The Advantages of Intermodal Transportation in the Global Economy

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Table of Contents

Introduction
Approaches to Transportation
Greater Effectiveness and Reliability
Leaner Planning and Flexibility
Reduced Costs and Scalability
Sustainability
Discussion
Conclusion
References

Introduction

Logistics and transportation have become the backbone of the modern globalized economy as various stakeholders rely on the shipment of goods and commodities to maintain interconnected and interdependent networks. As global networks developed in the late 20th century, intermodal transportation became popular, although some levels of standardization were seen in the decades prior. Intermodal transportation is the use of standardized containers via at least two different modes of transport on a freight shipping route from origin to destination. Some benefits of this type of transportation are reliability of delivery time, precise planning processes, sustainability and a reduction in costs of transport. Intermodal transportation has significantly more advantages in comparison to unimodal and multimodal approaches to shipping in the context of modern global logistics networks and capabilities.

Approaches to Transportation

In the 1960s, major deregulation began in the United States’ previously modalism-based system, and significant efforts were made to integrate separate transport systems. At first, maritime systems were developed followed by inland networks. As a result, three components of the multi-transport systems developed. These are intermodal, multimodal, and unimodal (also known as transmodal) transportation systems. Intermodal transportation relies on the movement of freight from the origin to the destination using several modes of transportation, relying on unique and different carriers or logistics channels, most known for the use of standardized container freight transportation across a sequence of modes. Similarly, multimodal transportation relies on the movement of freight relying on multiple modes but using one contract or operator. It is similar to intermodal transportation, but it requires either a single operator or a strong level of integration between involved actors in a network that the freight flows smoothly under a unified system of integration and tracking (Rodrigue, 2017). Finally, unimodal transportation is the movement of goods within the same mode of transportation, which is becoming extensively rare in modern economic realities, but it has the purpose to ensure continuity within the same modal network.

Greater Effectiveness and Reliability

Intermodal transportation is viewed as highly effective and efficient in the modern logistics networks because it is a highly operational system consistent of many operators and other stakeholders working in a clockwork, consistent manner. The key to this efficiency is the standardized container, which fits various modes of transport including trucks, rail, boat, and certain cargo planes. These goods do not need to be repackaged or sorted at any point throughout the shipment journey until they reach the destination. Therefore, ramps and distribution centers, which are adapted to handle the specified size of container can operate effectively in simply transferring it from one mode to the next (DeWitt & Clinger, 2000). This contributes to goods being delivered faster, maximizing capacity utilization on each mode, and takes advantage of the robust internal railway networks and international maritime routes to reach near optimal efficiency in freight shipping.

Intermodalism functions best when cargo flow is continuous in similar quantities as is the case with the global economies. Furthermore, the consistency of the system also contributes to its reliability, there are almost no issues in the flow of goods. However, if there are problems, the system allows to select a different mode or carrier at each leg of the journey, effectively creating a backup plan in cases of disruption, which would not be possible under multimodal or unimodal approaches.

Leaner Planning and Flexibility

As discussed above, the intermodal system allows for greater flexibility and leniency, as shippers can effectively plan their shipments across various routes and modes to be most cost-effective and appealing to their needs. Unlike a multimodal or unimodal approach, where a contract is agreed upon with a carrier, and essentially the responsibility is centralized to them, intermodal transportation gives control to the owners of the shipment. One area where intermodal transportation has continuously performed less optimally compared to the other approaches, was tracking and reporting of status in transit. However, with modern smart technologies and the Internet of Things (IoT), this has become less of an issue as transportation companies are adopting innovative solutions with logistics data being at the forefront of growth for the industry (Newton, 2021). While shippers do have greater flexibility in choice of contracts under intermodal transportation, they also have a higher degree of responsibility to abide to transit times for ramp delivery at key points, which can present certain logistical challenges.

Reduced Costs and Scalability

Intermodal transportation is increasingly the most cost-effective and serves as a beneficial means for shippers to move goods. The basis of the system is that it allows for scaling, bringing more savings to stakeholders. Scalability is achieved via containerization as capacity increases in modes such as rail and maritime in comparison to truckload or aviation where the ratio of operator per container freight is approximately 1:1. Due to the fuel-efficiency, standardization of containers, and capacity fulfillment using these containers, the savings begin to accumulate. Zhao, Zhu, and Wang (2020) found that intermodal transport savings with effective modeling can reach 24.5%. Intermodal can bypass many logistical challenges as well, to plan routes or transportation modes ahead of time to avoid any congestions, weather delays, or other issues. Shippers can take advantages of lower rates at each transport leg and gain flexibility of loading and unloading goods at different ramps based on their practical and financial needs.

Sustainability

While transportation has the benefits of economic efficiency and social progress, it can also have significantly negative environmental impacts. With greater awareness of environmental footprints and global warming, stakeholders are attempting to reduce their impact and fossil fuel energy consumption while keeping the logistics networks operational and sustainable. The intermodal approach is considered as the most sustainable (Göçmen & Erol, 2018). The use of different modes to best transport goods has two environmental advantages, it allows to choose the most carbon-friendly way for the transport and it leads to carry more space-efficient intermodal containers per load, reducing needs for additional trips.

For example, trains operate at higher speeds and capacities compared to trucking, cutting approximately 65% of greenhouse gas emissions per 1000 miles in compared to trucking (CIE Manufacturing, n.d.). In turn, modern cargo ships can carry significant loads of the standardized containers compared to that of air travel which has an infamously high carbon footprint. If trucks are necessary for the last legs of the journey, it would be for shorter distances and smaller trucks can be used, which are more fuel efficient than the diesel-powered heavy alternatives. While arguably, the multimodal approach can also follow this path, in an intermodal shipment, there are multiple shipping contracts and transport fills up quickly. In a multimodal relationship, working within the same carrier or network of carriers, it is more difficult to achieve optimal load without waiting. However, time delays would result in disruptions to the supply chains, effectively forcing the carrier to make more trips with lower load capacity. At the same time, multimodal networks can be highly sustainable as well since they have a focus on increasing efficacy which can produce streamlined supply chains with reduced emissions.

Discussion

Intermodal transportation serves as the best means of shipping in the modern global environment for the majority of goods in most contexts. While multimodal and unimodal approaches have their advantages, they are specific to very unique situations. Unimodal is largely best for either short-distance delivery, on very specific routes where containers are not appropriate, or for high-speed delivery such as by air. There are potentially more origin and destination pairings via unimodal shipping and there is an inherent simplicity in terms of logistics management and billing because only one mode of transport is involved. Meanwhile, multimodal transportation is only possible in cases where one provider oversees all elements of the transport process, which only few companies in the world are able to do, delivering the product from origin to end destination. Companies such as Amazon that have extensive fleets or specific shipment companies such as DHL, FEDEX, and UPS are able to effectively oversee. In both unimodal and multimodal approaches, there are inherent limitations of reliance on one specific transportation mode or delivery partner, if there is a breakdown in those logistics chains, little can be done until the process begins moving again.

Intermodal shipping is not for every context or logistics chain, but in general, the global system does require a level of flexibility and travel across various modes to reach its destinations. Intermodal transport is most effective over longer distances, likely multinational, and on a supply chain that has the intermodal ramps on route. Intermodal ramps are essentially hubs where the container shipment switches modes, these should be located within 50-100 miles of the origin and destination. However, in some geographies and supply chains that may differ. The most common types of ramps and intermodal transport used are maritime to truck and rail to truck, and vice versa for both. Intermodal transportation is effective and reliant, for high value of freight. The flexibility of the system allows to utilize aspects of logistics such as many-to-many relationships (i.e. a rail segment can move multiple containers, and then the truckload segment can be filled with drivers picking up deliveries throughout the day to ensure on-time delivery). Elements such as freight consolidation of smaller shipments being bundled together and forward positioning inventory for time-sensitive shipments are also beneficial.

There are inherent limitations to intermodal transport, the primary of which is its dependence on the standardized container size, making it difficult (albeit not impossible) to increase capacity. However, the standard container is extremely popular for the reason that it meets the needs and demands of the majority of shipments, so it is not a common issue. The intermodal approach is also operationally complicated as there are more steps, but processes have become highly efficient over time and modern logistics operators simplify the concept for clients and regularly report excellent KPIs.

Conclusion

This paper had demonstrated the advantages and effectiveness of intermodal transportation in comparison to the unimodal and multimodal approaches. While intermodal shipping may not be appropriate in all cases, it is significantly more flexible, reliant, and beneficial in terms of cost and sustainability, particularly for international supply chains. Considering that 80% of all world trade is conducted via maritime shipping, multiple modes of transportation are required to deliver goods from origin and to destination locations. Intermodal transportation offers the systemic approach necessary to achieve that in an efficient and safe manner while offering nearly the same level of accountability, efficiency, and tracking which other modes may have under a single mode or operator.

References

CIE Manufacturing. (n.d.). The environmental advantages of intermodal shipping. Web.

DeWitt, W., & Clinger, J. (2000). Intermodal freight transportation. Web.

Göçmen, E., & Erol, R. (2018). The problem of sustainable intermodal transportation: A case study of an international logistics company, Turkey. Sustainability, 10(11), 4268.

Newton, E. (2021). Intermodal transportation gets an efficiency boost with IoT technology. Web.

Rodrigue, J. (2017). The geography of transport systems. New York, NY: Routledge.

Zhao, J., Zhu, X., & Wang, L. (2020). Study on scheme of outbound railway container organization in rail-water intermodal transportation. Sustainability, 12(4), 1519.

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