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4 Strategies to Benefit from Intermodal Service

Intermodal Service

The intermodal landscape is evolving. With more available routings, providers, and service offerings, the environment is becoming more complex and dynamic. Additionally, impending truckload regulations and highway infrastructure concerns can give intermodal service an attractive edge in the marketplace. For many reasons, shipping freight via rail is becoming a common solution for shippers to manage costs and capacity.

By some industry estimates last year, intermodal capacity jumped up 20%. To manage the increased demand for intermodal service, railroads and asset owners have bulked up their container fleets, and traditional truckload carriers are adding TOFC (trailer on flat car) solutions to their suite of service offerings. This is good news because a larger rail network and additional capacity will allow the railroads and intermodal marketing companies (IMCs) to convert freight that was previously moving via other methods. And converting to intermodal is creating record intermodal volumes. How can shippers position themselves to ensure they have the best access to intermodal capacity and services?

  1. Determine where intermodal service fits in your supply chain. If you ship high-volume, consistent lanes, it’s important to work with a provider with consistent capacity. Ask your provider for asset tracking reports and information on monitoring surplus and deficit markets. In addition, ask about the provider’s contingency plans if capacity tightens. For example, can the IMC provider reposition equipment from other markets? Does the IMC have truckload service options in case intermodal capacity tightens or service declines?
  2. If you decide to switch more freight to intermodal, make sure you work with companies that can provide an integrated transportation solution. Visibility is a critical component. Without a big picture of all options, you could miss opportunities. As markets change, the value of intermodal can change. Working with flexible companies that can shift seamlessly between services will allow you to take advantage of any type of market.
  3. Look for a provider with a comprehensive intermodal solution. Can your service provider access all of the Class 1 railroads (UP, BNSF, CSX, NS)? If trains are disrupted due to weather, for instance, can your service provider shift to the other railroad to keep your supply chain moving? Or do you scramble to source other capacity? Your best bet will be a provider that can seamlessly move between one railroad and the other, or from one service to the other, to make sure you don’t experience a disruption.
  4. When searching for container capacity, ask about surge allowance. If you’re getting committed capacity, it is important to note any surge penalties. Working with providers that have flexible capacity solutions will help you avoid high surge charges during times when you rely on the capacity the most—when sales are up and volumes are increasing.

In the end, it is important to make educated decisions when searching for intermodal capacity. Intermodal capacity is increasing, but so too is demand. Considering these things as part of your intermodal sourcing strategy will help ensure that you have the best access to intermodal.

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