Subscribe to our free, weekly email newsletter!


Moore on Pricing: Breaking the rail intermodal myth

By Peter Moore, Supply Chain Practitioner/Adviser
June 01, 2014

I joined my son at his church last week and happened to meet a senior executive from a brick manufacturing company. When this gentleman learned of my logistics background, he asked if I knew anyone who had flatbed trucks. 

His transportation team was projecting a shortage of “hundreds” of trucks in the coming weeks. He told me that the team was using “load board” sites and working the phones to get individual trucks to take loads. Then we commiserated about the “cowboy” image of flatbed operators and the lack of a large flatbed carrier the he could partner with to set up a comprehensive contract. 

I asked him if the transportation team looked at soft-side highway vans and intermodal as alternatives. He was aware of the first, but surprised me by stating:  “Railroads are just unreliable, so we stopped shipping rail years ago.”

I knew at once that he was referring to traditional rail operations in large flatbed railcars. I spoke with him about intermodal, schedules, and their improved reliability. I assured him that there are soft-side intermodal containers as well.

“The flatbeds or soft-sides are needed because the receivers often have to unload from the side from the ground at construction sites and storage yards,” I told him. He thanked me and he left with a number of questions for his transportation team. 

This encounter reminded me that many myths still exist about intermodal rail. Some shippers see intermodal as only ocean vans in 35-foot to 53-foot lengths. Worse, some are still picturing rail as carload service requiring transloading.

Shippers need to realize that highway and rail—particularly for moves over 500 miles—are competitors, and for long distances highway carriers themselves use intermodal rail as an alternative to sending drivers far from home base.

The need for flatbed or side-loading service raises some questions about equipment options for intermodal shippers. For many years these have been obtainable in limited quantities and little known.

As intermodal becomes more integrated with highway, the alternate equipment types will become more readily available. Shippers with the need for specialized trailers, tanks, and heavy equipment carriage can then feel confident of having a competitor in over-the-road to call for large volumes of product needing special equipment.

When looking at intermodal options, shippers need to do some research into several factors that will drive cost and service. Here are three key factors to consider.

First, what lanes of traffic are a good fit for both you and the provider? Can they integrate your traffic into their network? Do they have customers with a need for similar equipment in the opposite direction? Can they meet your delivery service requirements?

Second, is the equipment available nearby or can it be? Which intermodal yards are close by and do they have capacity for your business?

Third, after the equipment questions are answered and service seems acceptable, what is the cost? Intermodal often compares well with highway, and the regularity of train schedules is a nice juxtaposition to “cowboy” flatbed operations.

Shippers can increase their options and raise competition for their freight by thinking outside the box—or in this case, outside the flatbed.

About the Author

Peter Moore
Supply Chain Practitioner/Adviser

Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

In this webcast we'll explore how successful companies use strategies such as cross-client load consolidation, zone skipping, pooling, etc. to minimize freight cost. You’ll hear how transportation optimization is used to generate cost savings and where the ROI comes from.

Even with expected import cargo volume declines in the coming months, the Port Tracker report by the National Retail Federation (NRF) and maritime consultancy Hackett Associates expects volumes to be up for the first half of 2016.

USPS pointed to ongoing growth in its Shipping and Package Group, whose primary offerings are comprised of Priority Mail, Express Mail, Parcel Select and Parcel Return services, as the key driver for the quarterly revenue gains.

With a 2.3 cent decline to $2.008 per gallon, this week’s price stands as the lowest national average going back to the week of March 16, 2009, when it checked in at $2.017.

A recent Wall Street Journal report stated that third-party logistics and freight transportation services provider XPO Logistics shut down seven freight terminals that were part of the Con-way Inc. less-than-truckload (LTL) network, Con-way Freight. Con-way was acquired by XPO for $3 billion last year.

Article Topics

Columns · June 2014 · Rail Freight · intermodal · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA