Changing the Train of Thought

Changing the Train of Thought

Copyright 2002, Traffic World Magazine

When it comes to intermodal, current perception is far from reality. Intermodal for years was viewed as a slow and unreliable service. That may have been the case in the past but it does not apply today. Intermodal is delivering high quality, reliable service that offers shippers a viable option for reducing their transportation costs. The message to our industry is clear. It's time to join forces to change the perception of intermodal.

Changing the perception will be challenging , especially in the light of a recent report by Morgan Stanley that touched on the woes of intermodal. According to one executive interviewed for the report, "Railroads are just plain customer-unfriendly and do not understand the truck transportation business." Another person said, "The hassle (of shipping intermodal) is not worth the savings."

While the intermodal industry has faced its fair share of challenges in the past, including two difficult mergers in the 1990s, there is reason to get excited about the industry's potential. Service levels have improved as railroads have upgraded their linehaul networks by offering a variety of new premium trains. On-time service numbers are reaching all-time highs - over 95 percent in many corridors. Railroads also are making a significant investment in terminal infrastructure. Norfolk Southern's $100 million ramp near Austell, Ga., and the Union Pacific's ongoing investment in Rochelle, Ill., are positive actions that will improve our ability to deliver capacity and on-time service to our customers.

Highway capacity has been tight in markets across the country. This creates an opportunity for intermodal to move beyond its traditional inventory freight base. Highway conversion is within our grasp if we are willing to address the specific needs of shippers moving via truck. Direct-to-customer shipments represent a multibillion-dollar new business opportunity. Delivering 95-98 percent on-time service and flexible 53-foot capacity will transfer this lucrative freight from highway to rail.

A key factor in deploying this high level of service is the availability and use of quality 53-foot equipment. Though the rail industry has expanded the 53-foot fleet in recent years, we still are woefully short of the required inventory. Intermodal also must find answers to the multithousand pound tare weight advantage enjoyed by our trucking competition. Successful highway conversion will require an industry equipment policy that focuses on customer needs in lieu of internal operational or maintenance requirements.

But in order to address this capacity issue for customers and expand the market for intermodal use, there is the need for 53-foot equipment. The railroads are making a concerted effort to bring 53-foot containers and flatcars into their fleets. That focus has been reflected in positive gains in industry traffic numbers.

A key message to convey to prospective customers is the variety of service options available via intermodal. Delivering optimal intermodal value requires customer awareness of all price and service options available. A small increase in cost often can provide a significant upgrade in service quality or consistency. Intermodal needs to evolve beyond our traditional cost label and begin focusing on value.

In order to deliver this kind of service, carriers must continue to be actively involved with the railroads and embrace them as transportation partners. The railroads have seen the benefit of putting people on site at carriers. At Schneider National's headquarters in Green Bay, Wis., for example, BNSF and Union Pacific have full-time staff working side-by-side with our customer service representatives to route freight and coordinate the best transportation options for our customers.

By working together with their rail partners, carriers will be able to design better service solutions for their customers. In addition, the opportunity exists for the intermodal industry to focus on realigning train networks with customer needs, making every effort to take excess hours out of the network design. The ultimate service design should meet the highway conversion needs of customers' freight - 95 to 98 percent on-time service via high quality 53-foot equipment.

Future intermodal success will be driven by the ability to delight customers with service options and reliability. We need to show customers the potential of intermodal from a cost effectiveness and overall service perspective. Forget the current perceptions. We want them to know what the reality is. Intermodal is not just backup capacity to highway service - it's a competitive capacity option that is on the rise.

-- Bowers is vice president of intermodal and brokerage services at Schneider National Inc., Green Bay, Wis.