Mixing Modes: Why OTR is Giving Way to Intermodal

As over the road (OTR) transportation continues to rise in higher fuel costs and present additional challenges such as capacity shortages and environmental concerns, shippers are turning more and more to intermodal solutions as a cost-efficient and environmentally friendly option.

Here’s a look inside intermodal and why it could be the ideal solution for your company’s shipping needs. 

What is intermodal?

Intermodal refers to moving cargo by using two or more modes of transportation—generally OTR truck plus rail, ocean plus rail, ocean plus OTR truck, or all three modes. For example, stackable containers are designed to move across multiple modes of transport such as tanker, rail and truck, without unloading and reloading cargo.

Rail intermodal is the long-haul movement of shipping containers and truck trailers by rail, combined with truck or water movement at one or both ends. In 2016, intermodal accounted for approximately 24 percent of revenue for major U.S. railroads. Intermodal transportation provides shippers with an efficient option to transport their products with low energy usage and reduced costs.

To reduce risk and ensure there is enough product in the pipeline, many businesses have the option to consider dividing freight on the same lane between intermodal and OTR. Industry experts recommend that shippers look for these opportunities to convert to intermodal every six to nine months.

Shipping freight in transferable containers rather than dedicated trucks can significantly lower shipping costs and overhead. Integrating rail as one component in the cross-country shipping process reduces the fuel surcharge that you will be required to pay — and with gas prices fluctuating so much, dedicated OTR shipping can be astronomical.

Breaking down the benefits

Here are some of the reasons it makes sense for your company to consider an intermodal shipping strategy:

  • Statistics from the Association of American Railroads show that rail is the most environmentally sound way to move freight over land. On average, trains are four times more fuel efficient than trucks. They also reduce highway gridlock, lower greenhouse gas emissions, and reduce emissions of particulate matter and nitrogen oxides.
  • According to the Intermodal Association of North America, a typical intermodal train is equivalent to 280 truckloads, and can move one ton of freight 470 miles on a single gallon of fuel. This translates to fewer trucks on the highways, less congestion and greenhouse gas (GHG) emissions, and fewer accidents.
  • With the price of diesel often topping $4 per gallon, shipping by truck has become increasingly expensive. Transporting a medium- to long-distance load via intermodal costs 15 to 40 percent less than moving the same load by truck. And even considering the fuel surcharges railroads typically impose, shipping by rail is still three to four times more fuel efficient than shipping OTR.
  • Customers, environmental advocacy groups and regulatory agencies all are putting pressure on companies to reduce their environmental footprints. Shipping freight on the rail is fuel efficient and produces lower greenhouse gas emissions. A ton of freight shipped by train produces two-thirds less in greenhouse gas emissions than the same volume shipped by truck, according to the U.S. Department of Transportation’s SmartWay Transport Partnership.
  • With the ever-tightening capacity for OTR shipping, intermodal also alleviates a personnel challenge for shippers: Given the ongoing shortage of long-haul truck drivers, new safety regulations and requirements; a shift to intermodal means an alternate solution to the need for long-haul drivers.
  • Intermodal’s freight loss and damage statistics have steadily decreased over the past 20 years. Since 1995, the loss and damage experienced by Class 1 railroads has dropped by 75 percent.
  • While intermodal might be slightly slower than OTR transport, the lower cost of intermodal shipping can be worth a day or so of extra transit time — and many railroads offer expedited service to accommodate urgent freight.

What’s the best approach to intermodal?

Although transportation managers often shy away from integrating rail into their freight and logistics plans in the past, more and more companies are making intermodal a key element of their transportation strategies. Over the road trucks currently handle more than 50 percent of all goods moving across the country at any given time, and as such play an incredibly important part in getting these products to thousands of customers daily. A savvy shipper knows how to work intermodal rail into their shipping matrix to allow flexibility in lanes that are highly competitive in transit times while compromising very little in comparison to over the road trucking. 

Agforce Transport Services specializes in transportation solutions for our customer’s specific business needs. From trucks and chassis to domestic and international containers, Agforce has the experience to maximize the efficiency and effectiveness of your intermodal transportation experience.

To learn more and how we can help simply your path to market, contact us today for a free consultation. Give us a call at 844-713-6723 or email us at inquiry@agforcets.com.


Sources:

Intermodal Factbook: An Introduction to Intermodal Freight Transportation
Intermodal Association of North America (IANA); 2017
https://intermodal.org/

Rail Intermodal Keeps America Moving
Association of American Railroads (AAR); April 2017
www.aar.org/