While many motor carriers are hitching their wagons to shippers’ growing fondness for the cost-effectiveness of intermodal transportation, intermodal shipments can be a frustrating exercise for those who work Canada’s supply chain. Despite the best planning intentions, every port, switching yard, or inland terminal is a potential bottleneck; every transfer of freight means a potential delay. And when freight is delayed, fingers of blame point in every direction.

Chalk it up to growing pains. Growth in intermodal freight continues to outpace North America’s economy as a whole. Related shipments have increased an average of 13% since 1996, according to the Intermodal Association of North America. Overall volumes were up 4.4% in the second quarter of 2003, compared to the same period in 2002, and ISO container numbers increased 11%. A survey conducted by analyst firm Morgan Stanley found that large American shippers – those with transportation budgets over U.S. $5 million – will increase their intermodal volumes in the fourth quarter of 2003 by 7.2% compared to the same period last year. Smaller shippers are also planning to increase their intermodal volumes.

But has the growth outpaced the capacity of the infrastructure that supports it? Canadian National has yet to build the Milton, Ont. facility it announced in 2001 to ease congestion at sites including the nearby Brampton Intermodal Terminal (BIT) – recently the focus of protests by delayed truckers. And growth at ports including Vancouver and Montreal is limited by geography.

The pressure on existing infrastructure will also continue to increase, says George Kuhn, executive director of the Canadian International Freight Forwarders Association.

Consider that as many as 100 new vessels capable of moving 7,000 to 8,000 TEUs are being built at shipyards around the world, he says. “Imagine what that means in the way of capacity. As globalization becomes second nature to the world, as world trade is going to continue, we obviously need to look at our infrastructure.”

The existing intermodal network needs to be better utilized, suggests Kuhn, with a call for better communication that’s echoed by leaders of Canada’s key transportation groups.

The various modes of transportation continue to work in “solitudes”, he says. “Each one is still developing their own thing … there is no proactive, consolidated information hub.”

Freight forwarders, for example, are left unable to track real-time updates to arrival times for specific containers.

“This is especially important come Mid-December, when the Atlantic becomes a very volatile sea, and ship delays can happen,” Kuhn says. “If each (mode) is well advised ahead of time … the whole handling of the move can be done much more efficiently.”

Importers who seem unwilling to receive containers on the spur of the moment may be more flexible with schedules if they get three days’ notice before a shipment arrives, he adds.

Some delays are caused because different links in the intermodal network work on different schedules – and that has to change, says Bob Ballantyne, president of the Canadian Industrial Transportation Association. But unionized workers can play a role in setting a specific facility’s hours of operation. Decisions to open on weekends can be stalled by premium wage costs. And importers determine when they’re willing to receive loads.

The CITA wouldn’t back higher storage charges to press receivers to pick up containers as soon as they arrive at a terminal, Ballantyne says. But he suggests delays could be minimized if terminals notified the rest of the supply chain at the earliest sign of a backlog.

“They’ve got to start contacting the Port of Halifax, the Port of Montreal to say, ‘We can’t handle those boxes right now.'”

“Usually where there’s problems, it involves communication,” agrees David Bradley, CEO of the Canadian Trucking Alliance, adding that truckers need to have a better idea of what’s happening within intermodal yards on any given day.

Improvements have been made, he says. “I don’t get nearly the complaints I used to get from carriers about intermodal service, other than the flare-up (at BIT).” And he points to steady growth in traffic as proof that some related technology has improved.

Still, Bradley agrees the infrastructure has been stretched to the limit. “Whether (improvements to technology) are working in all cases, or whether they’ve been embraced may be an issue,” he says. “I don’t know if (intermodal freight) has grown more than people thought, or whether they were cautious with their investment in capacity.”

Kuhn says the first step in improved communications would involve beginning the customs clearance process as soon as a manifest arrives at a port. However, many companies delay the paperwork because of the potential of a $1,000 fine levied under Bill C274, when government officials look for a container that didn’t arrive on schedule. (His group is lobbying to eliminate the fine.)

Some delays are simply a new reality with the increasing focus on border security, suggests Roger Cameron, a spokesman for the Railway Association of Canada.

“There have been some changes in the continental market nobody could have foreseen even a few years ago, (resulting) in security clearances that have affected operations, probably for the rest of our lives.”

Bottlenecks have been eased with the use of technology that can do everything from tracking clearance through customs to lining up container traffic while ships are still at sea, he says. “But like any new technology, it takes time and communications, and I’m sure that there’s always more room for improvement on that front.”

Canada’s infrastructure has improved, but most work has focused on maximizing existing capacity, he adds. “It’s a (low)-margin business, so everybody tries to make the best-possible use of the resources they have.”

Much of the focus over the past 50 years has been on shrinking networks and assets in order to cut costs. In Canada over the past decade alone kilometres of track operated shrank from 56,138 in 1993 to 46,811 by the start of this year. Railroad companies have also been stripping out double tracks and introducing signaling technology that allows them to better manage traffic on single lines. That too has had an impact on service. For example, in 1953, the New York Central Railroad had a four-track mainline to Chicago that enabled a train to transit between the cities in 16 hours. Fifty years later, the same journey takes 21 hours on a two-track mainline, a degradation in velocity of 30%. And single tracks also pose obvious problems in the event of an accident or delay as every train in both directions is affected.

The difficulty, of course, is in finding the money to pay for the massive investment that would be required. Kuhn wonders if railways will ever be willing to invest the money needed to improve Canada’s intermodal network.

“They are already taxed by having heavily invested and moved into the U.S. market, which is very profitable,” he says. “The degree of incentive for them to keep up in Canada is not there.”

Railway balance sheets might say otherwise. Canadian Pacific’s intermodal revenue was up 10% in 2002, and jumped 30% – almost $200 million — in the past five years. Canadian National saw a 7% increase in its intermodal carloads in the first nine months of 2003, to 963,000.

Thin profit margins will always play a role in infrastructure investments, says the CTA’s Bradley. “There’s a question as to whether a return on investment is there in terms of future intermodal (expansions) … that’s not a question I can answer. I’ve always been of the opinion that you should never try to oversell anything. But in the public policy domain, there’s a tendency to oversell intermodal and the amount of freight it can handle.”

And the recent problems at CN’s Brampton Intermodal Terminal may also be “the tip of the iceberg”, warns CITA’s Ballantyne. “The other evidence I’ve heard are some of the problems on the East Coast at the Port of Halifax, in getting containers moved
inland.”

The freight simply has to go somewhere.