Intermodal transportation has taken a beating in the past year.
Late this summer, in its quarterly Intermodal Market Trends Report, the Intermodal Association of North America (IANA) reported that year-over-year traffic was down 18.7 percent.
“Intermodal volumes have leveled, on an absolute basis, since the sharp downturn from early fall  through late winter ,” the report reads. “Though loadings are no longer worsening, neither are there yet clear signs of improvement.”
But the recession isn’t the only reason intermodal is underused.
Even in good times, many shippers have been hesitant to use intermodal.
There are two main reasons behind this. The first is misperception. Since there are many variables (marine, rail and truck modes; 20ft, 40ft and 53ft containers) involved, there is often a tendency for shippers not to realize that a good intermodal solution is greater than the sum of its parts. According to Dimitri Mousmoulis, a Montreal-based intermodal specialist for Wheels Group, nearly half of shippers don’t fully understand that intermodal could benefit their business, believing that the added steps between modes and containers will add costs to their supply chains.
The second reason is intermodal’s heavy reliance on rail transport—specifically, the limitations of the mode. Time is a problem: rail is slower than truck, so expedited cargo is out. Reliability can be an issue, too: cargo moved by rail is susceptible to the weather, labour and equipment failure delays.
This makes scheduling difficult, and while some railways offer shippers the option of paying extra to secure a guaranteed delivery time, most are not willing to commit to a deadline. Then there is the flexibility problem: shippers who want to change the routing of a container after it’s been loaded are often subject to heavy fines.
Yet in this economic climate, there is a big—and difficult to ignore—advantage to moving freight intermodally: cost. Load per load, mile per mile, it’s almost always cheaper to use rail for at least some of a trip than it is to ship exclusively by truck.
For years, service providers have preached the cost-saving benefits of intermodal to shippers, Paul Waite, CN’s vice-president of intermodal, tells MM&D. Traditionally the promise of better margins hasn’t been enough to lure most away from tried-and-true methods. But that has changed in the past year or so.
“It’s been an ongoing dialogue that probably needed something of a watershed moment to make it tip, and I think the recession was that watershed moment,” Waite says. “People are looking at the most cost-efficient way to get things to destination.”
This is causing more shippers to look at intermodal differently. Wheels Group national sales manager Barry Murphy reports that his company received far more requests for quotes for intermodal services in the first half of 2009 than it has in the past few years.
Richard Tremblay, director of operations at Hyphen Freight Brokerage Incorporated, has noticed a similar trend.
“People who have never shipped intermodal before are now starting to open their minds to it,” he says. “It’s always been ‘oh, I can’t deal with the extra transit time.’ Now their orders are smaller and less frequent, and they can plan a little better.”
In his experience, shippers are now willing to re-engineer their supply chains to build in the longer lead times required to ship intermodally—so long as the product being moved is not time-sensitive.
Besides, those longer lead times may become a thing of the past. There is evidence that intermodal carriers are stepping up their service games, particularly on the rail side. In both Canada and the US, federal stimulus dollars are being funneled into infrastructure projects, like repairing rough patches of rail track and improving deconsolidation facilities. Another federal program that allows carriers to write off a portion of the capital cost of new equipment is causing many carriers to upgrade in order to improve the speed and reliability of shipments.
Because of all these factors, many predict that intermodal use will spike in the months—and years—to come. “I suspect there will be people looking at intermodal a little more seriously than they have in the past,” says Bob Ballantyne, president of the Canadian Industrial Transportation Association.
All that is needed, Mousmoulis points out, is a shift in mindset.
“It’s time to switch the thinking from ‘I can’t find a truck; I might as well use intermodal,’ to ‘I have to use intermodal because they deliver on time, they always have units, the price is better and it’s greener.’”