Intermodal Transport: 7 Ways to Save Want to cut costs when incorporating intermodal and rail transportation
Want to cut costs when incorporating intermodal and rail transportation into your supply chain? Here's some expert advice:
1. Use a transportation management system (TMS). A TMS is supply chain management software that helps shippers select modes and carriers, and manage rates, load tendering, and freight payment. Platforms range from installed on-premise to hosted to Software-as-a-Service.
Nearly 80 percent of shippers responding to a CSX Transportation Intermodal survey use or are considering a TMS not only to manage costs, but also to improve access to information about transportation options, and better manage capacity and service requirements.
Shippers in the process industries who use automated railcar fulfillment software can also save money by improving efficiency. "If, for example, distributors want to have 12 railcars on location ready to go to fill an order, the software will determine that they may actually need to have 18 railcars in inventory—with three en route and three empties returning to keep an average of 12 on location," says Gary Neights, director of product management for Elemica, a global provider of supply chain solutions for the process industries.
2. Build relationships with intermodal transportation providers. "The key is in consultation," says Darren Field, senior vice president of intermodal at J.B. Hunt Transport, the largest domestic intermodal provider in North America. Sharing deadlines, budgets, and goals can help an intermediary match shippers with the best rail and over-the-road options, or help them adjust to changing market conditions.
"Shippers who have a long-term relationship with J.B. Hunt benefit from our continuous assessment of their business needs," Field says. "Once we learn a shipper's business, we can bring them opportunities to save money as they become available."
3. Bid your network annually. Home Depot bids both lane truckload and intermodal every year, and then runs cost comparisons. "If intermodal and truck costs are comparable, we look at how service is trending," says Ron Guzzi, Home Depot's senior manager of transportation carrier relations and sourcing.
4. Evaluate shorter lengths of haul for intermodal conversion. Shippers traditionally turned to intermodal rail for freight moving more than 1,000 miles. Today, however, infrastructure improvements mean that shippers can also evaluate moves that are 500 to 1,000 miles long for intermodal.
5. Assess your routes and modal options at least every six months. Situations change. Review your routes quarterly, if possible, to make sure you are using the optimal mode.
6. Leverage volume and regularity during carrier negotiations. "If you ship two to three times weekly in the same lane, you can negotiate a better rate with your carrier," says Michael Bahn, president of RR Logistics, a 3PL based in Rogers, Ark.
7. Use asset-based intermodal carriers to avoid the risk of container shortages. Home Depot contracts with service providers that own their containers, such as J.B. Hunt, as a way to manage the risk that boxes might not be available.