Tense might be a good word to describe the transportation industry. As carriers adjust to enforcement of the U.S. Federal Motor Carrier Safety Administration’s hours of service rules, other challenges—including high fuel prices, driver shortages, new equipment requirements, highway congestion, and even parking restrictions—continue to affect the industry. For these reasons and others, some produce businesses are revisiting a more integrated approach to getting product from point A to point B: intermodal shipping.
Shipping cargo by a combination of truck, rail, sea, or air is nothing new, but today’s intermodal is a state-of-the-art experience from dock to destination. Supplementing traditional over-the-road transport with rail can cut down on fuel costs, alleviate driver restrictions, and reduce environmental impact.
“From a big picture perspective, intermodal has been (and will continue) enjoying several favorable macro trends,” explains Matthew Young, a transportation analyst with Morningstar, Inc. in Chicago. “The rising focus on supply chain optimization is driving shippers to seek lower-cost alternatives in transportation—particularly multimodal options.”
New Opportunities
To lure shippers into the realm of intermodal shipping, Young says rail companies have had to step up their game. “Class 1 railroads have been adding intermodal service in regions where it was not available before, giving shippers more opportunity to incorporate it into their transportation planning.”
Such expansion includes a number of regional and national projects aimed at increasing efficiency or adding capacity. Jacksonsville, FL-based CSX announced more rail lines on the I-90 corridor connecting the Midwest to New York; while Canadian National Railway planned expanded service to the West Coast through the Midwest with a new intermodal ramp near Chicago, one of the most highly congested distribution centers in the country.
“Some shippers have increased their use of intermodal to hedge against supply chain disruption should material trucking capacity shortages arise,” continues Young. Further, he notes, “truckload carriers are also increasing their use of rails, partly to compensate for limited driver availability.” Add the thirty-four hour restart and there are a host of reasons to take another look at intermodal. But can it really save produce shippers time and money?
To find the answer, we went to three experts in the field: Luke Gowdy, manager at FoodSource, a C.H. Robinson company, in Monterey, CA; Debra Sanford, vice president of sales at Clipper Controlled Logistics, headquartered in Chicago; and Sean McKenna, general manager for intermodal services at England Logistics, Inc., based in Salt Lake City.
Question
How has intermodal shipping changed over the last few years? What do you see as its key advantages versus traditional over-the-road trucking?
Tense might be a good word to describe the transportation industry. As carriers adjust to enforcement of the U.S. Federal Motor Carrier Safety Administration’s hours of service rules, other challenges—including high fuel prices, driver shortages, new equipment requirements, highway congestion, and even parking restrictions—continue to affect the industry. For these reasons and others, some produce businesses are revisiting a more integrated approach to getting product from point A to point B: intermodal shipping.
Shipping cargo by a combination of truck, rail, sea, or air is nothing new, but today’s intermodal is a state-of-the-art experience from dock to destination. Supplementing traditional over-the-road transport with rail can cut down on fuel costs, alleviate driver restrictions, and reduce environmental impact.
“From a big picture perspective, intermodal has been (and will continue) enjoying several favorable macro trends,” explains Matthew Young, a transportation analyst with Morningstar, Inc. in Chicago. “The rising focus on supply chain optimization is driving shippers to seek lower-cost alternatives in transportation—particularly multimodal options.”
New Opportunities
To lure shippers into the realm of intermodal shipping, Young says rail companies have had to step up their game. “Class 1 railroads have been adding intermodal service in regions where it was not available before, giving shippers more opportunity to incorporate it into their transportation planning.”
Such expansion includes a number of regional and national projects aimed at increasing efficiency or adding capacity. Jacksonsville, FL-based CSX announced more rail lines on the I-90 corridor connecting the Midwest to New York; while Canadian National Railway planned expanded service to the West Coast through the Midwest with a new intermodal ramp near Chicago, one of the most highly congested distribution centers in the country.
“Some shippers have increased their use of intermodal to hedge against supply chain disruption should material trucking capacity shortages arise,” continues Young. Further, he notes, “truckload carriers are also increasing their use of rails, partly to compensate for limited driver availability.” Add the thirty-four hour restart and there are a host of reasons to take another look at intermodal. But can it really save produce shippers time and money?
To find the answer, we went to three experts in the field: Luke Gowdy, manager at FoodSource, a C.H. Robinson company, in Monterey, CA; Debra Sanford, vice president of sales at Clipper Controlled Logistics, headquartered in Chicago; and Sean McKenna, general manager for intermodal services at England Logistics, Inc., based in Salt Lake City.
Question
How has intermodal shipping changed over the last few years? What do you see as its key advantages versus traditional over-the-road trucking?
Answers
Gowdy: The most notable changes in the perishable arena have been growth in the container-on-flatcar marketplace, as well as the number of carriers traditionally focused on over-the-road service that have entered the intermodal market.
The advantages remain the same in terms of access to capacity and pricing, but the recent trends have changed the competitive landscape as well as opened up a variety of new lanes that traditional intermodal carriers have struggled with in the past.
Sanford: The service has gotten so much better. The expedited rail network has made it possible to cross the country in five to six days—which is comparable to a single driver. With the hours of service changes, intermodal may be faster than over-the-road depending on the lane.
McKenna: We have seen a shift in the mentality of the railroads to be more customer-centric; service schedules have improved to make rail transport much more competitive in terms of transit time. Capacity is a huge advantage during seasonal spikes, and weather delays are basically nonexistent.
Question
Which types of investment—service area, capacity, infrastructure, marketing, etc.—do you think are most important in convincing customers to try intermodal?
Answers
Gowdy: I would point to service areas/lanes of traffic and increasing capacity as the two primary selling points. As more carriers enter the market and more lanes are opened up in the rail network, theoretically, the service becomes more “truck-like” and easier to grasp as a supply chain solution.
Sanford: As over-the-road challenges continue to increase such as driver shortages, hours of service, emission requirements, etc., the shipping public will have no choice but to try this mode of transportation.
Railroads are spending billions of dollars to improve the network with increased engine and flatcar inventories. They’re adding more and more articulated flatcars, which make for a smoother ride, as well as improving the rail lines with double tracking to allow for increased speed. They are in the ‘ready’ position.
McKenna: Service area and capacity are key to converting customers to intermodal shipping, but education is the biggest factor.
Many shippers simply do not realize how reliable rail transit times have become. With the correct timing, there are lanes where rail can be directly competitive with over-the-road trucking; on the shorter lanes, it can be only a one-day difference. Educating customers to these improvements often results in new intermodal business.
Question
What would you consider your top two challenges during 2013? How have you been dealing with these issues?
Answers
Gowdy: Two shipping challenges that jump out are trailer/container capacity and the supply of dray carriers.
The price for over-the-road transportation has always been a major factor for shippers, and intermodal is a great way to offer similar service with respect to transit time but at a slightly discounted rate.
The challenge has been access to equipment during the peak season; very few fresh produce shippers offer year-round volume, and as a result, over-the-road and intermodal carriers struggle with providing enough equipment to satisfy the increased demand during the California produce shipping season.
In addition to equipment capacity, the supply of reliable dray carriers is also a challenge. While it’s difficult to put a finger on the exact cause for the supply deficit, it is fair to say the economic conditions combined with a stringent regulatory environment have taken their toll.
The shortage requires shippers to provide increased lead time to secure needed equipment; in addition, there’s the potential for increased transit times due to equipment shortages at the delivery location.
Sanford: First, it would be the ever-changing regulations in the transportation industry. California is one of our primary markets and keeping our fleet compliant with CARB [California Air Resource Board] rulings—along with finding responsible drayage partners that are also compliant—is difficult and costly. Updating our fleet and securing additional drayage partners is an ongoing process.
Second would be backhaul opportunities that position our equipment in key markets. One of our strongest lanes is moving out of California to the Midwest and East Coast.
Finding loads to move back to California is getting harder and harder; this has always been a challenge, but I think the slow economy has magnified it. I don’t see it improving until the country gets back on its feet again and capacity tightens up across the nation.
McKenna: The logistics industry has grown tremendously in the last few years and as a result, has become highly competitive.
The top two challenges for 2013 have been bringing on new customers and growing freight volumes with our current customer base.
Our primary strategy to achieve both of these goals is to continue educating customers and providing the best customer service in the industry.
Question
Let’s talk about labor. What concerns you more: port strikes, driver shortages, hours of service restrictions, or a lack of college graduates interested or qualified to fill logistics openings?
Answers
Sanford: For us, it would be the truck driver shortage. Although we ride the rail for the majority of the line haul, we still rely on drivers to pick up and deliver the freight once the trailer has been taken off the train. The local pickup and delivery pool of drivers is shrinking just as the over-the-road pool is.
McKenna: A possible port strike has the most direct and immediate impact on our operations and our customers. Intermodal shipping actually becomes more appealing given the threat of driver shortages and tightening hours of service restrictions.
Question
What new technology or product do you think has the most potential for the transportation or logistics industry?
Answers
Gowdy: Global positioning system (GPS) technology, paired with live temperature monitoring, continues to be brought up in many conversations and is a part of C.H. Robinson’s customizedtransportation solutions.
Sanford: The onboard computer in the driver’s cab. This allows for better communication between the driver and dispatcher. Information can be communicated quicker and to websites, eliminating phone calls and potential errors.
McKenna: The proliferation of smartphones and apps has the most potential for our industry. Smartphones will likely lead to greater ease of communication with drayage drivers, leading to better tracking of trucks and shipments. This will allow us to provide more real-time information to our customers at origin and destination.
Concluding Thoughts
Despite the many obstacles in getting fresh produce from field to fork, innovative thinking is what keeps carriers moving day in and day out—from new service lanes and optimized loading strategies
to high-tech tracking and earth-friendly equipment.
Perhaps the key to strengthening the transportation industry, while alleviating undue pressure from tighter federal regulations and driver shortages, is sharing the load.
With recent service improvements and increased rail access, intermodal shipping appears well positioned to deliver for the fresh produce industry.
