(Graphics created by Emily Ricks)
Responsible freight management parties have a duty to understand how their enterprise goals impact others. That includes potential impact to the environment, social causes and governance structure and their impact on routing guide compliance. Together, these form what’s collectively known as ESG values, and in today’s world, intermodal shipping and ESG are closely intertwined.
The reason behind this comes from the significantly stronger sustainability advantages within intermodal. As an example, World Finance reported that Bryan Trucker, Vice President of Corporate Communications at CSX, stated, “CSX became the first U.S. Class 1 railroad to operate at a fuel efficiency rate of less than one gallon of fuel per 1,000 gross ton miles.” Let’s juxtapose that against trucking fuel efficiency rates of around 10-20% of that amount. That effectively means rail is up to 10X more efficient than sending a shipment by truck. And that means it’s significantly more sustainable. But to further that argument, let’s take an in-depth look at the benefits and disadvantages of intermodal shipping load planning, when to choose one over the other, and a few core SONAR insights to maximize value.
Benefits of intermodal shipping
Intermodal shipping offers significant benefits across a variety of core transportation concerns. For instance, consider these benefits and their value:
- Lower carbon footprint that aligns with ESG initiatives, lowering greenhouse gas emissions.
- Increased overall safety during transport.
- Higher reliability and capacity.
- Lower total transportation cost.
- Convenience via track and trace capabilities.
- Warehouse in transit.
- More independence from market seasonality.
- More energy-efficient transport than the engines used only a “few years ago,” said Tucker.
Disadvantages of intermodal freight
While intermodal freight does possess qualities that make it attractive to those interested in pursuing ESG initiatives or simply lowering freight spend, it can come with some drawbacks. These include:
- Risk of higher freight spend through waiting costs.
- Higher chance of damage during handling.
- Higher infrastructure and equipment cost.
- Risk of loss at terminals.
- Limited ramp access.
When to choose intermodal over truckload
Determining when to choose intermodal freight transport can be troublesome, especially with today’s changing market dynamics. However, the top indicators for when intermodal might be a better option over truckload include:
- When weight is 42,000 pounds or less.
- When the O/D is within 50 miles of an intermodal ramp.
- Intermediate cargo value.
- Avoidance of wear and tear.
- Longer distance hauls.
- Consistent cargo volume, regularity and O/D points.
When to choose truckload
Like intermodal freight, there are also indicators of when to use truckload transportation over intermodal. A few leading signs that cargo is better suited for truckload shipping include:
- Urgent hauls.
- Shorter hauls.
- Low risk of changing the route while in transit.
- When capacity is ample among trucking carriers.
- High-than-LTL frequency stops to load/unload cargo.
How to know when it’s time to rethink your intermodal versus truckload strategy
And lastly, the primary factor goes back to knowing when to start considering expansion of intermodal freight use in conjunction with rebidding on existing lanes. For reference, the top indicators that existing carrier and mode use are contributing to higher costs, as well as predictive rates, which may further suggest an opportunity to tap the value of intermodal, include:
- Freight market volatility increases.
- Overspending in certain lanes.
- Seeing more tender rejections.
- Experiencing storage issues.
- Inability to compare costs of intermodal versus truckload.
Apply FreightWaves SONAR IMCSI1.USA and IMCSIF.USA to prioritize your use of intermodal based on accurate freight market rates
A tactical supply chain relies on data and facts to guide all activities. That includes onboarding new lanes, expanding into new order fulfillment centers, considering the overall needs of fleet management and recognizing when existing operations fall short. The best-laid plans will come to a halt without a strong understanding of market conditions and near-real-time insights to account for changes and knowing when to switch from OTR transport to intermodal freight or vice versa.
That’s where FreightWaves SONAR and SCI’s Lane Acuity can add value by helping organizations learn from the collective data-consciousness of the industry. And by combining that with the Intermodal Contract Savings Indices, including IMCSI1.USA and IMCSIF.USA, freight management parties can have a better view of when to move truckload shipments to intermodal freight. Request a FreightWaves SONAR demo to see the IMCSI tickers in action, and request a FreightWaves SONAR SCI Lane Acuity demo to propel your full transportation procurement strategy to its greatest potential.