Rising transportation costs and tight truckload capacity are creating more opportunities for intermodal rail in 2012, logistics executives said Wednesday.
“Modal shift is something we see quite regularly,” said Joseph Gallick, senior vice president of sales at Penske Logistics, a $2.8 billion global logistics company.
As truck capacity tightens, “what we’re seeing is a willingness and ability (among shippers) to be agile and flexible and consider (new) modes,” Gallick said.
“Our domestic intermodal growth this year is up near double digits,” said John Lanigan, executive vice president and chief marketing officer at BNSF Railway.
“That gives you an indication of the modal shift and customers looking at that cost and service tradeoff” between intermodal rail and long-haul trucking, he said.
Gallick and Lanigan spoke in a panel discussion at the release of the Council of Supply Chain Management Professionals annual State of Logistics report for 2011. Penske Logistics sponsored the report.
Intermodal volume rose 5.4 percent to 11.9 million containers and trailers last year, according to the CSCMP report, while rail carloads rose 2.2 percent.
“Intermodal is the growth sector in freight transportation,” said Rosalyn Wilson, senior business analyst at Delcan and the author of the 23rd annual report.
Railroads have recovered only 38 percent of their 2006 peak year carload traffic, but 84 percent of their 2006 intermodal volume, Wilson said in the report.
Limited Brands is putting more freight on intermodal rail, said Rick Jackson, executive vice president of Mast Global Logistics, a subsidiary of the retail giant.
“We’re very excited about how intermodal has stepped in” as truckload capacity shrinks, Jackson said. He tied capacity to capability and, especially, reliability.
“As we get further into working with the railroads, we find their services are reliable for time-sensitive goods,” he said. “We’re more confident putting goods on trains.”
Manufacturer Kimberly-Clark is expanding its use of rail and changing the way it uses intermodal, said Rick Sather, vice president of the customer supply chain.
“The relationship will increase as we go from inbound moves to using intermodal for customer moves,” Sather said. That will help with time-sensitive deliveries.
Modal shift isn’t restricted to land-based transportation. “Slow steaming” by container shipping lines is changing how Limited Brands imports product.
“Slow steaming is adding two to three days to our supply chain cycle,” said Jackson. That’s leading Limited Brands to shift some freight from ships to plane bellies, he said.