Intermodal shipping is the transportation of freight using two or more modes of transport. Phil Yeager, President and COO of Hub Group, a supply chain management company, provides insights into intermodal shipping and its advantages for shippers.
If you’re involved in long-distance freight shipping and are aiming to decrease transportation expenses, intermodal shipping could be the solution. Let’s explore how it operates.
Are you a shipper dealing with long haul freight? Are you seeking ways to cut down on transportation costs? If yes, intermodal shipping might be the ideal approach for you. Phil Yeager, President and Chief Operating Officer at Hub Group, a leading supply chain management firm, sheds light on the details and significance of intermodal shipping for shippers.
Decoding Intermodal Shipping: A Comprehensive Overview
Phil Yeager, President and COO, Hub Group, discussing intermodal transportation.
Intermodal shipping involves moving goods via two or more transportation modes. By utilizing intermodal containers, cargo can be smoothly transferred between trucks, trains, and ships. This seamless transition is the core of intermodal efficiency.
Intermodal shipping is broadly divided into international and domestic categories. International shipments typically use 20- or 40-foot containers, remaining in the same container throughout their journey across ocean, road, and rail. Domestic intermodal, while termed “domestic,” can still involve goods originating overseas. The distinction lies in the container transition: upon arrival at a port in international containers, goods are often transferred to larger 53-foot domestic containers at facilities like cross-docks or distribution centers for inland transport.
Domestic intermodal shipping, particularly the truck-train combination, follows a structured process:
- Goods are loaded into a container mounted on a truck chassis.
- A truck then transports this container to a nearby intermodal ramp. This initial truck leg is known as “drayage.”
- At the ramp, specialized equipment lifts the container from the chassis and places it onto a flatcar or well car for long-distance rail transport.
- Upon reaching the destination ramp, the container is transferred back to a truck for delivery to its final destination, such as a warehouse or retail distribution center.
Hub Group specializes in domestic intermodal solutions. “At Hub Group, we handle the initial drayage, picking up the container from the customer and delivering it to the rail ramp. From there, the railroad takes charge,” explains Yeager. “The railroad transports it to the destination terminal, where we then manage the final drayage, placing it back on a chassis for delivery to the customer’s distribution center or ultimately, the end consumer.”
Unveiling the Advantages: Why Choose Intermodal Freight Shipping?
An intermodal container being efficiently transferred from a truck to a train, highlighting seamless transitions.
Intermodal freight shipping brings numerous advantages to the table:
- Cost Efficiency: Significantly reduces transportation costs, especially for long hauls.
- Fuel Efficiency: Lower fuel consumption compared to over-the-road trucking, contributing to savings.
- Capacity Availability: Provides access to substantial rail capacity, easing capacity constraints.
- Sustainability: A greener shipping option, reducing carbon footprint compared to long-haul trucking.
- Reliable Service: Offers consistent and dependable service schedules.
Why should shippers prioritize intermodal? These combined benefits present intermodal as a compelling alternative to solely relying on truck transport. Intermodal shipping extends rail access to companies even without direct rail sidings at their facilities, unlocking the economic and environmental advantages of rail without major infrastructure investments.
The Economics of Intermodal Shipping
Consider the financial implications. For example, shipping 100 truckloads from Los Angeles to Chicago via intermodal can lead to substantial savings. Using an intermodal savings calculator, the estimated annual savings can average around $115,800.
“Intermodal is an excellent method for shippers to transport goods, primarily due to its economic benefits,” Yeager emphasizes. “It’s a far more fuel-efficient and cost-effective approach for long-distance transportation, offering significant savings and better fuel economy compared to truckload shipping. It provides a cost-effective, high-capacity solution with consistent service levels.”
Yeager notes the increasing focus of companies, particularly in retail, on reaching customers cost-effectively. Intermodal provides this solution. “You need to deliver products promptly, on schedule, and with excellent service,” he states. “For our retail-heavy customer base (45%), delivering end-to-end efficiently is crucial. Intermodal effectively offsets rising final mile costs while maintaining high service quality and seamless integration from import to the end customer.”
Service Consistency: A Key Intermodal Advantage
Beyond economics, intermodal’s consistent service delivery is invaluable. Hub Group’s experience with a retailer who shifted 30% of their truckload business to intermodal highlights this. Delivering directly to stores, on-time arrival is critical for staffing loading docks efficiently. Intermodal service consistency directly impacts staff productivity and cost management. Hub Group’s intermodal service has proven to be their most consistent provider, outperforming even their truckload network. “It’s a significant success story,” Yeager remarks. “Our technology investments enable real-time shipment tracking, enhancing visibility and planning. This translates to cost savings, improved service, and crucial benefits for staffing and operational costs.”
Intermodal Shipping and Sustainability
Fuel efficiency positions intermodal as an environmentally responsible shipping choice. U.S. freight railroads can move one ton of freight over 470 miles per gallon of fuel, making rail the most eco-friendly land freight mode. Shifting long-haul segments to rail significantly enhances sustainability.
Using the LA-to-Chicago example, converting 100 truckloads to intermodal reduces approximately 210 metric tons of carbon dioxide (CO2) emissions annually.
“Intermodal’s fuel efficiency is a major sustainability advantage,” Yeager points out. “Many customers prioritize sustainability and carbon footprint reduction, making intermodal a valuable option for achieving these goals.”
While intermodal transit times might be slightly longer (a day or two), Yeager argues the trade-off is worthwhile. “While transit is about a day longer than truckload, the benefits compensate for potential inventory cost increases,” he explains. “You gain service consistency, reduce highway congestion by taking trucks off the road, improve fuel efficiency, and achieve reliable on-time delivery. These service improvements are driving increased interest in intermodal as a dependable capacity source.”
Is Intermodal Shipping Right for You? Determining Suitability
Intermodal freight shipping accessibility via truck for first-mile and last-mile delivery.
Intermodal freight shipping is broadly applicable to various shippers. Its accessibility is a key advantage – no on-site rail infrastructure is needed at origin or destination. Trucks handle the initial and final segments, while trains manage the long-haul portion, optimizing efficiency.
Ideal candidates for intermodal consider shipping distance and location. “Length of haul is the primary factor,” Yeager notes. “Proximity to rail hubs or terminals is also crucial. Extended drayage distances, exceeding 300 miles for example, can diminish economic advantages.”
Intermodal’s versatility suits diverse businesses. “Hub Group serves large retail and consumer product companies globally, each utilizing intermodal uniquely,” Yeager explains. “Despite varied haul lengths and routes, they all recognize intermodal’s value and service benefits.”
Versatility in Cargo: What Can Be Shipped Intermodally?
Intermodal shipping accommodates virtually any cargo that fits into an intermodal container. “Almost any product is suitable, aligning with railroad transport capabilities,” Yeager states. “From tires to consumer goods, even diapers – intermodal is remarkably flexible in terms of capacity and cargo.”
While railroads typically exclude personal items, passengers, or live animals, the range of shippable goods is extensive, showcasing intermodal container versatility.
Shipment Visibility in Intermodal Networks
Modern intermodal shipping offers enhanced shipment visibility through technology and tracking systems.
Historically, transitioning between trucks and trains raised concerns about shipment visibility. However, Yeager emphasizes that modern intermodal shipping provides the visibility shippers require. “Past visibility challenges are largely overcome through partnerships like Union Pacific and technology investments. Visibility loss is now a misconception,” he clarifies. “Customer expectations for visibility are met, and our partnership with Union Pacific positions us at the forefront. Our aim is seamless, end-to-end solutions with complete transparency.”
Hub Group enhances visibility by equipping containers with satellite tracking, AI, and machine learning. This provides real-time location and ETA updates. Their customer platform, Hub Connect, offers push notifications, active tracking, rate access, and comprehensive end-to-end visibility.
Real-World Intermodal Examples: Omnichannel Retail
Omnichannel retail perfectly illustrates intermodal shipping’s value, particularly with rising online orders and rapid delivery expectations. While intermodal doesn’t handle final-mile delivery to consumers’ doors, it plays a crucial long-haul role in efficiently moving goods to distribution or fulfillment centers. “Final mile delivery costs are high and will remain so,” Yeager points out. “Intermodal offers a consistent, cost-effective solution to mitigate full truckload expenses.”
Hub Group’s process involves drivers collecting containers from manufacturing or distribution centers, transporting them to rail ramps for train transport, and then managing final delivery to stores or fulfillment centers from the destination ramp.
“Los Angeles to Chicago is a major intermodal lane,” Yeager notes. “We have drayage operations at both ends. We are also expanding into home delivery, enabling end-to-end service to the consumer. This collaboration between Hub Group and Union Pacific delivers a seamless transportation experience.”
Getting Started with Intermodal Shipping: Initial Steps
Initial steps for shippers considering intermodal involve inventory management assessment and cost-benefit analysis.
For those considering intermodal, Yeager advises assessing its impact on inventory management, an area Hub Group assists customers with. “Start by thoroughly evaluating inventory impact and lead times,” he suggests. “Understanding the lead time chain at the facility level is crucial for successful implementation. Getting this right sets a strong foundation.”
Yeager also recommends a comprehensive cost-benefit analysis comparing intermodal to over-the-road (OTR) trucking. “When comparing to truck transport, consider the full value proposition, not just inventory costs,” he advises. “Evaluate the consistency, service, and cost differential versus truck to get a holistic view.”
Utilizing an intermodal savings calculator is a practical initial step. It provides comparisons of transit times, projected costs, and carbon emission savings between intermodal and OTR over a year.
Future Trends in Intermodal Shipping
Recent intermodal advancements include enhanced visibility and service consistency. What’s next?
Yeager indicates Hub Group’s focus on increasing control over the trucking component of intermodal. “Historically, drayage in intermodal relied heavily on third parties and independent contractors,” he explains. “Hub Group is proactively managing more of our drayage with our own drivers and trucks. This trend will likely continue.” Greater control aims for even more consistent and punctual service.
Technological advancements, particularly Application Programming Interfaces (APIs), are also emerging. “We’re driving further technology integration to position intermodal as a leader in visibility and information access for customers,” Yeager states. “API adoption is growing, and we are investing significantly, anticipating it as a key trend for efficient real-time information exchange.”
APIs facilitate easier data sharing between logistics platforms. Yeager emphasizes understanding customer data needs to avoid overwhelming them with irrelevant information, focusing on data that meaningfully impacts their business.
Hub Group’s Role in Intermodal Freight Shipping
Hub Group’s long history and extensive assets position them as a key player in intermodal freight shipping.
With a history tracing back to 1971, Hub Group has been a long-standing intermodal provider. Initially brokering “piggyback” service, they now possess 38,000 containers and a fleet of 4,000 drivers.
“We see our role as the conduit between customers and intermodal, offering capacity and trucking solutions for excellent service,” Yeager concludes. “We are committed to identifying savings, efficiency, and visibility opportunities for our customers’ supply chains. Intermodal offers these advantages – it’s not just cost-effective and fuel-efficient, but also high-service and sustainable. Customers can rely on intermodal as a robust capacity solution.”
Explore Intermodal Shipping Further
Interested in learning more about intermodal freight shipping? Contact us to connect with an expert.
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