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  November 3rd, 2021 | Written by

Leveraging International Multimodal Transportation in the Face of Globalization

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Transportation activity has expanded considerably in recent years with the globalization of trade. However, in the face of accelerating flows of goods and passengers, supply chain players have had to review their supply strategies, especially in terms of demand and regulatory standards. In this context, multimodal transport is a sensible solution to meet consumer needs and solve the problem of network saturation. With new methods that move lines internationally and stimulate innovation in the field of logistics and transportation, we won’t complain!

The new challenges of international transport

The supply chain today is subject to multiple factors to be considered to propose the right transportation solutions. But what are the points that must be respected to meet the needs of consumers around the world?

New consumption patterns

Consumer trends observed around the world have a very significant impact on logistics services: diversity of consumption habits according to countries and areas of residence, changes in customer expectations at the point of sale, and new delivery requirements.

The end of the “one size fits all” era

Contrary to what we had thought in the past, globalization is no longer synonymous with standardization. The era of “one size fits all” is over. Consumption patterns vary greatly from one country to another: it would be dangerous to ignore them.

Export companies must be able to meet local requirements as precisely as possible. The key to international success now lies in the customization of the offer.

Variable customer profiles according to culture

To be successful at the international level, brands must deal with different consumption patterns according to cultural habits. Regional specificities must be considered in companies’ commercial strategies.

Although it is shared in Europe and the United States, the e-commerce trend is taking shape, for example, in totally different ways in different countries, especially when it comes to services. In China, companies are confronted with the needs of two main categories of consumers: city dwellers, who want quality and services, and rural dwellers, who buy products in bulk at low prices.

In the promising African market, professionals expect a lot from the implementation of banking services and infrastructures to catch up. As for the Middle East and North Africa group, they are ideally located at the crossroads of international highways. On the other hand, the political and social changes currently taking place in Libya, Syria and Yemen bode well for the future.

Increasing urbanization and demand diversification

Sociologically, the global trend is towards urbanization. According to a UN study published in May 2018 in New York, the world’s population living in urban areas is expected to increase from 55% in 2018 to 70% in 2050. Therefore, consumer expectations and needs are inevitably changing. Customers now prefer smaller stores, which in turn also have less storage space, and are demanding more and more services such as home delivery or click and collect.

While convenience shopping is becoming increasingly common online, customers also want a different experience at the point of sale. As a result, brands that once focused on low prices and self-service must now question everything. They must also adapt to a growing middle class whose needs, homogeneous in terms of basic offerings and services provided, are diversifying into products that offer better margins.

One of the main challenges of global transportation is undoubtedly the issue of delivery times. A major problem for Supply Chain players, penalized by infrastructure capacity problems and difficulties in finding labor.

To learn more, consult our TMS Product Sheet here!

Transport infrastructure capacity: a major challenge

Regardless of the mode of transport they use, all carriers face network congestion problems. Therefore, new solutions remain to be invented to develop transport modes, especially in terms of capacity.

Globalization and its limitations

Shipping, which covers more than 90% of world trade, is still the cheapest mode of transport today. But it is less and less responsive to the challenges of today’s trade. The consequences? A capacity crisis causing many delays with unavoidable negative impacts.

And the increase in the capacity of container ships does not change this, as it also limits the possibilities of accommodating cargo ships in ports. There are few infrastructures capable of accommodating large vessels and with sufficient resources to load and unload them.

Always cost-effective and flexible, road transport is the essential option for door-to-door deliveries. But the shortage of truck drivers in Europe and North America is limiting its development.
Rail transport is also reaching its limits, with heterogeneous infrastructures in Europe generating a high rate of damage. In fact, a global trade route war is currently being waged, with significant financial investments.

How to overcome the problem of road transport?

Different approaches are being explored to address the problems encountered in road transportation.

Investing in autonomous vehicles

Autonomous vehicles are undoubtedly the future of transportation, provided that regulations are changed and that this new mode of transportation is accepted by the population. Although the technology is almost ready, there are still some bottlenecks. As proof: in the absence of benefiting from a regulatory framework for non-polluting vehicles, Deret electric trucks were recently blocked at the entrance to Paris during the first days of alternating traffic.

Evolution of rail transport

The railroad began its offensive with the commissioning of a new rail route between China and the Netherlands. The first train carrying cargo containers arrived at the port of Rotterdam in 2015. It took only 18 days to complete the journey, compared to 44 days by sea.

The problems of punctuality and tracking have yet to be solved, but the rail industries are testing new technologies to reduce these risks. Like the partnership between IDEO (a subsidiary of ID Logistics) and Lille-based start-up Everysens to produce connected wagons integrating IoT sensors on behalf of Danone Eaux.

Consider alternative solutions

Other interesting solutions have been developed to address specific issues. Take Steve Jobs, for example, who invested $50 million in buying air cargo space to ensure delivery of his new translucent blue iMacs by Christmas.

The revolution is underway. International companies cannot ignore it: to think globally, they must empower themselves to act locally, according to the context and characteristics of the market.

Multimodal transport: A response adapted to consumer needs?

Global trade also means international sourcing, distance from production sites and mass flows of goods. These are all challenges in terms of logistics. To meet these needs, actors in the supply chain are increasingly using multimodal transport, which has many advantages.

A bit of history

A small leap in time. In the 1960s, the advent of the container was a real revolution in transportation. Thanks to this invention, it was possible to transport goods all over the world without breaking the cargo. This could be done by sea, air, rail, road or water. In this context, multimodal transport was able to take off.

Today, although globalization and the large production centers located in Asia have accelerated the development of maritime transport of goods, alternative means of transport are still necessary to reach the end consumer. Thus, today, transport is mainly overseas (by ship or plane), but road transport is essential when approaching ports and for home deliveries.

So, it is not only maritime freight transport that has benefited from internationalization: road transport and other available means have managed to develop in its wake. But in addition to the complementarity between maritime and road transport, other forms of multimodality have emerged. Take the example of Switzerland and Austria, which have developed rail highways to transport complete road units by train to improve regularity and limit pollution.

The advantages of multimodal transport

As an alternative to 100% road transport of goods, multimodal transport combines at least two different modes of transport, from the departure of production units to their arrival as close as possible to the final consumer. The transfer takes place without load breakage since the same loading unit (the container) remains the same for the entire duration of the transport of the goods.

Its many advantages justify the enthusiasm it generates in the supply chain:

1. Improved delivery times.
2. Increased security of the goods.
3. Optimization of costs related to the transport of consumer goods.
4. Improved load capacity, which is higher than that of road transport.
5. Greater respect for the environment.

Reconciling urban logistics and quality of life

Last mile delivery, which represents about 20% of freight transport costs, is the current challenge for logistics professionals. New organizational schemes that respond to the commercial strategies of brands and meet the urban and ecological policies implemented in the territories have not yet been found.  Multimodal transport could once again play a key role in this area. Proof of this is the multiplication of multimodal transport experiences and the structuring of shared logistics platforms in urban areas.

Some examples of multimodal procurement

Several brands have already taken the next step by focusing on new multimodal transport solutions. Monoprix, for example, has chosen to combine rail and road freight transport for its supplies within Paris.

From the departure of the warehouses to a logistics platform based in Bercy, goods are first transported by rail. The products are then transported as close as possible to consumers by road: gas-powered trucks are used to supply the points of sale, in addition to electric vehicles for home deliveries.

Thanks to a partnership with XPO Logistics, Ports of Paris and Voies Navigables de France, the Franprix brand (Casino group) has entered the urban waterway shipping market.

Urban centers are multiplying

Logistics is not lagging in terms of multimodal sourcing: several initiatives underway in Lille, Saint-Etienne and Paris show a strong will to offer innovative solutions.

A multimodal urban distribution center opened in the port of Lille in 2015, for example, makes it possible to consolidate upstream transport and group deliveries in the city center. In the same spirit, the Saint-Etienne metropolitan area is a laboratory for urban delivery with the pooling of its goods distribution platform, transported to the city by a fleet of electric vehicles.

In Paris, the Chapelle International project is also proving to be a bold challenge in terms of urban logistics. Its objective: to reintroduce rail transport in the capital by building a 45,000 m2 logistics hotel on a former railway wasteland located at the Porte de la Chapelle in the 18th arrondissement.

Faced with the many challenges posed by the globalization of trade, multimodal transport now seems to be a solution of choice. Experiments are multiplying in this field, each one more innovative than the other. It remains to find the right level of regulation and innovative capacity for supply chain players to effectively implement the change.

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This article originally appeared here. Republished with permission.