Intermodal rail is extending its reach into areas of the supply chain long dominated by trucking, and not just over-the-road long-haul truckload carriage.
Averitt Express launched a nationwide intermodal service last week as part of its “full-load/volume transportation” service, partnering with five U.S. railroads.
It’s a big step in the transformation of Cookeville, Tenn.-based Averitt from a regional less-than-truckload carrier to a nationwide transportation and logistics company. It’s also a sign of the deep inroads intermodal rail is making with U.S. shippers.
|Panel after panel at the NASSTRAC annual conference in Orlando April 25-28 touched on intermodal or multimodal transportation. “More and more, we’re seeing the surface carriers swing toward intermodal,” Gary Crowther, senior director of intermodal sales at Canadian National Railway, told the mainly truck shippers at the conference.
That followed presentations by railroad representatives at last month’s Transportation Intermediaries Association annual meeting in Tucson, Ariz., seeking to convince freight brokers more attuned to truck capacity that intermodal options could give them reliable service with important cost savings.
“We are absolutely serious about freight brokers as a market for us,” said Brian Bowers, senior vice president of intermodal and automotive at Kansas City Southern. “We think we can create pipelines where the broker product can work hand-in-hand with rail and intermodal services.”
The trend is driven partly by higher fuel costs, which is pushing shippers and trucking companies to look for transportation cost savings and by corporate sustainability programs. “When the price of fuel goes up, we see a lot of freight we don’t usually see,” Crowther said.
“There’s an important role intermodal plays, and it can go a long way toward helping the country solve problems of capacity and congestion,” said Chad Thomas, director of intermodal at J.B. Hunt Transport. “There are significant opportunities for shippers to convert highway freight to intermodal. In the East, we’re seeing opportunities for what would typically be considered short-haul,” he said, in the 500- to 800-mile range.
“Intermodal is the mode that is going to continue to grow above GDP,” said Jon A. Langenfeld, associate director of research and transportation analyst at R.W. Baird & Co. “It’s become a better and more efficient mode, a precision mode of transportation. It’s still a small part of the bucket, but there’s a lot of opportunity for it to grow.”
Even FedEx Freight, which has long rejected rail transport, could turn to intermodal in coming years if the price is right and customers want the option. “Customers want options,” Bill Logue, president of FedEx Freight, said at NASSTRAC.
Averitt is on the same track. “In today’s marketplace, shippers are thirsty for multiple modes and options that help them balance transit time and cost,” said Phil Pierce, executive vice president of sales and marketing at Averitt, which already offers LTL, truckload and logistics services.
He said the carrier is moving into intermodal because of “market conditions and customer feedback.” Its intermodal products will cover containers on flatcars and trailers on flatcars, and range across all 48 contiguous states.
Averitt is partnering with Union Pacific Railroad and BNSF Railway in the West, Norfolk Southern Railway and CSX Transportation in the East and Midwest and Florida East Coast Railway in Florida and Georgia. “Launching a completely new mode as complex as intermodal is a major undertaking. We wanted to make sure we did it right,” Pierce said.
Averitt will allow shippers to bundle intermodal shipments with the company’s traditional business lines of trucking plus warehouse, international ocean and air and transportation management technology products. For instance, the new service can tie into Averitt’s LTL distribution network and an over-the-road fleet with 1,500 units.
The trucker’s new long-haul rail service comes shortly after Averitt said it was restructuring that LTL route system to cut transit times in 14,000 lanes, eliminating more than 500,000 operating miles from its network and saving 100,000 gallons of fuel a year.
It’s bundling these services that matters most to shippers, Pierce said. “Our LTL distribution network and our 1,500 unit over-the-road fleet help us provide customers with operational and pricing flexibility,” he said. “We can react more quickly than other intermodal providers to sudden shifts, even with shipments already en route.”
At NASSTRAC, shippers who traditionally move more freight by LTL than truckload said intermodal could become increasingly important as they build density on certain lanes — but they didn’t expect to convert freight overnight.
“I think intermodal will continue to grow, but it will be a much longer process,” said Eric Morley, director of transportation operations at Best Buy. “There are still some issues within the network that need to get resolved from a performance standpoint.”
Crowther said unforeseen world events or changes in federal transportation policy or law could speed an intermodal shift. “A tax on carbon would be a game changer,” he said. “And we’re one hurricane away from a major increase in fuel prices.”
Contact William B. Cassidy at email@example.com. Associate Editor John D. Boyd contributed to this article.