Leveraging Logistics Blog

Looking at Google searches, a common question in freight and logistics is "What is transloading vs. intermodal?" The question shows many are confused about the distinction between the two, and rightfully so. Both typically associate with the movement of freight between truckload and railroad - and sometimes steamship as well. But there's one key distinction. In traditional intermodal transport, the load never leaves its original container. As in, the shipper packs a container and it goes across two or three modes all in that same container from origin until it reaches its destination. In transloading, goods may travel the exact same route across two or three modes again, but they'll be unpacked from an original container to either another container or a trailer, depending on how they travel and capacity. Transloading is associated with intermodal because there's very often a rail component to the journey of transloaded freight. But why go over this distinction now you might ask. Because with a still challenged container and chassis environment, transloading could be many shippers' best option to keep freight moving.

Intermodal transportation is a viable option for many shippers, but just as with any other freight mode, it can face challenges relating to capacity, equipment, labor and more. One way to mitigate many of those challenges is access to private intermodal containers. Private intermodal containers - also known as private boxes - offer the advantage of flexibility for intermodal marketing companies and the shippers they serve who have access to them. Those who don't have that access - including asset-based logistics providers and even plenty of IMCs  - are handcuffed to either their own containers or those of a specific equipment partner. This means when capacity challenges arise, these companies lack the flexibility of an intermodal alternative.

Weekly discussion and analysis on the trends in the intermodal spot rate market. For the week of August 8, 2022, domestic intermodal spot rate index: Decreased 1.5% from the prior week. Decreased 13.6% from prior year.

After a two-year shortage, freight capacity is no longer impossible to come by in intermodal and truckload for that matter. But while finding container space is now a reasonable ask, the intermodal freight market is still held back due to a different somewhat underreported, under the container, shortage: chassis. Chassis are a key piece of the intermodal puzzle. Also sometimes referred to as a container chassis or skeletal trailer, a chassis is a rubber-tired trailer under-frame on which a container is mounted for street or highway transport. Without them, intermodal containers are essentially stuck at the terminal as dray trucks need this purpose-built equipment to haul them. And it can be a compounding problem, as the more containers pile up dwelling at terminals, the more chassis are needed to get them moving.

The term intermodal in shipping means the transportation of shipping containers and truck trailers via freight railroad. Intermodal in essence refers to the use of multiple modes of transportation with a notable distinction being the freight remains in the same container - unhandled - throughout its journey. The key difference between intermodal and general rail freight is that intermodal specifically involves containers and trailers carried on trains via special chassis that can be transferred directly to and from trucks and/or ocean liners as well, while rail - which intermodal falls under - also includes options like boxcar, covered hoppers, flatcars, gondolas, open top hoppers ... and more. Intermodal shipping is optimized for freight lanes of 700 miles or more, and obviously over land. Domestic intermodal encompasses all of North America, as there are Class I railroad lanes heading as far south as Mexico City and as far north as Prince Rupert in Canada, with plenty of locations throughout the U.S. being served as well.

The holiday season is right around the corner - well, at least it's coming up fast. For shippers and freight pros, holiday logistics have already been on the brain for some time. We've discussed some general freight guidelines relating to Christmas and holiday retail already, but as Christmas in July gives way to August, we'd be remiss if we didn't spotlight the type of holiday shopping growing the fastest - e-commerce - and the logistics of the online shopping game. E-commerce brings with it some different shipping terminology and its own unique challenges, which we’ll take some time to discuss here.

Just under two weeks ago, we discussed the possibility of a railroad strike or work stoppage grinding freight rail in the U.S. to a halt. As we were writing a few days before a July 18 deadline, President Biden announced he'd convene a Presidential Emergency Board of Arbitrators (PEB) which extends the deadline for any type of work stoppage 60 days. So what's happening now and when can we expect next steps to occur? The PEB has convened and according to the Executive Order, has 30 days from that July 18 appointment date to investigate and report on the dispute, and then make non-binding recommendations for its resolution. Railroad worker unions and the railroads are continuing to negotiate during this time, and once the non-binding recommendations are delivered have another 30 days to reach a contract agreement. So the key dates are August 18 for the recommendations, and then September 18 as the next deadline at which time a work stoppage could occur. At that point, the 60 day extension would be up, and all measures outlined in the Railway Labor Act would be exhausted. Even still, Congress could act to force work to continue and/or an agreement. All these negotiations are occurring against the backdrop of a Democratically controlled Congress, which has the potential to change after November, and the other backdrop of peak freight season which could add more stress to supply chains. On a generally positive note, both sides are reportedly still talking and there is some optimism that a stoppage can still be avoided.

Peak freight season, just like the shipping industry in general, has many layers for shippers and carriers. And among those layers are the variety of shipping methods to consider, including expedited and LTL - less than truckload - as well as a combination of the two. LTL shipping can take place at standard speeds or include expedited options. On the other hand, expedited is often synonymous with LTL but can also include FTL - full truckload (sometimes just referred to as TL) - and of course the fastest form of transport, air. There are even some intermodal lanes considered expedited. Just like other freight modes, costs to ship via LTL and expedited tend to rise during peak season as capacity gets tougher to come by. But shippers may also be more willing to pay those premiums during peak season if they have no other viable options to meet hard delivery deadlines. 

UPDATE (July 22): Just a couple days after first writing about the AB5 law protest and its impact on supply chains, the latest has the Port of Oakland essentially closing down for the end of this week due to a five-day protest from affected truckers. Officials say they've had trouble getting dockworkers to their work locations due to the picket lines, but they do expect to reopen under "heavy congestion" next week as they play catch-up. The protests are by owner-operator truckers and their supporters who the California's AB5 law reclassifies into employees rather than independent contractors. While the supply chain implications relating to cargo ships being unable to load/unload at Oakland are fairly obvious, some ships are skipping the port altogether. But the ripple effects go beyond the water. For instance, some intermodal service - including some of those we utilize - transport loads via empty ocean containers that must return to the port and be officially terminated there. With the port closed, that action cannot occur, meaning empty containers must sit, accumulating fees and taking up valuable chassis, which are also in short supply. While other options are available to keep freight moving, these empty containers will continue to accrue storage fees or other accessorial charges in the meantime, and moving boxes off of chassis also constitutes a fee. In the meantime, California officials do appear to be heading forward with the enforcement of the controversial law. At any rate, stay tuned for more supply chain impacts...  Original Story: Supply chain issues of various types continue to pop up, and the latest has to do with the so-called AB5 bill in California possibly nearing enforcement. The AB5 bill, commonly referred to as the gig worker law, makes it especially complicated for workers to be classified as independent contractors. The supply chain upshot is, that's exactly what independent truckers have been all along - and independent truckers (aka owner-operators) have made up a huge part (roughly 70%) of drayage drivers at California ports - which happen to be the busiest ones in the country. With a stay on the law as it applied to trucking about to be lifted thanks to the Supreme Court declining to hear a California Truckers Association appeal, some of these independent truckers - estimated at about 70,000 statewide - who want to remain so have taken to the picket line in protest. The combination of these protests and the law potentially taking effect in full force, means ports such as Los Angeles, Long Beach and Oakland - and every supply chain associated with them - may be dealing with repercussions of AB5 for some time.

Freight costs come in a number of forms, with the most obvious being the rates charged by carriers to ship loads from point A to point B. So when someone not fully versed in the freight and logistics industry sees a story or two about spot rates going down, they may naturally assume that their company's shipping costs should drop as well. That assumption is missing a couple of key additional factors, though. As freight rates skyrocketed the past couple of years, carriers gained the upper hand in contract rate negotiations with shippers. So those contract rates - agreed to in the early part of the year usually for a 12 month period - are still elevated to reflect the generally high rate climate of the time. Additionally, as much as spot rates have dropped so too have diesel fuel prices gone up. And carriers pass those fuel costs along to the shipper either directly or through fuel surcharges. In other words, in spite of falling spot rates, the other factors at play are stepping right in to keep shippers from truly reaping the benefits. So any way you slice it, freight costs generally remain elevated in spite of spot rates being down.