Curtis Spencer, President, IMS Worldwide, Inc. (Logistics Distribution Warehousing 2007)
There are several significant trends in intermodal traffic that must be considered as fundamental drivers and policy-change agents. These important changes in the way cargo flows from origin to destination are the result of a need for more efficient and more predictable cargo flows, and to some extent the need to exert more control over the security and visibility of cargo in motion at any point between origins and destinations.
It is important to note that trends are part of the predictor of change in trade management. Observing trends in global logistics is the easy part; the most difficult challenge is to understand where the trends will have an impact on trade flow, and which trends will gain acceptance across all points of custody that occur on the global conveyor belt.
The logistics system is made up of many components including intermodal rail and the associated delivery challenges associated with rail-truck and truck-rail interchange. The complexities of the system reflect the imprint of each importer's (or their logistics services provider partner's) approach to managing security, visibility, cost, predictability, compliance, and numerous country-specific requirements.
The trends that will be discussed in this format are "works in progress," and only time will tell if any or all of these trends will become part of actual trade practices. Given the competing pressure for supply-chain consistency, increased velocity, decreased labor, lower costs, increased visibility, and compliance, as well as the emerging role of technologies, robotics, and security innovations, it is clear that global trade will continue to evolve - change will be the only constant.
Trade, specifically trade with China, is growing rapidly. At 7-8 percent growth per year, in 10 years, trade with China will double. The U.S. transportation system faces a massive shortfall in capacity to move and absorb these goods. To add greater unpredictability to the logistics process, shifting populations will continue to drive changes in port and destination selections. Larger ships, new port capacity, changing routes in favor of the Suez Canal, or new capacity in the Panama Canal will only continue to complicate the decision process for goods movement inland. Importers continue to weigh the costs of drayage, the costs/benefits of transloading or intact moves, the challenges of labor and truck drivers, and expanding rail capacity as intermodal market shares shift in the rail carrier's service systems.
The moving target is simple to ask: "Where do the boxes stop?" The answer is as complex and varied as each importer's strategy for distribution site requirements (where and how many import and regional distribution center (DC) sites are required and why?); location selection (which port, near port, inland port, regional DC, or import DC and why?); and choice over the carrier's role (is it door-door, door-port, port-port service, landed-delivered, consigned and why?). These selection choices come at the same time that the rail carriers have created an increase in intermodal market share. They face increasing pressure for intermodal services and increasing demand for port/near-port service and a diminishing land inventory at our ocean ports.
Furthermore, the rail carriers are looking for ways to aggregate services into inland "hubs" where they can operate more efficiently and service a greater number of clients. What is emerging from this desire for efficiencies by the rail carriers is a logistics hub, a site where the rail carrier's intermodal services intersect with logistics distribution services. There are several trends that indicate certain changes that are in varying stages of evolution:
Change Agent 1: Large ships at mega ports create huge volume spikes in cargo to be moved inland or to be moved to import/regional distribution sites near ports. Carriers are also seeking to aggregate their services to (inland or port) load centers in key markets and seek fewer ports of call where import and export volumes provide profitable operating revenue streams. The ocean carrier is driving this change purely on the basis of a desire to better utilize their container equipment. Choosing ports where they can reduce the "cycle time" of the containers between unload/load or discharge/stow can have a significant impact on the ocean carrier's profitability. Thus, ports of call that support efficient loading or unloading of containers from the ship and distribution networks that keep the containers closer to the ports are important considerations for the ocean carriers. This trend will continue to drive volumes to the most efficient ports and to ports where a higher ratio of goods can transition between the ocean carrier's containers and domestic conveyances in reduced timeframes.
Change Agent 2: Rail carriers are seeking to operate more efficiently by creating a parallel policy of aggregating demand in key markets. In fact, rail carriers now seek to change the model for delivery of goods by aggregating all rail-served goods into a single or multiple logistics parks in their markets (similar to how they concentrate intermodal delivery to a single ramp). These efforts to aggregate demand are based on their desire to increase velocity in service, to reduce local shuttle costs, and to expand their railcar service efficiencies. The rail carriers not only seek higher volumes of trade to specific locations, but once at an inland destination, they also seek a destination within that market where they can deliver all rail-served buildings within one logistics and distribution park.
Change Agent 3: Competition and collaboration between traditional U.S. East Coast and U.S. West Cost rail carriers, emerging corridors for rapid rail services, and the environmental desire to displace trucks on roads by rail short- and long-haul services are all emerging as trends for the future. All water routes to the U.S. East Coast and the promise of greater lift capacity post-Panama's expansion provide the traditional East Coast carriers with new mid-country reach on a competitive platform with U.S. West Cost and land-bridge service to mid-country markets. New corridors (Heartland and Crescent/Norfolk Southern, Triangle/CSX, and Meridian Speedway/Kansas City Southern/ Norfolk Southern) provide both north-south and east-west collaboration and track sharing in order to reduce truck traffic, provide expedited service, and reduce pollution and congestion at the ports and at inland destinations. The Union Pacific and Norfolk Southern have strengthened their collaborative efforts and the Burlington Northern Santa Fe and CSX have now done the same.
Change Agent 4:
Re-engineering the intermodal yard, the container yard, and the ocean
terminals by increasing density on current properties is the next
generation "throughput goal" for intermodal yards. Current
material-handling systems for container and intermodal yards are based
on rubber tire gantry (RTG) and straddle crane technologies. These
systems are limited in their "reach" and are generally deployed to
support building or unloading a single-unit
train-to-truck/hostler-supported chassis. While multiple gantry cranes
can operate over one train, they generally are limited to one rail
track and one line of trucks/chassis for loading or unloading.
wide-load gantry cranes, also known as rail-mounted gantry (RMG)
cranes, are emerging as an alternative to current mechanical choices
for intermodal, terminal, and ocean terminal operations. The RMG's
cranes can straddle up to six rail lines (which can be closer together
than with traditional RTG cranes), two or three truck feeder lanes, and
up to 10 rows of stacked boxes. The RMGs can reach boxes stacked on
either side of the crane to build out future rail loads or export loads
for the ocean carrier. These new cranes operate utilizing superior
technology that allows the terminal/yard to more than double the
throughput per acre over the more traditional operations utilizing RTG
cranes and wheel-parking operations.
The new RMG systems have
been developed to make every phase of the operation more efficient from
an operational and cost perspective. These cranes are electrically
powered and include a high level of automation. While it costs nearly
three times as much as the RTGs, the RMG technology maximizes movement
between each mode of transportation to eliminate the need for chassis
and hostlers, reduce labor costs, improve safety, reduce acres required
for the facility, and increase throughput of the facility by over 100
Change Agent 5:
New protocols for managing container yards are emerging and provide an
improvement for container per acre usage in terminals and intermodal
yards. While these technologies are emerging as first choice for marine
terminals, these systems will migrate to intermodal terminals in the
near future. Automation for a container terminal is comprised of
robotically controlled RTG/gantry systems that - when combined with
automated "container picking" and "container put-away" logic - provide
the terminal operator with a more efficient operation, the ability to
operate 24/7, lower labor costs, and higher use of land for storage and
stacking containers. The new Maersk-affiliated container terminal in
Portsmouth, Va., which began operations in August 2007, is utilizing a
highly automated, computerized terminal that promises to revolutionize
the local container shipping industry. Some of the equipment that will
be incorporated in this high-tech facility includes six large 110-ton
container cranes on the wharf; approximately 30 unmanned, rail-mounted,
computer-controlled gantries; and a smaller number of wheeled manned
Change Agent 6:
China is in the process of constructing 18 inland intermodal logistics
export hubs. What possible impact will this have on domestic intermodal
traffic and why? Currently, most cargo moving from China is
consolidated or stuffed at port locations, not at the inland origin
factory site. This process is changing as China's inland transportation
system continues to evolve. Its system will increase dramatically in
efficiency when the intermodal export hubs are completed and goods are
transported from deep inland China via the rail to ocean terminals for
loading onto carriers. This intermodal system will provide access to
lower-cost labor and increase transportation efficiencies. It will also
provide added security for cargo as it will be loaded and sealed at the
points of origin, which will provide a more secure system and increased
visibility when linked to China's rail carriers' train-management
systems. China's ability to streamline supply chains, improve security,
and reduce costs leads us to predict another level of cargo flow on
container ships that needs to be unloaded at our ports and transported
to inland destinations, adding significant strain to an already
These change agents will not happen all
at once, but taken in context, the intermodal system of today will be
different in many ways in the future, and the importers ability to
provide security and have accountable visibility (and therefore
increased efficiency and flexibility) will evolve until the next
supply-chain improvement increments are implemented. In the short term,
the key question remains, "Where do the boxes stop?" The answer is the
same real estate answer, "Location, location, location."