Intermodal Transportation and the North Texas Region

Intermodal Transportation and the North Texas Region Center for Logistics Education and Research University of North Texas This whitepaper was made possible through a scholarship grant provided by the Intermodal Association of North America Authors: Terrance L. Pohlen, PhD, CTL Director, Center for Logistics Education and Research Student research assistants providing research and co-authoring this whitepaper: Curtis Pogue Regina Suwuh Jesse Dolan Mary Catherine Schoals Laura Catalina Quinones Rios Intermodal Transportation and the North Texas Region Intermodal transportation plays a key role in the economic development of the North Texas region and for the many companies distributing goods throughout North America. The ability to combine ocean, rail, and motor transportation has enabled the North Texas region to become a major logistics hub with the ability to efficiently and quickly source, transport, perform value-added services, and re-distribute goods throughout North America and the rest of the world. The ability to move goods inland quickly and efficiently from the West coast ports has allowed North Texas to become the single largest port not located on a border or a major coastline. In addition, the large volume of goods flowing through the region has contributed to many companies locating facilities in the metroplex. Senior supply chain executives understand how the region’s logistical capabilities can create and sustain a competitive advantage while simultaneously contributing to bottom-line performance. The region directly benefits from the economic effects through a resilient base of employment, less costly transportation and goods, the attraction of additional companies and industries to the area, and a lower cost of living. This whitepaper explores intermodal transportation and its effect on the North Texas region. The objectives for this paper include: • Defining intermodal transportation and how it differs from simply combining modes • Identifying the advantages and disadvantages of using intermodal transportation • Reviewing the factors contributing to the steady growth in intermodal movements • Examining how intermodal systems have evolved in the United States • Understanding how the development of the standardized shipping container has facilitated intermodal shipments and globalization • Recognizing the effects of intermodal transportation on the logistics operations and economic development within the region Intermodal Transportation The term intermodal transportation is sometimes confusing. Many individuals refer to intermodal transportation as another mode within the transportation system. Others define it simply as freight using more than one mode of transportation; however, intermodal transport involves more than using two modes. In this whitepaper, the definition used by the General Accountability Office will be used. Intermodal transportation can be defined as “. .a system that connects the separate transportation Intermodal Transportation and the North Texas Region 3 modes and allows passenger or freight to complete a journey using more than one mode.”1 Systems View of Intermodal Transportation Intermodal transportation is a system that combines two or more modes for moving passengers or freight. A systemic approach distinguishes intermodalism from simply combining two modes. For example, freight could be loaded onto a truck, transported to a rail terminal, unloaded from the truck, reloaded into a railcar, and then transported to another terminal where the freight is unloaded from the railcar and then loaded into a trailer for final movement to the destination by a motor carrier. Although this approach may be considered an intermodal movement, it lacks a systemic view to streamline handling, reduce time and cost, and improve performance. An intermodal movement would view transportation as a system combining the best features of multiple modes while attempting to reduce handling costs. For example, an intermodal movement (Figure 1) would have the shipper contract with a single provider for an integrated movement combining multiple modes. A motor carrier could load the freight into a trailer, or a container mounted on a chassis. The carrier would transport the freight to a rail terminal where the trailer or container would be lifted onto a specialized railcar. The rail carrier would transport the trailer or container to a terminal near the destination. The trailer or container would be lifted off the train, placed on a chassis if a container movement, and then transferred to a motor carrier for final movement to the consignee’s location. Although similar to the previous example, this approach involves less handling and paperwork but also requires a system capable of seamlessly transferring trailers or containers while linking information flows to synchronize the transportation modes involved in the movement. Figure 1 Example of an Intermodal Movement 1 Siggerud, Katherine (2006), Director, Physical Infrastructure Issues, General Accounting Office, Testimony Before the Subcommittee on Highways, Transit and Pipelines Committee on Transportation and Infrastructure, House of Representatives, “Intermodal Transportation: Challenges to and Potential Strategies for Developing Improved Intermodal Capabilities,” GAO-06-855T, Washington D.C., June 15, p. 1. 4 Intermodal Transportation and the North Texas Region Intermodal transportation integrates the use of two or more modes into a single movement. By combining modes, an intermodal shipment obtains the advantages and disadvantages of each mode used in the movement. For example, a rail – truck shipment would obtain the low cost of rail but would gain the accessibility of trucks. Due to the need to move shipments from origin to the final destination, trucks are common to most intermodal movements. Within the U.S., eighty percent of delivery locations can only be served by motor carriers. Deregulation made intermodal movements more prevalent by allowing carriers to offer a single “movement,” or one-stop shopping, on a single bill of lading to their customers. Major Intermodal Functions Figure 2 Major Intermodal Functions Four major functions (Figure 2) define an intermodal transport chain2. The functions include composition, connection, interchange, and decomposition. Composition is the process of assembling and consolidating inbound freight. Containers and trailers originating at different suppliers are drayed3 to intermodal hubs where they can be transferred to high capacity modes such as rail and maritime shipping. Trucks tend to play a major role in this process as they provide door-to-door service. In addition to the inbound dray, composition includes all of the logistics activities to prepare the shipment to include warehousing, fulfillment, packaging, loading the trailer or stuffing the container, and working with an intermodal marketing company (IMC) to coordinate the intermodal movement. Connection involves the transportation of the shipment by an intermodal freight train or containership. The transportation occurs between at least two terminals. In some instances, the transfer may cross international borders, such as shipments departing China bound for the United States. The connection derives its efficiencies through the 2 Rodrigue, J-P et al. (2009) The Geography of Transport Systems, Hofstra University, Department of Global Studies & Geography, http://people.hofstra.edu/geotrans 3 See drayage section later in this paper for definition Intermodal Transportation and the North Texas Region 5 mode’s ability to achieve economies of scale such as through the use of intermodal unit trains or large container ships. Practices such as double stacking containers or the use of large post-Panamax containerships have further reduced the unit cost of moving a container or trailer. Interchange occurs at terminals such as maritime ports or inland intermodal hubs. To make intermodal transportation operate effectively, the terminals must provide the capability to efficiently transfer the containers or trailers from one mode to another. The use of standardized equipment, procedures and containers greatly facilitates this transfer. Information exchange across the supply chain plays a critical role to ensure the efficient scheduling of outbound transportation from the terminal and onward movement from being delayed. Decomposition occurs when the trailer or container is delivered to an intermodal hub near the final destination. The freight is drayed to a local or regional center. From this point, distribution to the final end user, typically a retailer or industrial consumer. Advantages and Disadvantages of Intermodal Transport The development of intermodal transportation has produced substantial advantages that have greatly facilitated global trade; however, intermodal transportation does pose several disadvantages which greatly affect shipper acceptance and growth. Due to its multi-modal nature, intermodal transportation incurs both the advantages and disadvantages of not only containerized freight but also those associated with each mode involved in the freight movement. Advantages The advantages of intermodal transportation include: standardized handling, flexibility, reduced travel time, lower cost, an alternative option for transporting goods, avoidance of chokepoints, reduces congestion, sustainability, security, and warehousing-in-transit. Standardized Handling Standardization of containers has permitted equipment to be designed anywhere in the world to support

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