When APL books an import load from Asia to an inland destination such as Chicago, Dallas or Kansas City, the container line’s logistics experts immediately look for loads to fill the emptied container back to Asia.
Match-backs, or the process of matching inbound containers with agricultural, recyclables or manufactured exports at inland destinations, are key to APL’s efforts to take cost out of the supply chain. “It’s part of our business model,” said Gene Seroka, president of APL Americas.
BNSF Railway, which operates rail logistics hubs at major inland population centers, works with importers, exporters and ocean carriers to facilitate the repositioning of empty marine containers and then the carriage of loaded export containers to seaports.
Container match-backs help BNSF achieve higher utilization of its costly railcars and locomotives. “We’re always trying to balance our network,” said Fred Malesa, BNSF’s vice president of international intermodal marketing and sales.
Achieving two-way use of valuable transportation assets sounds logical. However, connecting the dots in a complex international supply chain that begins in Asia, extends to inland U.S. destinations and requires diverse ocean carriers, railroads, trucking companies, importers and exporters to work together isn’t especially easy to accomplish.
The exercise is particularly complex in North America, because containerized imports — primarily consumer goods — move to large cities, whereas exports, which are heavily weighted toward commodities and resources, are generally sourced in rural areas, said Peter Ladoucer, assistant vice president of intermodal at Canadian National Railway.
CN actively seeks “import nodes” in sparsely populated regions such as Wisconsin. CN moves Asian imports to distribution centers operated by Ashley Furniture and Menards Home Improvement stores in western Wisconsin, and works with producers of identity-preserved grains and animal feed grains in the region to fill the emptied marine containers with exports to Asia. “We call it supply-chain enabling,” Ladoucer said.
Some ocean carriers have logistics departments devoted to matching the inbound containers they carry with their exporter customers’ requirements for those very containers. Expertise is required, because the carrier must keep track of the size and type of each container as well as the size and type of containers needed by exporters in the region.
Orient Overseas Container Line, for example, will move a mix of 40-foot, 20-foot and high-cube containers to Chicago. Exporters in the area that have contracts with OOCL likewise present a varied menu of container requirements. Unloading dates for the inbound containers must be matched with loading dates for the export containers, and then provisions must be made to move the emptied inbound containers to the exporters’ facilities.
Eric Witsaman, OOCL’s director of equipment management, said the carrier has developed its own internal computer system to project empty returns with outbound pickups. The system builds in free time allotted for importers to hold on to the containers as well as the average occurrence of “fall-backs,” or failure of exporters to produce the cargo when promised.
Witsaman said the ocean carrier’s key to success in arranging match-backs is to plan ahead for both import and export bookings, to keep tight control of equipment and to make sure OOCL does not overcommit equipment.
In the world of match-backs, Chicago is king, because it offers a huge inbound market for consumer goods as well as significant export opportunities within the metropolitan area and from grain-producing regions within 200 to 300 miles of the distribution facilities west of the city.
Chicago produces a strong volume of scrap paper, metals and plastics. Because these recyclables aren’t perishable, exporters have more flexibility than some agricultural exporters may have in arranging shipment dates. Even some grain exporters can be flexible. They may store their products in silos and release a steady flow of identity-preserved grains and distillers dried grains to the ocean carriers doing the match-backs.
APL saw such a good opportunity for match-backs in the Chicago area that last year it acquired 43 acres in Joliet where it built a logistics center equipped with optical character readers at the gates and ample storage room for containers.
Match-backs have become so important to APL that it will seek out potential exporters whose logistics needs may be different from what the carrier is used to handling. APL is willing to tailor its operation to fill those needs, Seroka said.
BNSF also tailors its service for particular shippers, such as cotton exporters in west Texas. BNSF offers a triangulated service in which it repositions empty containers from inland hubs in Dallas and Memphis to Lubbock, Texas, and then carries the containers that are loaded with cotton to Los Angeles-Long Beach for export to Asia, said Brandon Unterbrink, BNSF’s director of sales and international marketing.
One region that appears to have significant untapped export potential is the upper Midwest states extending from Wisconsin to Montana in the U.S. and the provinces of Alberta and Saskatchewan in Canada. That region is long on grain production but short on population centers.
CN is working to attract exporters to small but important generators of inbound loads such as Ashley Furniture and Menards. CN invested $4.5 million to build an intermodal terminal in Chippewa Falls, Wis. It also built a grain-loading facility at the terminal, and grain shippers that in the past had trouble securing empty marine containers now are finding them at Chippewa Falls, Ladoucer said.
The Wisconsin operation is generating some purely domestic moves as well. Alberta is an energy-rich province with an affluent population. “Alberta is a prosperous region. People there buy things,” Ladoucer said. CN, he noted, moves containers carrying domestically sourced consumer merchandise to Alberta. The containers, when emptied, may be filled with exports from Alberta for movement to Prince Rupert or Vancouver, British Columbia.
Bruce Abbe, executive director of the Midwest Shippers Association, which represents agricultural producers in the upper Midwest, said the region needs more creative planning by ocean carriers and intermodal railroads. “Intermodal offers opportunities for exports to new destinations like Southeast Asia,” he said, “but it is operating nowhere near its potential.”