Internationally, 95 percent of all manufactured goods spend some portion of their shipment in a container, according to the Intermodal Association of North America (IANA), and it’s this modular unit of cargo-carrying equipment that makes intermodal transportation possible.

Intermodal transportation is defined as the movement of freight via more than one mode of transportation. Goods are packed inside containers, trailers or other storage methods, for clean transfers between logistics service providers that do not have to directly handle goods during shipment.

In the US a typical inbound intermodal process will see containers enter port via an ocean freighter, where they are loaded onto a railcar for potentially the longest stretch of their overland journey. Containers are then loaded onto another truck for local delivery to their final destination.

While intermodal is sometimes used erroneously as synonymous with multimodal transport and transloading, it’s worth emphasizing that they differ. Each leg of a shipment’s journey via intermodal transportation is contracted through its own carrier. Both multimodal and transloading usually indicate that all the modes of transport involved are handled through a single contract or bill of lading.

Transportation expenses constitute the majority of total logistics expenditures in the U.S., 65 percent according to the Council of Supply Chain Management Professionals 27th Annual State of Logistics report. It’s this significant overhead that intermodal transportation is designed to economize.

Rail transport over long distances can dramatically reduce costs. Cross-docking of goods between modes, reduces transport costs and delivery times by maximizing utilization rates and optimizing routing. Although broadly applicable observations like this can be made about the benefits of intermodal transportation, there are often many more that are unique to the specific sources, destinations and goods themselves. So, when should a firm consider intermodal transportation options? And, when making those decisions, what should their rubric be?

How intermodal shipping benefits the wider logistics industry

To get a sense of the full scope and expansion of intermodal transportation, consider that North America houses the world’s largest market for intermodal shipping, USD 40 billion per estimates by the IANA, with a fleet of over 700,000 chassis hauling approximately 34.5 million domestic and international containers across its network. In 2012, the entire global container fleet was estimated to be less than two thirds of that volume, 20.5 million containers, according to Container Services International’s World Container Fleet Overview.

In North America, the intermodal freight fleet consists of more than 650,000 chassis and 135,000 rail cars, based on last year’s analysis by Wisconsin’s state Department of Transportation. As this breakdown suggests, these two major modes of intermodal transport have distinct advantages and limitations that must be considered seriously during logistics planning.

Broadly speaking, any shipment that has an origin or destination within approximately 200 to 300 miles of a major metropolitan area would be well positioned to benefit from an intermodal transportation combining the ocean leg plus a drayage or trucking move. In addition, shipments anticipating protracted loading times, longer than a day or more, will further benefit from the lower drop and pick chassis fees compared to the similar fees imposed by live unload trucking services.

While intermodal shipping incorporates a wide variety of transport modes to move goods both domestically and internationally, including trains, barges, trucks, ocean vessels, air freight and others, the category is most associated with the unique efficiencies of rail. Railroads and intermodal are so synonymous, in fact, that industry experts pair the two together under the same vertical, perhaps the best indication that any strong understanding of intermodal transportation’s benefits begins with their tracks.

Intermodal rail offers significant cost and fuel savings

Any logistics or shipment firm currently moving full truckloads of freight over 500 miles could likely cut costs, improve their carbon footprint and gain access to more flexible shipping capacity by employing intermodal rail.

Estimates within the industry vary, but the savings per total shipment can range from 10 percent to as high as 40 percent. Some of these cost savings can be attributed to the lower fuel costs for intermodal rail, while others derive from the greater flexibility and scaling potential that arise from the diversification of shipping options made possible by intermodal methods.

The dramatic fuel efficiency of rail has steadily increased over the years, making it the most environmentally sustainable means of transporting goods over land. In 2018, U.S. intermodal rail was capable of shipping a ton of freight an average distance of 473 miles on just one gallon of fuel, according to a July 2019 report by the Association of American Railroads (AAR) — up from 332 miles in 1990, and 396 miles in 2000.

Thanks to well cars and other technologies for facilitating double-stack rail transport, one single intermodal train can move the freight equivalent of 280 truckloads — a highly scalable shipping method that can mitigate unexpected issues with logistics partners and other capacity-related risks. As a consequence, intermodal rail has the capacity to help shipping clients respond to seasonal surges and other changes in demand, as well as adapt to tightening over-the-road capacity due to recent motor carrier regulations, like the U.S. Congressional mandates enforcing electronic logging devices (ELD) and hours of service (HOS) rules.

Intermodal trucking offers speed and precision

Under 500 miles, intermodal road transport options like trucking and haulage have advantages over rail, primarily access to more granular public infrastructure and streamlined procedures ideal for more time-sensitive and perishable goods.

Typically, industry analysts say, hauls below the 500-mile mark can be shipped in one day via truck. Road transport is also cheaper in these scenarios, as the hypothetical advantages of any low-cost rail miles would be more than likely cancelled out by the added costs of conducting circuitous drayage trucking “out of route.”

Although intermodal rail options are catching up in refrigerated freight categories like food and medicine, they often still require approximately one additional day in transit compared to over-the-road shipping, which can increase the risk of spoilage. These are nontrivial categories given that “foodstuffs” constituted the second highest volume of container-based imports to the United States in 2017, and agricultural products similarly came in second for U.S. exports that year, according to the Journal of Commerce.

Key metrics for measuring intermodal success

Since 2013, the U.S. Congress has directed the Surface Transportation Board (STB) to collect performance data from all the Class I railroads on key metrics including average travel velocity and container dwell time. In addition to aiding in the production of multiple contingency shipping plans, this information can also help shippers and their providers better negotiate rates with Class I railroads.

Similarly, for drayage, truck turn times at intermodal rail terminal yards can help measure individual provider’s efficiency, as they both reflect (or themselves impact) container dwell times at intermodal ports and terminals.

TradeLens provides secure and consistent access to unprecedented levels of event data including first and last mile, published directly from its source, in near real-time and has been onboarding rail operators, largely concentrated today in North America.

The TradeLens data direct from the rail providers may provide new levels of precision and enable accurate operational planning for TradeLens users, ultimately enabling opportunities such as:

·       Near real-time capture of source data for organizations running predictive analytics

·       Fewer unplanned costs

·       Reduced safety stock requirements with better visibility to variations of estimated and actual arrival times

While intermodal transportation is a vast category that can conceivably include these and many more methods of shipment, rail and trucking are the means most commonly associated with the practice within the industry. For this reason and more, assessing the benefits of intermodal transportation for any one business will depend on these and other metrics collected by the industry.