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Intermodal Transit: A Better Way To Ship

Industrial companies are finding intermodal transportation to be an efficient, cost-saving approach that enhances the supply chain process.

Apr/May 10
Intermodal transportation describes the transfer of products involving multiple methods of movement - by railroad, truck, or ship.

The Intermodal Association of North America (IANA) reports that 17 million to nearly 23 million containers were transported intermodally each year since 2006. Trucking companies, intermodal marketing companies, ocean steamship lines, and railroads provide a cost-effective, efficient, and environmentally friendly way to move freight from origin to destination. Shipments can move directly from a container ship to a truck or train, then arrive at the final destination. Throughout the process, intermodal facilitators or third-party logistics providers arrange each part of the move, from pick-up to drop-off.

The railroad industry has readily adopted intermodal transportation. "We work with a wide range of industries touching every sector of the economy," says John Lanigan, executive vice president and chief marketing officer of the Burlington Northern Santa Fe (BNSF) railroad. "Intermodal is an integral part of the transportation scene."

It may become even more important now that manufacturing is beginning to recover along with the economy. The Wall Street Journal reported on Feb. 18 that factories are preparing to hire again, and are even calling laid-off employees back to work. But the Journal noted that some manufacturers still fear a secondary slump, especially if a broader recovery - which will rely on job creation and stronger consumer spending - is delayed. Simultaneously, manufacturers interviewed for the story were positive about adding workers. And on March 15, the Federal Reserve released figures that showed the start of an industrial production recovery.

Hiring factory workers would additionally stimulate the replenishment cycle as manufacturers restock inventories depleted by the recession. Those manufacturers will likely utilize intermodal transport for its high-speed, long-distance service.

Savings and Solutions
Intermodal delivers service, savings, and solutions by combining the best qualities of different transportation modes. It's also cost-effective: One gallon of diesel fuel moves a ton of freight 423 miles, according to the BNSF.

Besides transportation, intermodal encompasses the facilities and resources to handle inbound and outbound shipments.

"We help cut costs for intermodal users. The more profitable they are, the more they grow," says Neil P. Doyle, executive vice president, infrastructure and transportation development of CenterPoint Properties, Chicago's largest owner, manager, and developer of industrial real estate. The company also manages rail, road, and port infrastructure. It provides solutions to enhance supply-chain and operating efficiencies, and owns more than 8,000 acres within its intermodal logistics centers that are strategically located in major transportation markets across the country.

These centers provide a campus-like environment with rail terminal, warehouse and distribution, cross-dock, trans-loading, and container and equipment storage facilities. That reduces drayage and demurrage costs and supports foreign trade zone savings, thus improving efficiency.

CenterPoint's crown jewel is its 3,600-acre Intermodal Center in Joliet, Illinois, 40 miles southwest of Chicago. With private investment exceeding $2 billion, construction continues as the company adds more facilities.

The center serves as a transfer point for regional goods distribution, Doyle says. Trains arrive from the West Coast and discharge cargo, which is either warehoused or immediately trucked to destinations in the Midwest. Cargo for export is loaded and shipped to the Ports of Los Angeles and Long Beach, the busiest port complex in America.

Customers also have the opportunity to green their supply chains. Rail is one of the most eco-friendly modes of transportation, especially for a long haul. Minimizing the dray from rail terminals to distribution centers reduces diesel emissions and saves money by burning less fuel.

The center operates in conjunction with the nearby BNSF Logistics Park-Chicago, a 2,200-acre intermodal facility ranked as one of the nation's largest and most active inland rail terminals.

"We developed the BNSF facility, and together we market the entire complex because we share a common customer base," Doyle says. "They move the cargo and we warehouse it with over nine million square feet of warehouse facilities."

Union Pacific's Joliet Intermodal Terminal, a companion to the complex, is slated to open in the second quarter of 2010. The 785-acre complex will provide domestic and international intermodal service to and from every major West Coast port.

"Intermodal is used for both foreign and domestic imports only when the manufacturing locations are more than 400 to 500 miles from the port city," says Tim Feemster, senior vice president and director of global logistics for Grubb & Ellis, a commercial real estate advisory firm. "Most railroads are not set up to do less than 500 miles because of the time element involved."

Land bridge containers are transported by rail to intermodal hubs near their distribution centers, avoiding the necessity of unloading containers at coastal ports.

"Time is money when it comes to distribution," Feemster adds. "Intermodal is the key link to inland port systems at the lowest possible cost."

Hot inland ports include Chicago, Houston, Memphis, and Kansas City. While imports comprise most intermodal shipments, export volume has grown over the past few years.

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