Is intermodal transport a solution to the capacity crunch?
By: Phil Sneed
The capacity crisis in U.S. trucking is already driving up shipping prices across the country, but this is just the tip of the iceberg. While nearly 70 percent of the nation's freight is already moved via trucks, according to the National Trucking Association, and the nation's capacity is already being strained. The recent improvements in the U.S. economy are expected to put additional pressure on shipping channels as more companies try and move goods to market.
The Journal of Commerce highlighted this issue and noted shippers expect 2015 to be a year of rate increases and continued capacity problems. The solution to many of the capacity issues plaguing the trucking industry could lie in intermodal transport that incorporates trucking but does not wholly rely on it.
What is intermodal transport?
Intermodal transportation uses modular shipping containers that can be mounted on trucks or train cars, and allows shipments to traverse great distances using the most appropriate mode of transportation for each leg of the journey. This has the potential to cut costs for shippers and may reduce some of the demand for truck capacity during the next several years. Intermodal shipping is best handled with the aid of a logistics company that can coordinate the movement of individual shipments between different transportation methods and provide consistent updates on the location of goods.
"Intermodal transport can improve efficiency."
Intermodal generally offers substantial price savings over pure highway trucking, and the industry has grown steadily as more shippers harness the flexibility intermodal options provide. Intermodal shipping has grown steadily in recent years, the Association of American Railroads projects it will continue to increase in the future. They particularly note the increasing percentage of domestic intermodal traffic on the nation's rail lines. As other forms of transit become overloaded, rail transport remains an appealing option.
Capacity issues remain
Intermodal transport is not a magic bullet that solves the shipping industry's capacity issues. In fact, the addition of rail can create further capacity issues. The need to load and unload a large number of goods in a train yard can put additional pressure on nearby roads as trucks hit the highway, and the railways are struggling with capacity issues of their own.
Speaking to Inbound Logistics, President of Gross Transportation Consulting, Larry Gross, said, "Intermodal has been growing consistently, but conventional rail carload traffic has jumped as well." Gross went on to note that rail carriers lacked adequate equipment and personnel to keep up with growing demand.
Intermodal as part of a comprehensive shipping strategy
The capacity constraints across all forms of shipping emphasize the need for companies to partner with logistics organizations when moving goods across the U.S. A cost-effective and efficient shipping plan will encompass multiple modes of transportation and coordinate these elements seamlessly to facilitate consistent on-time delivery.
The importance of intermodal transport could increase, as trucking capacity is likely to grow tighter. The current shortage of truck drivers is expected to worsen in the coming years, according to the ATA. Additionally, new government safety regulations will cut into the number of truck drivers even further, according to Inbound Logistics. These changes could shift more traffic to intermodal, but it's clear railways do not have an excess of capacity either.
Shippers will need to brace for price increases no matter what form of transport they use, but strong logistics partners could help soften the blow from growing prices. Longstanding industry relationships allow organizations like Tandem Logistics to attain prices that companies operating independently cannot match. Additionally, the advanced tracking capability provided by Tandem will keep shippers appraised of their goods location throughout the shipping process, regardless of what modes are used.