Intermodal services are not held in very high esteem by those who make the choices of mode and carrier decisions, a prominent transportation consultant told the International Intermodal Expo here Thursday.
Intermodal services take an estimated 16 percent of general merchandise freight, according to Robert V. Delaney, transportation practice leader with Arthur D. Little Inc., Cambridge, Mass."The market available to intermodal service will grow to $48 billion by 1994," he said. "Current share of 16 percent means lackluster performance, but a market share in the 20( percent) to 30 percent range would lead to growth and profitability. The industry has to dig deeper and improve its performance" if it is to achieve the higher level.
Charles Kaye, chairman of XTRA Inc., Boston, told the same audience of several hundred shipper and carrier executives that providers will have to wring a lot of excess capacity out the system and buy a lot of new containers and trailers in the next few years.
The picture painted by Mr. Delaney and Mr. Kaye was not terribly optimistic.
Mr. Delaney presented a summary of the results of a joint survey undertaken by the Little organization, a leading international consulting firm, and its subsidiary, Opinion Research Corp.
The study explored the criteria and the trade-offs made by general merchandise shippers in reaching their decisions.
Mr. Delaney said two-thirds of the survey respondents buy intermodal services in competition with for-hire truckers and private carriage. Although shippers were broken down by size, there was no discernible difference in their purchases of intermodal services.
A significant difference in the use of intermodal compared to trucking alternatives was found when the "mission" was considered.
Intermodal, at 39 percent for example, trailed trucking's 62 percent selection for interplant shipments and work-in-process transfers, Mr. Delaney said.
The use of intermodal increased to 69 percent for direct shipments to customers, but still trailed trucking's 80 percent to 90 percent selection rate.
Intermodal exceeds private carriage and is competitive with commercial trucking when the mission involves shipments from warehouses and distribution centers, principally replenishment of finished product inventory.
"This may reflect the fact that the replenishment of field inventory is less service sensitive than transfers of shipments direct to customers," Mr. Delaney said.
All too often, he said, carriers don't persuade shippers that the ''benefits" they are selling are what shippers want. "The stack train may have promise, but the majority of merchandise shippers including those disposed to intermodal service are not clear about its benefits," Mr. Delaney said.
Mr. Kaye, who participated with Mr. Delaney in a panel assessing intermodalism over the next five years, told the audience that service providers were going to have to change some of their thinking.
"Just-in-Time in equipment is going to be necessary just as JIT is practiced as an inventory turn process," Mr. Kaye said.
"Carriers are going to have to stop trying to pick up that last piece of freight," he said. The ability to get the last piece of freight means there is a lot of equipment standing idle.
Mr. Kaye estimated that as much as 20 percent of containers and trailers are idle now. He estimated that the current market justifies a fleet that needs to be reduced to about 100,000 units over the next five years.
Traffic growth and replacement, however, would call for purchase of an additional 50,000 units over the same period. He estimated the capital cost at about $1 billion. He questioned how it would be raised unless providers reduce excess capacity, thus allowing prices to be increased.