overcome the challenges connected with rail transportation and use that mode to save money and improve operations. A company’s best first steps are to analyze its freight, study the North American rail network, and look for places where need and capacity coincide. “If the length of haul is greater than 750 miles, and the shipper and consignee are within 100 miles of a rail ramp, that provides good opportunities to understand what freight in the shipper’s network can be converted,” says Simendinger. The Intermodal Association of North America (IANA)’s website offers several helpful educational resources for shippers who want to evaluate intermodal options. INTERMODAL BEST PRACTICES Here are some other best practices to consider: Get dynamic in procuring transportation. Don’t simply assign a lane to certain carriers or a specific mode. Instead, make continuous adjustments as shipping needs, network conditions, and carrier performance fluctuate. “Put some of that business onto the rail and start to build out a few of the capabilities within your organization,” Simendinger says. “Then work to feather that on and off, based on the service requirements of the product you’re moving in that lane.” Route creatively. “When we see the network starting to gum up in a certain area, we make suggestions about alternative routings that might be longer in transit time, but, because of capacity issues, end up being shorter,” says Cupp. Rail experts at IntelliTrans might also point out certain days when portions of the network are especially slow, using artificial intelligence (AI) and machine learning to spot those anomalies, he says. “For instance, we might say, ‘You should never ship to this particular location on a Thursday,’” he says. Lose the demurrage charges. An intermodal terminal generally gives a shipper 24 to 48 hours to retrieve
strike, rail transportation poses some additional challenges. For one, recent events have made shipping by rail more complicated and expensive. That’s partly due to the impact of Precision Scheduled Railroading (PSR), an initiative among Class I railroads to boost profits through greater efficiency. Rail carriers have scaled back schedules, staffing, and other areas to achieve better operating ratios. Those lean operations make it hard to maintain top-quality service in the face of disruption, whether caused by hurricanes, labor shortages, or volatile consumer demand. “Potentially, they can cut too thin,” says Ken Sherman, president of IntelliTrans, an Atlanta-based provider of logistics technology and managed supply chain services. When demand for transportation exceeds service capacity, a railroad may limit volume by imposing a temporary embargo on some freight bound for certain locations. For instance, from June through early September 2022, BNSF limited some westbound carload—but not intermodal—shipments into California. “It’s complicated to manage your way around those embargoes when you ship thousands of cars per day,” says Brian Cupp, director of operations at IntelliTrans, whose rail-shipper customers use mainly carload services. Rail shippers also face the same kind of congestion that has famously plagued ocean ports. “Congestion is not as bad at the rail terminals, but it’s still a bad situation,” says Andrew Sobko, CEO of CDL 1000, a company in Lyons, Illinois, that provides technology-based services focused on container drayage. Not only do traffic jams in terminals increase total transit time, but they can trigger large storage fees for shippers that can’t get their containers out. “One of our largest customers recently spent $12 million on port and rail storage charges,” Sobko says. With the right tactics, however, shippers and their third-party partners can
As freight costs continue to rise, regardless of drops in oil prices, every supply chain executive is trying to pare down those expenses. “One way to cut freight costs is to consider less-expensive alternatives to truck,” notes Richard Thompson, international director, supply chain solutions at commercial real estate company Jones Lang LaSalle (JLL) in Chicago. Intermodal also offers alternative capacity when high demand, supply chain volatility, and the ongoing driver shortage make it hard to find a long- haul truck. “Intermodal allows an organization to ship a load and not utilize a driver for the entire trip from the shipper to the consignee,” says Luke Simendinger, vice president, intermodal services at Coyote Logistics in Chicago. In addition, shifting some volume from road to rail can help a company get closer to its environmental goals. “Depending on their freight network, the move to intermodal can reduce a company’s carbon footprint anywhere from 30 to 60%,” Simendinger says. In the face of supply chain disruptions caused by everything from COVID lockdowns in China, to war in Ukraine, to labor disputes in North America, to natural disasters around the world, modal diversity makes a supply chain more resilient. “Companies are focused on supply chain risk mitigation,” says Thompson. “What will we do if we can’t get a truck or there’s no driver?” Rail can offer a solution. REASONS TO RESIST In the past, many shippers avoided rail because they thought it was neither fast nor reliable enough to meet their needs. “Rail wasn’t a viable consideration for many companies, and some companies today still believe that’s the case,” Thompson says. “Because there are more handoffs in the execution of an intermodal load— between an origin dray, a rail move, and a destination dray—there are more opportunities for exceptions in the process,” says Simendinger. In addition to dodging a threatened
40 Inbound Logistics • October 2022
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