Chapter 7

Intermodal and Special Carriers

INTERMODAL TRANSPORTATION

• Intermodal transportation involves the use of two or more modes of transportation in moving a shipment from origin to destination, primarily through the use of the “container.”

• the development of a standard container that could be interchanged among all modes made modern intermodalism possible.

• Standarization of dimensions, hold-down devices, and related items allowed the service providers to design ships, railcars, and highway chassis, knowing the container or “box” would fit.

• The intermodal service combines the advantages (and disadvantages) of each mode used.

• For example, air-truck intermodal transportation combines the advantages of the motor carrier’s accessibility and lower cost with the speed of the air carrier.

• At the same time, the combined service includes the air carrier’s high cost and the motor carrier’s slow speed.

• Air-truck intermodal rates are lower than all air rates but higher than all-truck rates, and the transit times are shorter than by all-truck but longer than by all-air.

• A mode common to most forms of intermodal transportation is the motor carrier.

• The motor carrier’s high degree of accessibility enables it to serve points that other modes are physically incapable of serving.

• Trucks can go to the shipper’s door, pick up the freight, deliver it to the airport, and at the destination airport deliver the freight from the airport to the consignee (receiver).

• The air carrier is incapable of providing service to points beyond the airport. Similar conditions exist for rail, water, and pipeline transportation.

Piggyback

• Piggyback transportation includes the movement of motor-carrier trailers on flat-cars (TOFC) plus containers in flatcars (COFC).

• The high volume of trailers and containers being moved is due in part to economic deregulation of piggy back and technological advancements such as the double-stack train.

• With a double- stack train, two containers are loaded onto one flatcar, increasing the operating efficiency of the railroad and lowering the cost per container, thereby making possible a lower rate per container [ Figure 7.1).

• The longer hauls within the merged railroads mean fewer interchanges.

• This has speeded intermodal service while reducing the number of times the trailer must be handled between origin and destination.

• Increased use is being made of piggyback (COFC) for the domestic portion of product movements between the United States and foreign countries.

• In such moves, the container is commonly used because of its easy transferability from one mode to another and minimal additions to handling costs and total transit times

• Service providers, whether they are motor carriers, intermodal service companies, or railroads, can offer any type of service combination that the customer desires.

• Current offerings range from intermodal service offered through motor carriers to transporting shipper-owned trailers with the customer providing the highway portion of the service.

Containerization

• As noted above, the container, which is nothing more than a big box into which the freight is loaded, improves the efficiency of interchange among modes.

• The container also reduces the potential for damage and theft because the actual freight is not rehandled after it is loaded at the shipper’s facility.

• Cargo interchange efficiency increases with the container, and both overall transit time and the transit time consistency of containerized intermodal shipments improve.

• The motor carrier trailer is essentially a container on wheels. The trailer comes in various sizes.

• The railroad flatcar is capable of handling various sizes of trailers.

• The trailer is loaded onto the flatcar by a variety of methods including driving, hoisting with a crane, or lifting by means of a forklift-type device.

• The use of trailers as containers for movement by ship presents technical problems.

• Therefore, the containers used for water transportation are boxes without wheels or a chassis.

• The water container comes in two standard lengths: 20 feet (TEU or 20 feet equivalent unit) or 40 feet (FEU or 40 feet equivalent unit).

• Container rates are quoted by water carriers on a TEU or FEU basis.

• In an effort to address the varying sizes of containers, both marine and highway, the railroads developed a method whereby containers can be “double stacked” on specially designed railcars (see Figure 7.1)

• This has also increased the efficiency of the railroads.

• Under the old method of placing two trailers on a flatcar, as many as three or four containers can be shipped on a double-stack car.

• Containers are unloaded from the ship by crane and are transferred to either railroad or motor carriers.

• For movement by motor carriers, the containers are either placed on a flatbed trailer or on a chassis (frame with wheels).

• The transfer of the container from water to either railroad or truck takes less than 1 day and usually is accomplished in a matter of hours.

• The most recent trend in rail-ocean transfer has been to load or unload the containers from the railcars directly at shipside.

• The “on-dock” transfer saves both time and money by eliminating the drayage (movement) between the pier and the rail yard.

THIRD-PARTY TRANSPORTATION

• Third-party activity grew out of many companies’ desire to concentrate their resources on what they do and leave other, non-income-producing tasks to these specialists.

• The trend toward focusing on “core competencies” has also benefited from management’s desire to streamline operations and move such non-productive facilities as warehouses off the firm’s balance sheet by transferring that activity to a third party.

• Many of these third-party firms enjoy economies of scale that allow them to provide a manufacturer with logistics services at lower costs than the firms, could do themselves.

• The different types of third-party transportation providers include either management of information-based providers or asset- and operation-based providers.

• The management-based firms tend to be either shipper or consultant spin offs, whereas the asset-based firms are out-growths of either carriers or leasing firms.

• Each has its own unique benefits and must be considered in light of the tasks to be performed for the customer.

• The information-based third-party providers generally, but not exclusively, provide transportation management, freight bill payment, auditing, reporting, and consulting services.

•The asset-based companies provide many of these services plus basic transportation. Table 7.2 contains examples of third-party provider services.

• In all of these third-party arrangements, information links exist between the shipper and/or receiver, and the third-party “carrier” is part of an integral link.

• Many of them have over-the-road trucking equipment with computer-transponder links to satellites that can give the exact location of the truck at all times and information regarding specific package pickups and deliveries to company headquarters at the exact moment the transfers are taking place.

• The benefits to shippers and receivers are more efficient processes, lower labour rates, and/or improved services.

• Also, the third party could break down container loads at the port and ship items directly to the stores.

• Another recent development has been for third-party firms to place their own personnel at the manufacturer’s plant or the consignee’s warehouse to handle the details of outsourced services.

• This frees the client’s staff to devote their attention to those areas that are beyond the day-to-day details.

SPECIAL CARRIER FORMS

• Several special types of carrier services represent a significant segment of the transportation services purchased by shippers.

• These forms of transportation often use the long-haul services of the five basic transportation modes.

Surface Forwarders

• Surface freight forwarders hold a unique place among carriers.

• A forwarder is both a carrier and shipper in as much as they are recognized as a “carrier” by their customer, while being treated as a “shipper” by the company who actually provides the transportation service.

• A forwarder is a “person” holding oneself out to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation or property for compensation in the ordinary course of its business.

• The definition goes on to state that the forwarder (a) assembles and consolidates shipments and performs

break-bulk and distribution operations for shipments; (b) assumes responsibility for the transportation from the

place of receipt to the place of destination; and (c) uses the services of another mode, such as a motor or rail

carrier, Air freight forwarders are specifically exempted from this definition.

• Some forwarders still provide the classic consolidation or small shipment service, but most have expanded into the inter-modal and truckload areas.

• A forwarder must “issue” a bill of lading to the shipper, the same as a railroad or motor carrier. In so doing, the forwarder accepts responsibility for the shipment.

• (Bill of Lading - a receipt given by the carrier to the shipper acknowledging receipt of the goods being shipped and specifying the terms of delivery: what, where and when)

• Because of this, a forwarder must maintain cargo insurance and accept liability for loss and/or damage to a shipment that it accepts.

Air Freight Forwarders

• Air freight forwarders act in much the same way as surface forwarders by consolidating small shipments for long-haul and eventual distribution.

• They primarily use the services of major passenger and freight airlines for long-haul service.

• The air freight forwarder serves the shipping public with similar pickup service, a single bill of lading and freight bill, one-firm tracing, and delivery service, as does the surface forwarder.

• The air freight forwarder, though, is generally used by shippers of goods having high-product-dollar value or time-sensitivity value, or both.

• Air freight forwarder offer major transportation service benefits like:

• speed of service is vital for many movements such as spare parts, emergency replenishment goods, medical components, and business documents.

• Further, this industry represents a single-carrier, full door-to-door service.

• Its main disadvantage lies in its high rates, but these are usually considered by shippers in light of the service benefit received relative to the product’s value and time sensitivity.

Freight Brokers

• Brokers function as “middlemen” between the shipper and the carrier much the same as a real estate broker does in the sale of property.

• The definitions states: a broker as a “person” other than a motor carrier, an agent, or an employee that, as a principal or agent, sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for transportation by motor carrier for compensation.

• Freight brokers are intermediaries who bring shippers and carriers together.

• As is the case with freight forwarders, brokers act as ‘fourth party’ service providers in transport transactions.

• Brokers find carriers for shippers’ consignments, or recruit clients for carriers.

• Receivers or consignees can also use the services of brokers for inbound goods

• Basic shipper services include the arrangement of service, the verification of the trucker’s insurance and safety rating, verification of equipment condition, and the negotiation of a freight transportation price.

• Brokers also are involved in LTL and warehouse consolidation for shippers, as well as insurance acquisition for truckers.

• The broker typically charges the shipper for the freight movement, deducts a brokerage fee between 8 and 10 percent, and then remits (send) the net amount to the trucker.

Shippers Associations

• These transportation entities are non-profit cooperative consolidators or distributors of shipments owned or shipped by member firms.

• Their prime purpose is to group together members’ shipments for line-haul.

• Shippers’ associations benefit members through better service and lower total transportation costs

Owner-Operators

• Owner-operator is usually applied to a person who owned or leased a truck, and often a trailer, and made his or her equipment and driving service available to for-hire carriers.

• Owner-operators were confined to serving regular for-hire carrier firms that needed the service on an overflow basis when carrier equipment and labour were not available

• They also commonly worked for special-commodity carriers that did not have the equipment but booked freight and used owner-operators to carry it from origin to destination.

Express Services and Expedited Services

• The growth in express and expedited services is related to today’s business focus on supply chain speed, or cycle-time reduction.

• The higher value of today’s products places greater emphasis on reducing inventory, which is achieved, in part, through lower transit times

• Express and expedited carriers are typically motor and air carriers who specialize in the movement of small shipments, generally under (110kg).

• These carriers specialize in moving small packages with published transit times, Internet-based tracking and tracing capabilities, and, for some services, a delivery guarantee.

• Their transit times are usually lower than the basic shipment time provided by an LTL carrier or non-express air carrier.

• Thus, the express and expedited carrier target market is the shipper of high-value, low-weight, and time-sensitive products.

Drayage Carriers

• A drayage carrier is a motor carrier that provides pickup and delivery service in the local metropolitan area, piggyback ramp area, and/or container area.

• The drayage firm will load product from a local warehouse and deliver it to the receiver in the metropolitan area

• Likewise, the drayage firm will pick up freight from shippers and bring the shipments to a warehouse, carrier terminal, or container yard for consolidation and long-haul shipment preparation.

• END