the European Union, countries are currently trying to push for greater use of rail transport to reduce carbon footprint, as trucks at the moment are their main means of land transport.

Train transport in Europe, such as in the UK, does not use double-stack well cars and instead uses flat cars that can fit one layer of 20-foot containers, so they cannot ship to the capacity American shipping companies can.

Container Ship

Shipping by ship is the most versatile of the intermodal methods. Ships transfer freight on rivers, canals, seas, and oceans and can move freight between major ports both domestically and internationally.

In 2020, 1.85 billion metric tons of freight reached their destination through at least a partial journey on a container ship. This number shows that container ships account for a significant portion of the world’s shipping.

In the United States, container ships operate on the Mississippi River and the coasts, often moving especially between the west coast, China, and Japan to move freight between the three countries. On the east coast, freight also moves to the Gulf of Mexico from Northern ports.

Within the European Union, ships account for much of the intermodal transportation traffic, especially on the Danube and Rhine rivers, which can accommodate shipping between several countries and even foster the transfer of freight between ships as they lead to the North and Black Seas.

Unlike rail, ships use two general sizes of containers for shipping due to their high capacity: the 20-foot long container and the 40-foot long container.

Aircraft

Aircraft is the fastest-developing of the intermodal transportation methods but remains the most limited for actually fitting containers. While we have no exact specifics on its capacity within intermodal transportation, we know air freight grew another seven percent in the last year.

The American market uses this option for urgent freight but often uses smaller containers that are not ISO containers to ship items in the “bellies” of passenger planes, and Europe does the same. If not engaging in this practice, they will often use smaller freight containers that do fit in planes.

Boeing, however, patented a plane five years ago that can fit the 20-foot intermodal container, and other companies have responded by attempting to do the same, so we can expect to see this sector develop further.

Truck

Trucking is the simplest to understand of the intermodal transportation sectors, but it is the most susceptible to inefficiency. Trucks can typically only transport one container, but they can accommodate all sizes of containers. Trucks transport packages and items overland on highways, roads, and streets.

As mentioned before, they are usually the first and last transport methods used on a container’s journey.

10.23 billion tons of freight were moved by truck alone in the United States in 2020. The United States is not alone in trucking being a massive shipping sector either. Several companies facilitate this massive volume of transport, such as the Hub group.

Europe shipped over a trillion tons of freight in 2021, even when the sector declined last year, which means trucking is the most used means of intermodal transportation in this continent.

Benefits of Intermodal Transportation

Now that we’ve outlined how to define intermodal and how Intermodal transportation works, let’s take a deeper look at its benefits.

Reduced Cost

There is no need for longshoremen to sort the packages within the containers or unload and reload the freight, which adds costs and time.

Potential to Mitigate Climate Change

When intermodal transportation works efficiently, it fosters fuel efficiency. It limits environmental damage because the fuel is used to transport far more weight than it would otherwise be able with a single transportation method.

Thus, its carbon footprint is lower than many other means of shipping.

Tracking

With standard marked containers and improved technology, it is far easier to estimate arrival dates, track containers, analyze the movement of freight, and see how to speed it up.

Increased Capacity

Intermodal transportation can ship massive loads of items and containers safely and reliably,

Disadvantages of Intermodal Transportation

Like everything, however, intermodal transportation has its disadvantages. These are the major of them.

Susceptibility to Weather

All methods of transportation in intermodal shipping have the potential to be slowed down by rain, storms, and otherwise dangerous conditions. Ships are particularly vulnerable to environmental hazards, as sudden storms cannot only stop them from sailing but indeed knock the freight off of them into the water.

Disease Vector

Since most ISO containers are not temperature regulated, many contain pests that will sneak out of the containers and spread diseases at new ports. These containers also have the potential to ferry invasive species between ecosystems.

Risk for Damage

Since the freight is handled quickly and generally not opened, there is a risk of damage that no one will even see as the process moves. The more freight changes hands as it moves, the more this risk increases.

Intermodal Transportation Example

As an example of the relatively simple process that intermodal transportation can follow, we will outline here an international intermodal shipping situation, as it utilizes and demonstrates the domestic shipping network.

International intermodal shipping:

• Your freight needs to get from Chicago, Illinois, to Shanghai, China and is too large to fly.
• Step A: You commission a company or companies to complete your shipping for you.
• Step B: Your freight is containerized into ISO containers.
• Step C: Hub group, the company you commissioned to transport your freight on its first leg, loads it onto trucks and brings it to Chicago’s train hub, where a shipping company takes them on trains that travel to the Port of Los Angeles.
• Step D: Once in Los Angeles, cranes will load the containers onto ships.
• Step E: The ship you contract will bring the containers, along with many others, to Shanghai, China.

What Is the Environmental Impact of Intermodal Transportation?

Due to its fuel efficiency, reliance on reusable materials, and reduced use of trucks in the process to avoid traffic and fuel waste, intermodal transportation is a sustainable means of shipping.

Intermodal vs. Multimodal Transportation

Intermodal transportation and multimodal transportation have one real difference, and it is regarding how contracts and planning work. Both are under the umbrella of “intermodal,” but with standard intermodal transportation, you must contract and plan each separate step.

Multimodal transportation has a single contract system – you make a contract with one company that will organize the intermodal transportation.

Intermodal vs. Transloading

The difference between intermodal shipping and transloading is easy to understand. Intermodal shipping moves entire steel containers without sorting through the contents inside them. Transloading means unloading the container and sorting through it to put the freight on different transportation methods so they can head to their final destination.

A: TLC got its start working closely with distribution companies moving liquid bulk chemicals. After time, we expanded our business to moving a multitude of commodities in bulk tankers, dry vans, intermodally via rail, repackaging, warehousing, and international freight forwarding.

Q: How do you see the third-party logistics market in relation to the logistics industry?

A: Third-party logistics and logistic brokers play a vital role in connecting small/medium-sized businesses to the wider logistics market. Smaller businesses might not have the resources available to have dedicated personnel to develop relationships with carriers, or know where certain market values should be for their freight.

At TLC, we strive to empower these businesses and place importance on developing those relationships with both existing and new carriers. We’re always looking to the future for growth opportunities, and this attitude allows us to remain competitive while maintaining positive relationships with our customers. It also permits us to expand our coverage footprint—giving our customers more access to shipping locations, as well as leveraging negotiating power.

Q: Why should a shipper consider working with a third-party logistics company compared to asset-based or owner-operator firms?

A: A third-party logistics company works with many different carriers with a multitude of capabilities over a larger area, as opposed to working with asset-based/owner-operators that tend to have extremely limited capabilities or coverage areas.

Q: What is one piece of advice you give to your customers?

A: “Make your freight more attractive.” We have found the most success in securing capacity on businesses that cast the widest net in terms of options. Whenever we’re able to present carriers with an acceptable delivery “range” (as opposed to a single, strict appointment), or locations that have their own dedicated offloading equipment (hoses, pumps, etc.), we have noticed higher acceptance rates on the carrier’s part.

TLC dedicates itself to working closely with our customers to make sure their freight needs are attractive to the right carriers, so that their entire supply chain runs as smoothly as possible.

Q: How has the market moved towards rail and intermodal, compared to liquid bulk and dry van freight?

A: Intermodal and rail are typically a cheaper alternative to shipping commodities that are less time-sensitive in their delivery windows. However, there is a positive correlation that people tend to worry less about the time-sensitivity of using intermodal and rail when OTR (over the road) dry vans/tankers become more expensive.

Q: What strengths does TLC possess as a third-party logistics broker?

A: TLC offers a wide range of different capabilities pertinent to logistics. Our tracking and communication technologies allow us to partner with carriers, warehouses, and repackaging facilities, while being able to relay up-to-date information to our customers at a moment’s notice.