Intermodal Transport System as a Solution to Dynamic Supply Chain Demands
Intermodal transportation is one of the prime trends of supply chains impacting the contemporary transportation industry. In the recent past, higher demand, greater government oversight, higher fuel costs, and driver shortages have all squeezed capacity in the transportation industry (“Vielhaber” n.p.). All of these situations have multiple implications on everything ranging from timing of cargo to pricing. Therefore, executives on the other hand are seeking for a solution to achieve and maintain a supply chain that is cost-effective. One solution that they have found is intermodal transportation (“Vielhaber” n.p.). In the modern global community, it has become outdated for carriers to strictly sell the benefits of their own transport modes traditionally. In order to keep abreast with the economic growth as well as consumer demands, it has become imperative for the shippers to adopt a more integrated plan (“Vielhaber” n.p.). In this discussion, I will support my opinions of the intermodal transport system as a means for companies to improve the efficiency of their supply chain and reduce costs.
The adoption of mobile phones to integrate processes is a great instance of success in the business field. In the 1980s, the only use of mobile phones was to make phone calls, but that changed such that making calls alone did not fulfill the needs of businesses. The technological field therefore had to integrate talk and connectivity along with data so as to facilitate communication anywhere on the globe, at any moment (“Vielhaber” n.p.). Currently, the same approach has been adopted by logistics executives so as to find a solution to the issue of capacity squeeze via integrating the different transportation modes of air, sea, rail, and truck (“Vielhaber” n.p.). As a result of the slow economic expansion being experienced today, shippers are working to find alternative means of integration before the situation improves. The integration approach that has proved to be the most successful is that of intermodal rail (“Vielhaber” n.p.). In recent years, shippers all over the nation have discovered that intermodal rail provides a great solution to fulfill present and future demands in business as the expansion of the economy continues.
The intermodal transportation concept has been in existence for a quite a while throughout the history of the supply chain. Integration of major modern transport modes began to receive major efforts in the United States in the 1960s (“Vielhaber” n.p.). The establishment of maritime networks to gain better connections with inland transport systems was the initial step of the integration process. However, only either ship to truck or ship to rail shipment processes occurred during that time (“Vielhaber” n.p.). Today, the use of both trucks and rail is growing for a various reasons which include: road safety results, cost-effectiveness, and environmental benefits (“Vielhaber” n.p.). In 2013, rail traffic achieved tremendous growth whereby the intermodal volume was 14.6 carloads, along with the intermodal 12.8 million containers (“Vielhaber” n.p.). This is the highest volume recorded, exceeding the 2006 record totals by an excess of more than 549,000 units (“Vielhaber” n.p.).
There will be an expected increase in production and consumption as the country recovers from the Great Recession, hence preparation for an increase in traffic in the transportation industry will be vital (“Vielhaber” n.p.). Due to the decreasing capacity resulting from high fuel costs and driver shortage, the transportation needs of the nation may not be met by trucks alone (“Vielhaber” n.p.). Since there seems to be no increase in truck capacity, this situation is likely to last, forcing shippers to seek for alternatives.
The C.E.O. of Florida East Coast Railway (FECR) James R. Hertwig has explained that shippers cannot only benefit from lower costs, but can also have the advantage of faster delivery via multimodal solutions (“Hertwig” n.p). He has explained that through the newly opened FECR’S “intermodal container transfer facility” (ICTF) next to Port Everglades, clients transporting local and international goods now have greater efficiency in in handling their freight (“Hertwig” n.p). Moving of containers to or from a far rail facility through congested interstate roads using trucks is no longer required. Another way speed has been increased may be through what he explains as the investment in on-dock facilities by FECR at PortMiami, which has enabled trans-loading of freight from ship to rail hence saving time and eliminating the extra cost of having to transport the load from the port to a rail facility that if far from the port (“Hertwig” n.p). Both ports having on-dock rail facilities, FECR is now able to serve the central Florida customers more efficiently via its Cocoa facility using little on-highway transits (“Hertwig” n.p). In earlier days, trucks moved this cargo on congested highways from Jacksonville to Savannah (“Hertwig” n.p).
The South Florida Logistics Centre (SFLC) which serves as a warehouse as well as a distribution center providing a high degree of fumigation is next to the Hialeah rail yard of FECR, and has on-dock rail facilities from PortMiami as well as Port Everglades (“Hertwig” n.p). FECR also possesses a shuttle that connects facilities enabling freight to be transported without having to use the congested highways. In my opinion, this case can enable one to see the how the supply chain is enhanced by innovative relationships, whereby all parties benefit from lower costs, less congestion on highways, and reduced emission of carbon dioxide.
The U.S. government is continuing to regulate companies in efforts to control their environmental impact. As the government continues to do this, shippers are looking for ways to decrease their carbon footprint. In every 100 ton-miles, trucks emit carbon dioxide of about 19.8 pounds while trains emit amounts as low as 5.4 pounds for every 100 ton-miles (“Vielhaber” n.p.). This clearly shows that the most environmental friendly inland transport mode will continue to be intermodal rail before manufacturers are able to make a fleet that has a lower carbon footprint and is cost-effective (“Vielhaber” n.p.). It is clear in my opinion that through adopting the intermodal system, executives can be sure of being proactive in following government regulations regarding the environment.
A company using the solutions of logistics/supply chain technology in the context of the intermodal transport system is Ste. Michelle Wine Estates in Washington (“Reilly” n.p). This is a company that gives great attention to the shipment of its products. The company did not initially see rail transport as a suitable option before it started working with Railex (“Reilly” n.p). Started in 2006, Railex is a logistics company which offers intermodal rail services to Ste. Michelle Wine Estates. As a rail transport company, it transports temperature sensitive goods via rail across the U.S.A (“Reilly” n.p). Railex can transport refrigerated cargo equivalent to 220 trucks from coast to coast within 5 days. It is this company’s assurance of on-time delivery that helped to draw Ste. Michelle to become its client. It is only 40 miles from Railex to the winery at Columbia Crest, which is Ste. Michelle’s major production center (“Reilly” n.p). Therefore, with the rising fuel prices Ste. Michelle consulted Railex. Due to its strict requirements, the winery had found it hard to find a rail transportation company that would meet its standards. Concerns were on temperature regulation and product damage, yet it was difficult to find transporter that would ensure both quality and efficiency (“Reilly” n.p).
During the test runs of using intermodal transport, product damage and scuffing of the bottles was an unpleasant outcome (“Reilly” n.p). The biggest concern was on temperature. High temperatures would push the cork allowing oxidation of the wine, while temperatures that are too low would cause the wine to sediment. The second major expense to the winery is packaging, hence damage in either step cannot be allowed. However, Railex has been able to prove the efficiency of intermodal rail. It provides safe and reliable transport from Wallula to Rotterdam (one of Ste. Michelle’s distribution centers) in five days (“Reilly” n.p). Not only can Ste. Michelle benefit from the temperature-controlled railcars, it can also track the movement of its freight in real time. Using the already set temperature thresholds, the winery can be alerted if there is a change in the pre-set conditions (“Reilly” n.p). To solve the situation Railex can contact its rail partners which are Union Pacific and CSX in the western states and eastern states respectively (“Reilly” n.p). In my view, the example of the relationship between Ste. Michelle and Railex is a prototype of how a company can benefit from adopting the intermodal rail transport system, which includes customization of needs such as refrigeration.
In my opinion the intermodal transport system is the next great thing in logistics/supply chain based on the great number of supply chain demands it meets such as reliability and cost-effectiveness. With the kind of tremendous growth in the intermodal rail achieved in 2013, whereby the shipment capacity handled was the greatest in history, I believe that the concept of intermodal rail is going to last and will continue to grow as more executives adopt it to meet their requirements of efficiency and cost effectiveness. Furthermore, from the recent past of 2009 to 2013, there has been a general increase in shipment of cargo via the intermodal system; hence showing its growth which proves that it is here to stay and expand. In my opinion, the technology will offer companies many benefits that include: solving the challenge of scarcity of drivers; lowering the amount spent on high fuel costs; reduction in delays caused by congestion in highways; increase in cargo capacity; and last but not least, companies will benefit from complying with governmental environmental regulations through a reduction of carbon dioxide emission.
In my view, most cargo containers from seaports are mainly moved from there either by trains or by using trucks hauling intermodal chassis. Due to its reliability, intermodal has established a reputation of being economical and reliable. However, according to my evaluation, a number of drawbacks have arisen as a result of the great numbers of containers on the highways, rails, and ports. In my view, as more shippers adopt intermodal, the drawbacks of it will also concomitantly increase. Several setbacks have resulted from the increasing intermodal transportation demand. The drawbacks which in my opinion would impact the intermodal system include: limited availability of crews and trains on cargo railways; competition from conventional shipment for rail space, such as in the Midwest where there has been great grain harvests and an oil boom; congestion on highways and in sea ports; and a shortage of truck drivers.
Additionally, according to my view, natural factors such as winter weather would also present a major drawback to the intermodal system whereby winters like that of 2013 to 2014 in the U.S. give major challenges to intermodal shippers within the region. Trains have to be shortened by about 25% when temperatures fall to 10 degrees, translating to reduced shipment capacity (Douglas n.p). Sometimes truckers and shippers may also have to face the drawback of securing chassis to place under their containers. This has proved to be a significant drawback, and occurs when they fail to know where to obtain them. A combination of these challenges may cause a serious intermodal breakdown.
In conclusion, it would be vital for executives to consider how their companies can benefit from intermodal transportation when recreating logistic strategies for their businesses. This strategy would offer greater reliability, increased capacity, significant cost reductions, reduction of empty backhaul expenses, and last but not least, environmental friendliness.
Works cited
Douglas, Merrill. 'Intermodal: Too Much Of A Good Thing? - Inbound Logistics'.Inboundlogistics.com. N.p., 2014. Web. 26 Oct. 2014.
Hertwig, James R. 'Shippers Get Creative With Multimodal Solutions - Inbound Logistics'.Inboundlogistics.com. N.p., 2014. Web. 26 Oct. 2014.
Reilly, Joseph. 'Rail Intermodal: Where Rail Meets Road - Inbound Logistics'. Inboundlogistics.com. N.p., 2012. Web. 26 Oct. 2014.
Vielhaber, James. 'Intermodal Transportation, Solution To Our Evolving Supply Chain Demands - Inbound Logistics'. Inboundlogistics.com. N.p., 2014. Web. 26 Oct. 2014.
Appendix
Source: IANA Intermodal Market Trends and Statistics
International and domestic intermodal traffic has grown steadily overall, despite the recession. In 2011, more than 12.4 million intermodal containers moved worldwide.
