“One word on logistics” is our way to introduce you some “complex” concepts which surround our international freight forwarding and transportation industry. This week our topic is Intermodal Transportation, one of the most basic concepts when it comes to international logistics. Feel free to share, comment, and suggest new topics for us.

What is it?

It’s the movement of the same containerized cargo over air, land, or sea through the use of different transport modes (aircraft, truck, rail, boats, ships, barges, etc.) capable of handling containers, without having to unpack and repack the cargo. By extension, the term intermodalism has been used to describe a system of transport whereby two or more modes of transport are used to transport the same loading unit in an integrated manner, without loading or unloading, in a door-to-door transport chain.

What is the importance?

Intermodal transportation has gained importance for 4 critical reasons:

  1. Boosting inventory management. Many businesses that historically warehouse a large amount of inventory now embrace just-in-time systems that minimize inventory holdings and increase flexibility for both production and product offerings. Timely shipments are crucial for this approach to succeed. Failure to receive necessary parts on time can result in costly production slowdowns. Transportation providers, recognizing the importance of timely deliveries, have responded by offering just-in-time services. Intermodalism expands the scope of shipping alternatives by allowing shippers to weigh the timeliness and cost of the different transportation options and choose the option that best meets their needs.
  2. Encouraging the improvement of information and Communications Technologies which leads to better tracking of shipments. Shippers, carriers, and recipients are able to obtain real time information about the location of shipments in transit as well as expected delivery times. Fewer reliability problems exist due to improved coordination and communication. Reliability may be compromised when the amount of handling and the number of parties involved in a particular freight movement increases. However, good coordination between modes and the efficient transfer of information can offset that risk. Communication also improves when freight handlers and shippers use these technologies to track and transfer shipments.
  3. Impact on environmental goals and objectives. Intermodalism can play an important role in reducing motor vehicle emissions. Improving intermodal connections, for example, could increase the use of public transportation since passengers are more likely to use transit services to get to rail or air terminals when there are direct connections. With respect to freight movements, increased use of truck-rail movements instead of truck-only movements may decrease pollution since rail transport has lower emissions per ton mile than truck transport.
  4. Contribution to less traffic Congestion. Vehicle miles traveled have increased at a much greater pace than lane miles, resulting in increased congestion. Congestion not only contributes to delays in travel times, it also wastes fuel. One solution to the problem of congestion is to build more highways, but highway construction involves large capital expenditures and is not likely to contribute to air quality improvement. Other constraints to highway expansion plans include: insufficient land availability in densely populated areas; land-use policies and zoning restrictions; and air quality regulations and other environmental concerns, such as preserving environmentally sensitive areas and ecological diversity. Thus, policymakers and planning organizations may increasingly look to other alternatives, such as intermodal transportation, to reduce congestion on state highway systems and perhaps avoid highway expansion costs.

Today container shipping has standardized many types of general cargo and thereby improved efficiency, reduced costs and minimized handling and risk.

How does it work?

Source:

International Union of Railways: http://www.uic.org/

Bureau of Economic and Business Resarch: http://www.bebr.ufl.edu/