In certain applications Intermodal transportation, the combination and integration of at least 2 transport modes, can be a cost effective and environmentally friendly complement to road transport for the handling of shipped goods. With diesel prices having increased y/y by over 33% to $3.908 a US gallon, the intermodal option is being considered more frequently, but at what price?

Current global, regional and local economic challenges are placing significant demands on transportation service providers to lower costs and deliver increased service levels with virtually no guarantee of customer loyalty. Shippers are looking for options that can meet their corporate objectives: maintaining (or increasing) margins amidst ever increasing costs (most recently driven by soaring fuel prices) while meeting environmental responsibility pressures.

The increase in fuel costs is contributing to at least a partial shift in transportation mode selection. Businesses are revisiting the individual costs in the supply chain and transportation is a "low hanging fruit". Leading transportation providers understand the business pressures at play and are being pro-active in improving internal efficiencies, partnering with alternate modal providers and finding new ways to improve service and provide their customers options that enable them to remain competitive.

From a pure transportation view point, there are three primary elements that should be considered when there is a partial/total switch to intermodal: reliability, cost and in-transit visibility. When a company begins to leverage intermodal transportation, the business reality is an increase in inventory as a result of marginally higher inventory and safety stock levels (SS). For that reason, the reliability of the selected partners in the movement of goods is critical. Unforeseen/unplanned delays will cost money. In addition, the lead service provider should be expected to offer the same level of visibility that is prevalent in over the road. Visibility reduces risk and enables the lowering of SS, thus making intermodal a viable component of the solution.

Solutions covering all transportation market segments (intermodal, TL, LTL and brokerage) that deliver end-to-end visibility, control and management of the flow of goods are currently available. The ability to replace a portion of the over-the-road miles with an alternative, such as rail, has been documented to lower greenhouse gas emissions – good news for those wanting to make their supply chain more sustainable. But what does that mean to the over the road transportation provider? It suggests they find ways to reduce fuel consumption by adjusting driver habits, improving engine efficiencies and maximizing cube/weight on trailers in order to reduce their carbon foot print and remain a competitive and viable alternative to intermodal.

Studies consistently find the intermodal option turnout to be cheaper than the all-road alternative. But are these studies flawed because they don’t take into consideration the full impact on the supply chain, such as increased inventory levels?

There needs to be a balance between cost, distance and service levels, particularly when one considers the extended duration of the multi-modal trip versus the unimodal over-the-road transportation with its inherent benefits and drawbacks. Transportation service providers are joining forces to offer services at the price point their customers want and are implementing technologies that enables oversight from origin to final destination, be it uni- or multi-modal.