- Allen Czermak
What Are The Advantages Of Using Intermodal Transportation?
Businesses are now past the holidays and the first quarter of 2022 has begun. Those who were able to secure inventory were lucky as many containers unfortunately have yet to make it to their final destinations. At the same time retailers are confident that their inventories will be restocked as their shipments will be arriving in the coming weeks with shipping bottlenecks beginning to ease. However, the one thing that will not ease up and continue to rise are shipping costs. How can retailers earn a profit when the cost of shipping a container from Asia has risen to well over $25,000? It’s time for business owners to reach out to their logistics partners and figure out how to lower delivery costs by using other shipping modules like intermodal transportation.
How Can Intermodal Shipping Lower Freight Costs?
The initial thought process of business owners is that OTR trucking is more reliable since there are less connections along the way. In truth they are right. Try and imagine me taking a trip across the United States from the East Coast to Midwest and having the option to travel by car or by air. Traveling by car sounds quite enticing because you can leave today and get an accurate time of arrival with Google Maps on your mobile device. But we all know that it takes less time to fly, even though one is subject to arrive at the airport early and potentially be subject to delays.
The same is true with intermodal transportation. When a container is received at the Port of Los Angeles and it is ready to be moved to the next destination point, this is the point that you want to consider using a logistics service that can get it on to a rail car. Intermodal shipping can use multiple freight systems to get your container to you in the most cost-effective way. True, the goods can be subject to delays at the transfer yards, but it will cost your company far less than paying a trucker operator by the hour.
One train moves on average 280 cars and each car can carry two twenty-foot equivalent containers, one on top of another. Let us assume that this train is used just to transport shipping containers, we are talking about potentially 560 containers all being hauled by one diesel engine. In contrast it takes one truck to haul just one container and for that shippers are paying by the hour and not to mention other fees along the way.
You don’t need to be a rocket scientist to figure out that transporting a shipping container or any goods across the United States, intermodal transportation will cost you less then that of using an OTR driver. At the same time, the common folk on the roads will thank you for reducing congestion. On an annual basis there will be much less trucks on the road making people’s commutes shorter.
Why Is It Likely For Truck Shipping Cost To Increase?
No one is saying for sure that shipping costs will continue to rise because we are not Nostradamus. Had we known of shipping bottlenecks and limits on inventory we would have shipped goods three years ago, safely storing them for the rainy days of the pandemic. But no one saw that coming and all we know is that demand for shipping is at an all time high and to top that we are in the midst of a rise in inflation. Therefore, it only makes sense that shipping rates continue to climb and business owners need to reach out to the best logistics partner to come up with the most cost-effective way to receive their goods. A logistics partner will see to it that you stay within budget and understand the freight costs and fees that are all part of a complicated supply chain system. Using intermodal transportation in your logistics strategy can keep your cost down and you will not have to pass them on to your customers. At the end of the day, no one wants to be paying double for a product that was purchased just a year prior.
Intermodal Transportation Is Better For The Environment
In today’s complicated political climate everyone has the environment on their mind and what can they do to protect it. Whether they mean it or not no one knows for sure, but we should try and protect a gift that was given to us by a higher authority. Just the other day I was traveling over the Verrazano Narrows Bridge into New York City. It was a beautiful day except for a smog cloud hovering over the city that never sleeps.
For a major city across the United States we are going to need dray services to get a delivery to its last destination point. But limiting the trucks along the way can have a significant impact on the environment and potentially result in cleaner air in our cities. It was quite a phenomenon to see crystal clear blue skies during the global shut down, as there were less automobiles on the roads. One picture showed clear waters in Venice, Italy. There definitely is a correlation between a cleaner environment with less cars and trucks on the road and intermodal freight might not be the total solution but it can certainly help.
What To Do If a Shipment Is Delayed or Stuck At a Transfer Station?
It’s not uncommon for delays to occur when shipping via rail that can lengthen the time of delivery for your container. But that’s where you need to have a logistics partner to quickly identify the cause of delay and put into play a solution to keep your goods on the move. The longer a shipping container remains at a transfer station the greater the chance for additional fees to accumulate. This is exactly what happened at the Port of Los Angeles. When the containers were unloaded from the large marine cargo vessels, they got stacked up and were very hard to access. Since there was no place to put them, the port had to stack them up high, and if your container was on bottom it could be three months before they remove all the ones on top. To make things even worse, the port slapped on additional fees for having the shipping container laying around longer than the allotted time window for pickup.
Besides not being able to have the goods for sale, the cost for shipping containers became more expensive due to the added lay fees. Business owners not only had to prepay the $25K to the marine logistics companies but they had added fees on top of that. By the time the products arrive at the customers warehouse, it’s almost impossible to compete at a good price. It’s very challenging as brands are going to be forced to raise prices.
The Port Of Los Angeles Looks To Change Shipping Behavior
Even with all the convincing in the world many shipping customers will naturally lean towards truck container delivery. It gives them the peace of mind knowing that they are in control and can be in touch with the one delivering their goods. However, the Port of Los Angeles is looking to promote intermodal shipping by adding free lay time for goods that are being transported via intermodal. So, while shipping via truck might give you more control it just might cost you more when your container is sitting around the port accumulating per-diem fees.
Major water ports that litter the shores of the United States are looking to encourage the use of intermodal freight that uses a hybrid of truck and rail to avoid shipping container bottle necks. With a train that pulls 238 cars, containers can be loaded and swiftly exit the water port making more room for new containers coming in. Ports are looking to incorporate logistics models like intermodal to keep containers from laying around that resulting in shipping bottlenecks. This will be better for the water ports and the shipping customers as they will get their containers faster and avoid hefty lay fees.
Owners who are waiting on goods from Asia really need to understand what logistics channel they are using and how it impacts time of delivery. It’s going to be hard to convince those customers that ship everything by truck but after all those fees add up it may just be the time to reach out to a trusted logistics partner. They will give you the insight into anticipated time of delivery and what all your cost will be until the container arrives.
With the price of oil on the rise, fuel fees for shipping by truck will go up as well. Intermodal transportation is something you should research for your 2022 logistics strategy. If you’re still not convinced, maybe this might help you take another look at intermodal transportation. Besides being good for your pocket, less trucks on the road is good for the environment and that’s important too no matter what your political affiliation is.