Ten Things You Need to Know About Domestic Intermodal Services
Intermodal continues to be the fastest growing segment of domestic transportation and industry experts do not see the trend changing anytime soon.
A study from Morgan Stanley and FTR Associates indicated 46 percent of the companies surveyed will convert some of their truckload lanes to 53-foot domestic intermodal. The reason is the continued pressures on truckload carriers have companies hedging their bets to gain access to affordable and reliable capacity.
With that said, what does a new entrant into the intermodal need to know?
The number one issue new intermodal shippers run across is weight and distribution of intermodal weight. Domestic intermodal containers can be loaded at 42,500 versus truckloads at 45,000 pounds. The difference in weight is because of the combination of the intermodal container and chassis is greater than a 53-foot dry van. The domestic intermodal container is also more rigid and heavier than a standard dry van. The rigidity allows the containers to be double stacked on trains and allow for safe container transfer from rail to chassis at the ramps.
As a general rule, shippers are responsible for blocking and bracing their domestic intermodal loads. This is important to understand because many shippers have pushed off the blocking and bracing of truckloads to their carrier. On the plus side, railroads are very helpful in providing direction and load plans on how to best block and brace the loads.
Do not shy away from putting retail deliveries on intermodal. As a matter of fact, retail deliveries are one of the best lanes to use intermodal. The reason these lanes provide a more reliable delivery is intermodal service allows shippers to gain control through the management of a buffer window on the delivery date that cannot be done with truckload shipments. For truckloads, shippers have to forecast the ship date much tighter because they need to make sure they hit the RAD date on the transit time of the driver. If a shipper’s truck arrives early, they could be faced with layover charges, while the driver holds the goods to avoid the retailer’s fines. Through intermodal service, shippers can pad the transit by having the container deliver at the destination ramp one or two days prior to the RAD date and then have a short distance dray for delivery to their customer.
Intermodal transit times are roughly truck, plus a day. When two railroads are needed to complete a lane, it is typically truck, plus two or three days. Expedited transit options are available on some intermodal lanes.
High security loads are a perfect fit for intermodal. Double stacked intermodal containers restrict access and protect cargo while on trains. The short drays at origin and destination ramps are the only segments of the move going over the road.
Typical cost savings by converting from road-to-rail is roughly 18 to 20 percent. There may be lanes where the savings are greater, but consider those pleasant surprises versus going into it thinking that it will be the norm.
A domestic intermodal container is similarly built to an ocean container, but that is where the similarity ends. Domestic containers are all 53 feet. Unlike ocean containers, domestic intermodal containers do not have rings in them for bracing purposes.
Railroads do not sell retail, meaning shippers cannot work direct through the railroads. Shippers will work through what are called intermodal marketing companies (IMCs). IMCs buy on a wholesale level with the railroads and are the groups shippers work with to get their shipment from origin to destination. The railroad and IMC relationship works extremely well with today’s door-to-door intermodal product. The arrangement allows the railroads and IMC’s do what they are good at, while also allowing the IMC to layer on additional flexibility and reporting the shipper needs to run their business. The relationship also allows shippers to have one provider to work through and gain access to all railroads versus having to call the individual railroads for their respected West Coast and East Coast lanes.
Domestic intermodal has a peak season, and related challenges and charges, much like ocean shipments. Some IMCs have options available to guarantee the capacity and eliminate the charges, so make sure to ask questions around the topic to ensure you’re covered.
Not all IMCs are created equal, so be sure to vet the IMC before moving forward. The good IMCs will be a great source of education and will hold your hand all the way through the process of converting your truckload lanes over to intermodal lanes. In some cases, the railroad will also make their own recommendations.
Rick LaGore is Chief Financial Officer of Integrated Distribution Services, Inc., an intermodal marketing company.
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