Introduction to Intermodal Freight Transportation Basics

Intermodal domestic freight transportation solutions may play a lesser role than truckload in the United States today, but that role is still vital. According to a recent article published by the Journal of Commerce (JOC), intermodal volume is roughly 6.5% to 7.0% of all truckload and intermodal shipments in the US that are 500 or more miles. The JOC article entitled "Market share holds key to recovery for US intermodal, truckload: analyst" went on to say that since the pandemic, intermodal share has slid to being 5.5% to 6.0% of the total market. That sounds like there's some room for opportunity.

From its inception, intermodal has been positioned as a low cost alternative to truckload shipments over 600 miles, which may have been a great lead in sales pitches coming out of the gate. But against truckload it misses a lot of other benefits that today's intermodal shipping offers and makes it sound like an inferior service to over the road options.

The value of today's intermodal is as an innovative approach to get the best of both worlds in land transportation by combining truckload and rail for a full end-to-end solution that saves money, cuts fuel consumption, reduces greenhouse gasses and is a highly reliable freight mode when moved with a high value IMC (intermodal marketing company). To explain the value further, let's look into the truck, better known as dray, and the rail segments of an intermodal transportation freight shipment.

For the full door-to-door intermodal journey, truck provides the flexibility to pick-up and deliver to just about any location and represents the shorter segments of an intermodal shipment. Those are complemented by rail, which is the most efficient and sustainable land transport service and represents the longest portion of the shipment.

As supply chain sustainability moves from being a mission statement to a strategic initiative, the value proposition of intermodal is also in its outsized impact in driving a company closer to a zero carbon footprint compared to trucking-focused alternatives.

InTek started from ground zero in intermodal twenty years ago and over the years has taught shippers how to use intermodal strengths to enhance 53' capacity, reduce costs, improve 53' service reliability and drive supply chain sustainability. From this perspective we are uniquely qualified to teach others how they too can better understand intermodal capacities and advantages to allow them to bring intermodal into their organization confidently and successfully.

With all that said, be prepared for an action-packed article that makes this more than just an introduction to intermodal freight transportation basics, but a roadmap to follow for shippers new to intermodal service. Topics included are:

Evolution of Intermodal
Mechanics of Intermodal Shipping
Reasons to Choose Intermodal Shipping
Comparing Intermodal Versus Truck
How Businesses Benefit from Intermodal Transportation
Understanding Latest Intermodal Shipping Trends
Making Sense of Domestic and International Shipments
Essential Suppliers in an Intermodal Network
Key Providers of Intermodal Freight Services

The Evolution of Intermodal Freight Transportation

Intermodal freight transportation has an interesting past, tracing its origins to 1700s England. The initial concept was introduced as a method for moving coal from mines using canals and railways.

By World War I, the Great Eastern Railway was using wooden containers to transport passenger luggage between trains and sailings.

Containerized shipping began to be seen in the USA when the U.S. Military began using 8'6" x 6'3" x 6'10" metal shipping containers during World War II.

In America, intermodal shipping started making waves during the mid-20th century with container sizes becoming standardized. In 1956, Malcolm McLean designed the first uniform shipping container that revolutionized how cargo was stored and transported.

By the 1960s, intermodal shipping became the preferred method of ocean transport with standardized box sizes. Weight and container build & tolerance specs allowed for large scale investment around the standardization that solved the cost and time issues.

In 1984, intermodal shipping known as 'double-stack rail transport' hit the intermodal scene, making for greater efficiencies. Fast forward to today and intermodal is now considered another mode of shipping, like truckload, LTL and air versus thought of as a cost alternative to trucking freight. The advent of the 53' domestic container as an alternative to the 53' OTR dry van has helped the transition.

A Historical Turning Point: Standardization Era

Standardization brought about significant improvements in efficiency and cost-effectiveness for businesses involved in domestic or international trade. It also laid down groundwork for today's sophisticated intermodal shipping practices, which have become an integral part of modern supply chains.

Standardized containers marked a turning point by enabling seamless transfer between different modes such as rail, ship or truck without requiring direct handling, thus reducing loading/unloading times while minimizing damage risks through less handling. These innovations allowed companies to move goods over long distances more quickly and safely than ever before, thereby laying the foundation towards the development of train intermodal freight shipping offers we see today.

For the purpose of this article, we will stay focused on domestic intermodal shipments, meaning freight moving within the USA, Mexico and Canada. There are two service options under domestic intermodal containers: 53' intermodal containers that never touch the ocean and ISO containers that are used in repositioning programs with ocean carriers.

The repositioning programs offered by intermodal marketing companies (IMCs), have agreements with ocean carriers that allow them to sell capacity on ISO containers that are inland and do not have paying export freight loaded in them. Since there is not a planned reload for the ocean carrier, they look for IMCs to load containers with their domestic freight to get the containers as close to the port, so to reduce the empty revenue miles on their asset.

Growth And Expansion: Technology Wave Riding On Its Crests

In recent decades, technological advancements like GPS tracking systems, automated equipment at terminals, etc., have further propelled growth within this sector, significantly improving operational efficiencies while providing enhanced visibility throughout the entire shipment journey. Today's logistics management software now allows shippers real-time access to their supply chain information, including location status updates, estimated arrival times (ETA), etc., offering them unprecedented control over operations. All said, shipments going via intermodal provide shipment visibility beyond that of its competitive alternative, truckload.

Pivotal Role Of Various Stakeholders Within Ecosystem

This period also saw increased cooperation among various stakeholders - railroad operators, trucking firms, port authorities - who all worked together, ensuring a smooth transition across different transport modes, forming the backbone behind an efficient network working seamlessly towards achieving the common goal of delivery on time every single time.

The Mechanics of Intermodal Shipping

Intermodal shipping, a vital component of logistics and supply chain management, is a process of shipping products that involves truck and rail to efficiently move goods from their origin to their final destination.

Understanding Intermodal Containers

In the realm of intermodal shipping, there are essentially two types of intermodal containers available.

53' Domestic Intermodal Container

The most commonly used container for domestic intermodal is the 53-foot, which is specifically aligned to compete against truckload shipping options.

The 53' domestic containers can be either dry or refrigerated units designed for temperature-sensitive items.

40' & 45' ISO Ocean Containter

The other type of intermodal container is the 40-foot and 45-foot ISO boxes that are used in ocean shipping, but are a great alternative for shippers looking to save "big" money. The ISO boxes come into play within the domestic market, known as the repo or re-positioning market, as ocean carriers offer drastically reduced rates to help them reposition their empties toward ports with paying freight that is delivered to a domestic location to then be exported empty.

The Journey from Origin to Destination

An intermodal shipment has three segments: origin dray, linehaul and destination dray.

A typical journey begins with a truck picking up a container on a chassis to then arrive at the origin dock. Once the container is loaded, the truck is then taken to the origin rail ramp where the container is lifted off the chassis by a crane operation and double stacked on a well-car. As soon as the train is fully built out with all the well-cars loaded with intermodal containers it heads to the destination intermodal rail ramp. There may be a short stop along the way to drop off or pick-up more containers at another intermodal ramp. When the train arrives at the destination ramp the intermodal container is either loaded onto a chassis or stacked to await the truck that will pick up the container on the chassis, which are called wheeled or grounded operations, respectively.

For more on visit Ocean & Domestic Container Intermodal Solutions & Equipment Specifications.

Why Choose Intermodal Shipping?

The decision to opt for intermodal shipping can be a game-changer in the world of freight transportation. The advantages include: cost savings, fuel efficiency, service reliability and environmental sustainability when comparing versus truck.

For those looking to transport truckloads over 650 or more miles, intermodal shipping is a great option due to its cost and environmental savings potential. This mode of transportation has been known to offer a considerable cost differential versus truck-based logistics solutions, making it a preferred choice among businesses aiming to reduce their operational expenses when they need to ship freight long distances.

Besides being budget-friendly, intermodal shipping is also an environmental winner when compared to other land based freight options. When we compare different modes of transport on parameters like energy consumption per ton-mile transported, trains emerge victorious against trucks by consuming less fuel overall during transit. According to the Association American Railroads (AAR), one train can move goods nearly 500 miles using just a single gallon of fuel. Hence, choosing this method not only helps companies save money, but also contributes to reducing carbon emissions - an important consideration in today's eco-conscious business environment.

Favorable Capacity And Service Reliability

In situations where capacity crunches become common, domestic intermodal shipments travel without such constraints since rail networks generally have ample available capacity throughout most parts of the year, particularly when companies need to ship freight long distances.

This high-capacity feature, combined with regular schedules, ensures consistent reliable service levels, something every shipper values highly when planning supply chain operations. Furthermore, technological advancements now allow shippers real-time visibility into cargo's location during transit, thereby enhancing confidence in using this method for shipping just about any commodity to any location.

Sustainability Benefits Of Choosing Intermodal Transport

Apart from the financial benefits and improved reliability offered by train intermodal freight options, there are notable sustainability benefits associated with this form of transport, making it appealing to many modern enterprises committed to achieving sustainable development goals (SDGs). Railways leave a smaller carbon footprint compared to road-based logistic solutions, as they consume significantly lesser amounts of energy per unit distance traveled while carrying goods from point A to point B. As mentioned earlier, trains have a superior economy, resulting in lower greenhouse gas emissions.

Unveiling the Role of IMCs in Intermodal Freight Shipping

The intermodal shipping industry seems vast and complex, with various players contributing to its efficiency, but the reality is it gets down to roughly 10 providers that hold 85% of the total volume with another 40 meaningful IMCs in the space. In other words, it is not as fragmented as the truckload market where there are close to a million for-hire truckers. The IMCs do have a lot to deal with pulling the full door-to-door service together, but that is their worry, not the shippers.

Now that we are a bit ahead of ourselves, let's step back and dig into what an IMC, intermodal marketing company is within the freight market.

An intermodal marketing company is an asset or non-asset logistics company that purchases intermodal capacity directly from the railroads and trucking firms to give shippers a door-to-door intermodal service.

To be clear, an IMC is not a broker. The buys 100% of its intermodal capacity direct from the railroads, who wholesales their space and container within its rail network, and then manages the service direct with customers. Railroads wholesale their intermodal capacity to IMCs to work with shippers because railroads do not work direct with the shipping community directly, although they do want to know the BCO, beneficial cargo owner, the IMC is moving on the rates it requests.

Peeling back the onion a bit further, IMCs were established as the connectors between railroads and shippers, allowing railroads to focus on moving rail equipment efficiently while IMC’s sell the intermodal service, work the day-to-day operations and provide customer service and reporting to shippers on behalf of the North American railroads.

Types of Intermodal Marketing Companies & Their Value in Intermodal Shipping Market

Besides having direct connections and contracts with class I railroads, IMCs have another differentiator that makes IMCs different from a broker is three classifications of IMCs. The reason for the three classifications is how much of the asset ownership an IMC has in the intermodal process understanding that no IMC owns 100% of the assets because to do so would mean they own the railroads.

Bi-Modal
- The bi-modal IMC owns 100% of the containers used in their intermodal service, along with a good piece of the drayage capacity. The best example of a bi-modal is JB Hunt.
Asset-Lite
- An asset-lite IMC owns some of the containers and some of the drayage capacity used in their solution. The containers that are not owned by the IMC itself is typically owned by class I railroads, while the drayage work not performed by their own drivers is brokered. Hub Group would fall under the asset-lite classification.
Non-Asset
- InTek Freight & Logistics is an example of a non-asset IMC. Under the non-asset IMC model the intermodal provider uses either class I railroad owned 53’ containers and 53’ private box intermodal owners. The rail contracts are negotiated directly with the railroads and the drayage can either be purchased from the railroads capacity through their door-to-door divisions or broker the drayage themselves.
  - Not to confuse matters, but non-asset IMCs also work with ocean carriers in the reposition market which was described earlier in this article.

Consistent Service Delivery: The Hallmark Of Excellence

In any logistics operation, consistency matters - especially when you're shipping 100s of truckloads or more across long distances. This principle stands central to any IMC operations, where their focus on delivering consistent service has earned them trust and respect within the industry.

To achieve this level of consistency, they leverage advanced technology alongside robust infrastructure which not only enables real-time tracking but also ensures prompt communication at every stage of the transport process, thus providing businesses much-needed peace of mind during the transit period.

Promoting Shipment Visibility For Informed Decision Making

A key component of effective freight management lies in the ability to monitor shipments closely; thanks to the sophisticated system employed by IMCs that provides detailed insights into cargo movement, including estimated arrival times and potential delays - thereby enabling companies to make informed decisions based on accurate data points available to them in real time.

Spearheading Sustainable Practices Within the Logistics Industry Landscape

An area often overlooked yet extremely crucial in the current business environment is sustainability; it's here again where IMCs shine brightly as they've made significant strides towards reducing carbon emissions by leveraging rail networks over roadways wherever possible - reflecting their commitment towards environmental preservation and aligning operational objectives with broader societal concerns.

Navigating Challenges Posed By Omnichannel Retail Market Effectively and Efficiently

Omnichannel retail market presents unique challenges due to rapid shifts in demand patterns across different channels
This can lead to complexities around cross dock facility utilization; however
Thanks to the expertise offered by IMCs in handling these scenarios.

Comparing Versus Truck - The Cost Differential

The choice between intermodal shipping and truckload transportation is often dictated by the financial implications of each method. Understanding these cost differences can help businesses make informed decisions about their freight strategies.

An Overview of Truckload Shipping Costs

In truckload shipping, costs are typically driven by factors such as fuel consumption, driver wages, vehicle maintenance fees, and road tolls. These expenses tend to be more straightforward but potentially higher than those associated with intermodal transport.

Fuel costs may shift due to the state of the market, while labor charges have been on a rise because of an absence of qualified drivers. Additionally, regular wear-and-tear necessitates frequent vehicle upkeep, which adds up over time, along with various road usage charges like tolls or weight distance taxes imposed by certain states.

The Financial Advantage Of Intermodal Transportation

Intermodal transportation operates differently from traditional trucking routes as it leverages multiple modes - combining rail with short-haul dray trucks - allowing shippers to take advantage of efficiencies inherent within each mode's design. This approach often results in lower total expenditures compared to solo truck operations.

Rail travel offers significant savings on fuel expenditures given trains' superior mileage per gallon when hauling large loads over long distances. Furthermore, since cargo moves collectively inside standardized containers across shared infrastructure like railways or ports instead of individual trucks traversing highways independently, there are fewer associated costs such as maintenance and labor requirements. Not only does this lead to reduced direct expenses, but it also mitigates indirect ones like potential downtime caused by mechanical failures or driver unavailability.

Weighing Fast Delivery Expectations Against Cost Savings

A common perception among companies looking at fast delivery expectations versus cost savings offered by intermodal services vis-a-vis full load road haulage services suggests that using solely trucks offer slightly quicker transit times owing to their ability to go directly from origin to destination without needing to switch between transport types, unlike intermodal. However, research suggests the difference isn't substantial, especially considering congestion issues plaguing many major highway corridors. Moreover, advances in technology have enabled better coordination and scheduling, leading to a consistently high level of intermodal service.

As it stands, the vast majority of intermodal lanes hold to transits equal to truck, plus a day. In some instances the transits are the same between truck and intermodal.

And before closing this section out, it’s important to note that most transit issues are not associated with the railroads themselves but instead the drayage segments of the intermodal shipment.

How Businesses Can Benefit from Intermodal Shipping

As discussed earlier, the world of intermodal shipping encompasses two transportation methods, railroads and trucks. This flexible approach to transportation presents numerous benefits for businesses seeking efficient long-distance solutions.

Intermodal freight services are particularly advantageous for high-volume shippers, allowing them to diversify their 53’ truckload capacity requirements. While intermodal works well for large shippers, it is a great solution for small to medium sized shippers that have consistent freight in strong intermodal corridors.

And what stands out for shippers of all sizes is the ability to move goods over great distances using trains significantly reduces road congestion and carbon emissions - a crucial consideration in today's eco-conscious business environment.

Benefits for Omnichannel Retail Market

Omnichannel retail has emerged as the new norm in commerce. As retailers strive to deliver seamless shopping experiences across multiple channels - both online and offline - they encounter unique logistical challenges relating to inventory management and delivery times.

This is where intermodal shipping shines brightest. By combining different forms of transport, truck and rail, companies can ensure faster delivery times while keeping costs under control. In fact, it has been observed that leveraging intermodal logistics strategies allows businesses greater control over their inventories by enabling them to move products closer to demand centers without committing until sales occur.

Beyond improving inventory management capabilities, another key advantage lies in reducing delivery timeframes, essential when catering to fast-paced consumer expectations in the e-commerce era. With this method of transportation, businesses can fulfill customer orders more quickly than ever before, thereby enhancing overall satisfaction levels.

The Cost-Effectiveness Advantage

Apart from operational efficiencies, there is also a financial incentive associated with adopting these freight services. One notable aspect here is the potential savings in fuel costs. Since trains consume less fuel per ton-mile compared to truckload shipments, high-volume shippers stand a chance for substantial cost reductions. According to recent studies, railroads are four times more fuel-efficient than trucks, which directly translates to lower expenses for organizations opting to use this mode.

In addition to being an economical option for shipping 100 truckloads worth of material, it is equally viable for smaller quantities too, thanks to the flexible containerization system used within the industry, allowing the consolidation of several smaller consignments into a single shipment, thus maximizing load capacity and reducing individual charges.

Understanding Latest Intermodal Shipping Trends

The current trends are reshaping the way freight is transported, leading to enhanced efficiency and cost-effectiveness.

A key trend emerging within this space revolves around leveraging technology for improved shipment visibility. In today's fast-paced world where real-time data holds paramount importance, sophisticated tracking systems have become an integral part of various modes of transport. These systems provide shippers with instantaneous updates about their cargo's location while also enabling proactive management of potential issues during transit.

Tech Innovations in Shipment Tracking

Predictive analytics tools that forecast possible disruptions or delays based on historical data and prevailing conditions represent another significant tech innovation shaping intermodal shipping today. By providing insights into future scenarios, these tools enable businesses to plan effectively, thereby mitigating risks associated with unforeseen events such as adverse weather or equipment failure.

Digital transformation has emerged as a major driving force behind changes witnessed across all aspects of the intermodal transportation sector. Digital platforms facilitate seamless communication among different stakeholders involved throughout the journey - from rail operators, trucking companies, terminals, etc., enhancing coordination and reducing downtime at transfer points. At the same time these tech advancements have improved intermodal shipment visibility for shippers and helped to push more of the key intermodal corridors to where intermodal shipments typically fall in transits of truck, plus a day.

Sustainability: A Core Focus Area

In response to the growing emphasis on sustainability, many players in the network have adopted green initiatives aimed at minimizing environmental impact while maintaining high service levels concurrently. This shift towards greener practices isn't merely corporate responsibility; it makes business sense considering consumers' preference for brands demonstrating commitment to sustainable operations. Integrating eco-friendly supply chain strategies can offer competitive advantages in addition to contributing positively to environmental conservation efforts.

E-commerce Growth And Its Impact On Freight Transport

The surge in e-commerce has significantly impacted the movement of goods across borders. With online shopping becoming the norm, there has been an increase in demand for fast delivery expectations. Consequently, this leads shippers to seek flexible options capable of handling sudden spikes without compromising speed and reliability to cater to the unique needs of retailers and third-party logistics providers (3PLs) offering tailored solutions.

Making Sense of Domestic and North American Cross-Border Shipments

When it comes to intermodal shipping, recognizing the disparity between shipments within and beyond borders is critical. Each has its own unique routes and considerations, along with distinct challenges.

Domestic Shipments - Moving Goods Within Borders

In terms of intermodal transportation, domestic shipments travel within national borders using rail or truck modes of transport. The uniformity in container size - typically standardized 53-foot containers - simplifies equipment requirements across different transit stages while also allowing for efficient planning due to predictable space occupation on trains or trucks.

This efficiency often leads businesses towards choosing domestic intermodal freight shipping, which continues to grow in volume owing to its cost-effectiveness compared with traditional over-the-road trucking options. However, compliance with federal laws regarding safety standards and cargo weight limits remains a critical factor even though there are fewer regulations than international shipping.

Seamless Crossing-Border Intermodal Shipping: United States, Canada & Mexico

The complexities involved when you ship freight long distances internationally can be daunting as customs clearance procedures vary from country to country; logistics coordination becomes more intricate when sea, rail, or road methods come into play. Intermodal cross border freight shipping offers today an appealing solution, as it overcomes several of the challenges found in trucking freight across the US - Mexico border.

A common hurdle that shippers face during such journeys involves ensuring smooth transitions at various points along an international trade route. For instance, transitioning goods across the US - Mexico border comes with extreme congestion at the border crossings and the management of truckloads having to work through the operational driver regulations of US and Mexico drivers. These hurdles bring delays in shipping cross-border freight, which can be particularly troublesome when shipping temp controlled product.

We recommend the following articles for more on US - Mexico cross-border shipping:

Conclusion

Intermodal freight transport has evolved significantly since its origin in eighteenth-century Britain. Today intermodal shipping offers shippers an integral part of the global supply chain, moving goods seamlessly between different modes of transport.

The key to this process is intermodal containers, which have been standardized for efficiency and ease of transfer. They play a pivotal role in both domestic and international shipments.

Why choose intermodal shipping? The benefits are numerous: a favorable cost differential versus truck, improved fuel efficiency, sustainability advantages, and reliable service levels.

In the ever-evolving landscape of logistics providers like InTek, make all the difference with their consistent services and shipment visibility. They use specialized trucks to deliver products directly to their destination.

When comparing it with traditional trucking methods, intermodal comes out on top due to its cost-effectiveness, environmental friendliness, available capacity, and fast delivery expectations.

If you're looking for help deciding on the freight shipping options for you, let us know by filling out our brief Request a Quote form. We'll be happy to get back to you to discuss your unique needs. If you need more information about this or other freight topics, browse our Freight Guides for free eBooks and comprehensive articles, or check out more from our blog.