Intermodal transportation network designed for the future of global supply chains

Intermodal transportation is a leading solution to demands of today’s global supply chains, which are increasingly congested, more expensive, and environmentally unsustainable. By encouraging coordinated movement across all forms of freight delivery (water, rail and trucking), intermodal transportation can build on the best of each transportation type.

If effectively targeted, each dollar invested in an intermodal transportation network could yield a $5-$8 payback derived from decreased travel time, operating costs, and accident costs. Total benefits would be measured in the hundreds of billions of dollars when, for example, railroads are used for distances in conjunction with trucking and the transfer of goods between transportation modes is further optimized.

Timing is critical. As public and private sectors invest in transportation—such as the U.S. 2009 stimulus package—it is important to maximize the benefits of these investments through a coordinated plan and implementation. We encourage railroads, other transportation modes, and government entities to make coordination on intermodal initiatives a top priority as they assess how to maximize economic and public benefits of transportation investments.

Capturing the intermodal freight opportunity
Although intermodal transportation systems represent a growing share of U.S. freight corridors exceeding 500 miles, it is up against several constraints that are limiting growth. A coordinated infrastructure investment—aided by clear and integrated program management—will be important. Success relies on identifying critical interstate rail corridors, identifying projects required to enable efficient and reliable service, prioritizing the immediate benefits and highest financial return, and expediting coordination between the government and railroads.

A well planned and coordinated approach requires participation of private-sector players (such as railroads) and federal, state and local government on such matters as where to invest, how to use technology, and how to address environmental concerns.  It will be important to identify how each of these stakeholders will be involved in financing, and how the risks and benefits of this improvement will be shared. 

Necessary investments
While they can be prioritized for the short and long-term, critical investments need to include the following:

• Improving existing interchange efficiency—handling costs and shipment delays that result from transfers between carriers and/or modes can be minimized by improved communications and technology at the terminals
• Expanding use of long-haul corridors—increased capacity and efficiencies will be gained by raising bridges and enlarging tunnels to enable double-stack containers, and investing in locomotives that can run heavier, double-stack trains
• Implementing train control technology—capacity and safety in the intermodal network is also improved through positive train control (PTC), a collision-avoidance system that runs off global positioning satellites
• Adding intermodal hubs and upgraded track—meeting growing demand requires well planned additions that bolster the underlying structure and capacity of the entire transportation network
• Reducing complexity in distribution and marketing services—effective operation and coordination of services can be gained, for example, by standardizing  container, trailer, and chassis sizes; developing better container sharing pools; improving interchange of leased containers between ocean carriers, railroads, and drayage firms; better coordination in interchanging trains between competing railroads; deploying reservations systems and pricing incentives

Effective coordination of intermodal transportation systems and management of investments can generate major benefits to the U.S. transportation system, the economy, and society. All parties involved—truckers, railroads, shippers and governments—must actively collaborate to capitalize on the opportunity.

Contact

Randy Garber, A.T. Kearney partner
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