Going intermodal: Where’s the demand and are service levels improving?
October 17, 2013
MISSISSAUGA, Ont. -- A panel of intermodal experts attending the 2013 Surface Transportation Summit, held Oct. 16 by Transportation Media with Dan Goodwill & Associates, shed light on where this mode of transport is headed going into 2014.
MISSISSAUGA, Ont. — A panel of intermodal experts attending the 2013 Surface Transportation Summit, held Oct. 16 by Transportation Media with Dan Goodwill & Associates, shed light on where this mode of transport is headed going into 2014.
The panel, moderated by Dan Goodwill, was asked to elaborate on some of the common perceptions about intermodal use.
Neil McKenna, vice president, transportation, with Canadian Tire Corporation, indicated that intermodal is a strategic part of the Canadian Tire network, and that this mode is used to handle some 30 % of the company’s 4 billion pounds/year of freight, and specifically 36 % of the inbound freight coming in from Vancouver.
“It’s (for) freight that doesn’t move over the road. Where the infrastructure is conducive to it is an indication of where it’s used,” he said.
“I agree the driver shortage has some impact on moving containers to the intermodal mode, but I don’t think the shortage is as serious as it’s being portrayed-I think it’s a capacity thing,” added McKenna.
Ron Tepper, executive chairman and CEO, Consolidated Fastfrate, said the company is engaged in lots of intermodal activity through its recent trucking company acquisition and also through Canada Drayage “which has offered up a lot of opportunities for us. We have to find ways that are competitive, or better, to move LTL shipments. Because our freight is portable we can load it as cost per cubic foot. We have a real value to the railway in terms of repositioning shipments out west again,” said Tepper.
The company’s trucking business is a little more diversified while the intermodal business is 100 % LTL, he said.
Barry O’Neil, executive vice president, Hub Group Canada, said that out of some $3.1 billion in total business, $2 b is from intermodal.
“We’ve grown our drayage operations to become one of the largest in North America. The growth of HUB is driven by our asset management and control. We continue to grow our asset program as assets are depleted in the intermodal business,” he said.
Mark Lerner, CN’s AVP, domestic intermodal, said the CN vision for intermodal is not to change it.
“We want to build on it in terms of investing in our infrastructure and giving our customers more value, and more options. We’ve invested in infrastructure, in more track, and more sidings. We have a $200 million facility in Calgary that will give us the capacity to grow in key western markets, with faster ramping and deramping of trains and co-location opportunities. We’re also looking at capacity in terms of domestic and international,” he said.
The railway also just purchased 100 reefers that it’s starting to offer in the transborder market.
In terms of length of haul, and where intermodal fits best, Goodwill noted times have changed.
“I recall 1500 miles was kind of a benchmark back when. Now, we’re talking about lengths of haul as short as 600, 700 miles, with 80 % of truck movements in the 500 mile or less space. What’s the impact on cross-border, and on Canadian freight?” he asked the panel.
“A lot of the trucking companies we deal with are happy that we can move in the shorthaul corridors. In order for railway to compete there’s a lot of fixed costs. You need a truck-like service, dependable and fast. You need a good low cost infrastructure in terms of being able to doublestack,” said Lerner.
The Chicago-Toronto corridor is showing incredible growth, he said, both from freight transloaded out of LA-Long Beach or originating from the Midwest interior.
“It is quite doable-we may even see this accelerate,” he said.
Shippers continue to have questions about rail service levels and according to Lerner, a lot has changed in intermodal products over the last decade.
“When people experience something once it’s hard to shake it. I understand that if there was a bad experience there would be the fear it would happen again. But with the reservation process we put in back in 2003, 2004 we are able to understand shipper demand and size our cars accordingly. If we don’t understand what’s coming at us we can’t plan for it,” he said.
CN’s intermodal-focused customer service department is in charge of looking at service issues 24/7.
“The team sits with every new customer on delivery windows, expectations, contacts, targets. We have the KPIs against it. Now we buy ahead of the cycle-we have a little bit more than we actually need,” said lerner.
McKenna said that reservations “have improved fourfold, and 80 % of time we’re getting what we need.”
“Intermodal is the cheapest mode of transport next to water, and the lowest in emissions per tonne/km. It’s a no brainer as a sustainable part of your strategy,” he said.
With the Panama canal expansion and targeted opening for 2015, questions abound about whether the larger vessels will increasingly call on east coast ports, and how this will play out on the use of intermodal.
Shippers are increasingly procuring sophisticated technology that is allowing them to determine where intermodal fits optimally.
“We’re in the process of implementing a TMS-it’s necessary because of the complexity of the intermodal system and for keeping track of freight, bills and for reconciliation purposes,” said McKenna.
“Rail costs are lower than trucking costs so when it can move by rail, then it should, and other than that it should move by road,” said Tepper.
Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry. All posts by Truck News