Cleveland Intermodal Transportation Team: Lull is Likely Temporary
Cleveland intermodal transportation is a combination of two or more shipping modes, such as truck, ship, rail or aircraft, used to move goods to their final destination. It’s often most beneficial for shippers who need to move materials a distance of 750 miles or more. Third-party logistics teams are often contracted to help oversee supply chains involving intermodal transport as it involves multiple carriers each responsible for a specific mode.
Intermodal transport has been altered drastically just in the last several decades, with advances including automated terminals and double-stack cars. This led to soaring growth associated with cost reductions and productivity gains. The benefits of Cleveland intermodal transportation are still apparent, but the momentum does appear to be slowing a bit, according to the Intermodal Association of North America (IANA).
Domestic intermodal volume has fallen 6 percent year-over-year in the first half of 2019 and there was a nearly 8 percent drop in the second quarter of 2019. Intermodal traffic moving in trailers and containers has grown just 0.1 percent in the last five years, but it did hit a peak just last year.
(Internationally, intermodal volume and rates tend to be driven by ocean carriers, which face different demands and challenges compared to their U.S. domestic counterparts, so it’s not an apples-to-apples comparison.)
Theories on Intermodal Transportation Slide
Part of this might be explained by the increasingly common adoption of precision scheduled railroading. Also known as PSR, this is a rail mode strategy that keeps training running from origin to destination on a strict schedule, often for extended distances. This helps avoid delays, but it can also mean abandoning”unattractive” markets (“network simplification”) and lowering the priority of infrastructure investment. Ultimately, it can reduce reliance on other transportation networks.
A slowing U.S. economy might also explain some of these slipping numbers. Another factor is the fact that some forms of intermodal transportation can actually be more expensive than just using a single mode. Trucking, for instance, is currently less costly than other lanes.
But fluctuations in cost aren’t the only considerations shippers must consider, which is why our Cleveland intermodal transportation team is confident in long-term supply chain strategies that incorporate intermodal methods.
Benefits of Cleveland Intermodal Transportation
As 3PL providers, we’re constantly looking for the lanes that are going to offer the best overall benefit to our clients. Minimizing or eliminating unnecessary expenditures is at the top of that list, and intermodal still offers many shippers a clear cost advantage. For example, fuel costs for truck and rail tend to be far lower than for aircraft and ocean carriers. But even in cases where it may cost a bit more, there are other factors that might nonetheless make intermodal the smarter choice.
Shippers want the best value for transport services, but that also means goods need to be delivered reliably on time. Key to this is having a source of transport with consistent capacity. Intermodal transport of goods offers this, with shippers in some sectors finding capacity issues a far less frequent issue with intermodal compared solely to trucking, particularly in light of the ongoing driver shortage.
Making intermodal even more attractive are the technological advances that allow virtually all intermodal sources to have track and trace capabilities. This kind of transparency, long an integral part of the trucking sector, is increasingly critical for businesses engaged in the growing e-commerce sector in all lanes of delivery.
Finally, there is service quality. We work with our own fleet and drivers for trucking, but sometimes also sometimes contract with other trusted carriers when it benefits the customer. Not all 3PL providers offer this kind of service (which also includes warehousing). Depending on the details of your supply chain, intermodal transportation can be more resourceful and in some cases faster than just truck transportation. The length and complexity of your supply chain as well as the level of care needed to ensure your goods reach their final destination in the best condition will factor on this front.
On the whole, there is still a great deal of room for intermodal transportation to grow in the coming years, so the decline we’re seeing is likely only a temporary slip. And despite the IANA report, there is more recent evidence intermodal transport may already be on the rise again. FreightWaves.com reports intermodal container shipping spot rates were $0.07 higher in October compared to September.
You can trust our dedicated Cleveland intermodal transportation team to be clear and transparent about your choices and what makes the most sense for your company. We’ll help you carefully assess your networks to ascertain how best to allocate transportation spending across modes and carriers to optimize supply chain efficiency.
Precision Scheduled Railroading – evolution or revolution? Sept. 17, 2019, By Keith Barrow, International Railway Journal
More Blog Entries:
Smart Cleveland Supply Chain Strategies Support Business Growth, Aug. 16, 2019, Cleveland Intermodal Transportation Blog