The relationship between intermodal shipping & ESG initiatives

Adam RobinsonFreight Market Blog

intermodal shipping and esg

Defining corporate goals in the supply chain can be a monstrous undertaking. Organizations are continuously focused on maximizing profitability and achieving a better reputation. However, there is a unique problem within the supply chain, and faster and free shipping does not always amount to sustainable shipping practices. More rapid transport will inherently mean a need for either airfreight or overnight ground service. And for brokers, enterprise shippers, and carriers, figuring out when to balance the mode used for transportation against sustainability has proven to be difficult at best. However, there is a unique relationship between Intermodal shipping and the triad of environmental, social, and corporate governance (ESG) initiatives. Let’s take a closer look at why it again harkens to the value of real-time data and how it adds value to the supply chain.

The challenges of tracking intermodal shipping costs and value

As with truckload carriers, rail carriers experience a delay between invoicing and payment processing. By the time all is said and done, weeks, if not months, may have passed since the movement occurred. In today’s world, that leaves a significant gap for staying strategic. And with freight volumes shifting every few days, reflecting a change within rates, making an informed decision is even more difficult.

There is another side to the challenges well. Even when shipped by rail, freight still needs to make it to the station for loading. That is accomplished by truck, so again, it can be complex at best.

Why intermodal shipping goes well with ESG initiatives

All organizations are looking for ways to optimize their supply chains, and according to Inbound Logistics, energy management is the next step in supply chain optimization. That includes managing energy consumption costs and environmental impact, both critical components within an ESG-conscious strategy. These initiatives’ goal is to effectively promote a more responsible approach to everyday activities within a company. There is an obvious opportunity to create ESG initiatives in the supply chain that surround reducing reliance on fossil fuels.

Major carriers have taken steps to implement ESG processes that are often overlooked, such as investing in natural gas-powered final mile delivery vans. However, additional ESG improvements can be seen with the advent of electric trucks, drones, and IoT-enabled systems that continuously optimize routes based on the trucking market.

In the context of intermodal shipping, gaining insight into the actual shipping costs by a combination of truck and rail compared to the potential impact on the environment of simply shipping something solely by truck or air is valuable.

How freight management parties can stay informed and strategically leverage intermodal shipping

As already mentioned, intermodal shipping can be challenging to track. However, it all begins with the freight tender. That much is specific and accurate of all shipments and their execution. At the same time, rail carriers collectively generate a mountain of tendered data that can be applied to derive tendered data, and paid rail invoices within 14 days of a given move can provide a broad indicator of how rates are stacking up this mode of transportation. Yet, viewing that same information later can further increase the validity of the argument as to whether intermodal shipping contributed to any meaningful savings.

That singular fact is the basis behind creating the intermodal contract savings truckload indices within FreightWaves SONAR. These indices provide a distance-based comparison of average savings derived from intermodal transportation compared to truckload. Additionally, the rates are broken into three groups, including short, medium, and long-haul moves. By considering the differences between these three groups and the typical costs associated with truckload moves of similar distances, it is easier to justify using rail.

There is also the opportunity to lessen the worry over the timeliness of transportation. While today’s customers are clamoring for their latest purchases today, they are environmentally conscious. Many customers may be willing to wait when informed that a faster purchase is not necessarily a greener purchase. That is where shippers and freight management parties can apply data to consider predictive freight rates and historical rail rates to bring costs under control and achieve ESG goals simultaneously.

Gain increased insight into intermodal activity by investing in near-real-time, data-driven freight forecasting platform

The best-laid plans for aligning your organization with ESG initiatives are only as good as your day-to-day improvements. And taking advantage of more rail services, as well as recognizing the actual cost and savings opportunity of rail will go a long way in helping your organization tap the value and meaningful impacts associated with ESG improvements. Find out more about how your organization can get started with navigating volatile freight markets and tapping the intermodal value by requesting a FreightWaves SONAR demo today.