Tag Archives: transportation mode

Multimodal Transport: What is Multimodal Shipping?

There are many different types of transport and various shipping modes available to shippers today to help move goods all over the world. But sometimes, one shipping mode is not enough. Perhaps, your goods are going a long way from another part of the world by ship or aircraft. To reach the final destination, freight needs to be moved over the road, air, or ocean. In a nutshell, shippers often need to combine transportation modes in order to get their goods to the right place. Logistics companies define two ways of such combination: intermodal transport and multimodal transport.

What is multimodal transport?

Multimodal transport is a combination of several shipping modes like the truck, rail, ocean or air to deliver freight to its destination. Multimodal shipping suggests all of your freight movements are handled under a unified bill of lading, even if different carriers are moving it.

What is the difference between multimodal and intermodal transport?

Both intermodal and multimodal transportation suggest using two or more shipping modes. However, there is a list of differences between intermodal and multimodal transport. When you ship intermodal, a different carrier is responsible for each part of your transportation. Consequently, you have several separate shipping bills and reports from each link in the chain.

When using multimodal, all of your shipments are signed under a single bill of lading. Both transportation methods have benefits and drawbacks, and here we will dive deep into multimodal.

What are the benefits of multimodal transport?

benefits of multimodal shipping

Multimodal transport can benefit many businesses that ship large amounts of freight on a regular basis. The main reason why companies prefer multimodal is that it requires less time and effort. All the shipments are under a single bill and are usually managed by an external party. Other than saving money and time, there are many reasons your company should choose multimodal transport when planning your next shipment, including:

Time savings

Since in multimodal transportation one shipping provider handles the entire process, you’ll only have to communicate and get a report from one company. This ensures less worrying about the shipment, and faster transit times, which eventually result in higher productivity.

Cost-efficiency

It may seem like picking carriers with the lowest price is definitely a more profitable option. However, the lowest price is not always the greatest deal. Intermodal transport involves not only different contracts and carriers but also multiple shipment insurances. A much easier logistics coordination within multimodal can help you save a significant amount of money on transportation.

Less worrying

When a single carrier handles your freight from door to door, it ensures easier communication and efficient tracking. It delegates a larger piece of responsibility and liability to the company coordinating your logistics.

Easier Communication

When companies ship through multimodal transportation, they handle all shipping updates, delays and interactions through one provider and contract. This gives shippers ease of mind and simplifies the process of communicating between different contacts and carriers. Essentially, when you have one person responsible for the entire transportation chain, it’s much easier to just focus on the business and not spend time bouncing from one call to another.

Faster Transit Options

Due to new restrictions on truck drivers on driving hours and other regulations, some longer haul shipments are not as fast as they once were. The combination of different transportation modes under one contract lets you have a piece of mind and balance transit time. That way, you avoid drivers driving too long and therefore bypass shipping delays. Giving companies more options for their shipment gives you control and flexibility over the loading and unloading process.

Ultimately, multimodal transport helps guarantee consumers on-time deliveries and true cost savings. Whether you are shipping by air, rail or barge, multimodal shipping can be a solution for you.

Market Update: More Than Half of Shippers Look for Alternative Modes

The 2017 Capgemini Third-Party Logistics Study revealed that 3PLs and shippers are moving toward more meaningful relationships, where shippers rely on 3PLs to provide advanced solutions and real competitive advantages. One trend that emerged in the study is the shift from shippers using single-mode providers to using flexible solutions to utilize the most cost-effective method of moving freight.

As the trucking industry adjusts to implement new technologies to comply with regulations, it’s expected to lose more drivers and even more capacity. While intermodal and rail transportation were once considered slow and unpredictable, the modes can now be defined by reliability and safety.

58% of shippers indicate they are increasing their use of outsourced logistics services in 2017. The most frequently outsourced activities are domestic transportation (86%), warehousing (66%), freight forwarding (44%) and customs brokerage (42%).

To optimize the supply chain and efficiently move freight, the industry has seen growth in mode variance. 3PLs are using data collection and analysis to determine the best shipment method for clients. 62% of 3PLs said that over the past 2-3 years, their clients showed interest in changing their use of various modes of transportation. Consequently, only 21% of shippers said they only work with single-mode providers.

Cost may have a huge factor in this decision change, as 38% of 3PLs say that their clients are most concerned with the shortest shipping time, but 77% of shippers want the lowest cost.

Over-the-road (OTR) transportation provides flexible shipment options – there’s a wide variety of trailers, shipments can be loaded/unloaded quickly and freight can be hauled to almost any end-destination. But, OTR is typically more expensive for long haul freight moves than rail. With trucks, there are specific permits, based on freight and weight restrictions, which can make freight moves on specific lanes more challenging. Trucks are also more frequently impacted by weather-related disruptions and traffic. Although rail is slower than OTR transportation, it often comes at a lower price point. Rail has gained a positive reputation for on-time performance, and Class-1 railroads offer technology to track shipments.

Since industry experts are predicting more freight tonnage this year, shippers can turn to alternative modes to move goods to initiative consistency and contain costs. 3PL’s technology, reporting, and visibility will improve service and compliment a transportation strategy, and the effects of that are starting to be seen industry-wide. 71% of shippers said that real-time analysis from 3PLs helps them better understand shipping alternatives, and 61% valued 3PLs assessments of trade lanes and origin-destination pairs in terms of cost and service.

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Market Update: 9 Factors Determining the Rise in Transportation Rates

Freight shippers are enjoying a buyer’s market at the moment. There’s widespread overcapacity in the trucking industry, forcing carriers to lower prices in an attempt to keep their trucks full. For now, shippers can find low transportation rates relatively easily.

As with any cyclical industry, this will all change. Soon, carriers will be dictating rates and shippers will be competing for trailer space, paying much more for transportation than they are right now.

Why is this happening? And when can shippers expect to pay higher rates?

There are 9 major factors that will determine the severity and timing of the rate hikes.

Operating Costs

  1. When energy prices rebound, it will increase operating costs for trucking companies. In response, they will have to increase fuel surcharges to cover their expenses. Carriers make more profit from fuel surcharges when fuel costs are high, so the surcharge increase won’t be proportional.
  2. Government regulations affect carrier productivity. The ELD mandate, set to start in 2017, is expected to have huge impacts on capacity since almost half of the trucking industry hasn’t installed the technology yet. When trucking companies are less efficient, they have to increase rates to make up for lost revenue.
  3. Reliable drivers are hard to find and require more pay and benefits. Good drivers increase operating costs for carriers, who have to increase linehaul rates to cover the additional cost to hire, train and retain drivers.

Read more about rising operating costs here.

Truck Capacity

  1. Smaller LTL trucking companies are being pressured into lowering their rates, despite steadily increasing operating costs. This will burden the LTL industry, forcing many LTL carriers to go bankrupt or take trucks off the road.
  2. Truckload carriers aren’t expanding their fleets. Truck sales have decreased for 27 straight months, including a whopping 5% decrease in May. Truckload carriers are gaining little to no profit. They are expected to reduce capacity in late 2016 – which could leave the economy without enough truckload capacity when freight demand picks up.
  3. The driver shortage constantly threatens the trucking industry. There are just enough truck drivers to handle the slow freight demand now, but any uptick in load volumes will expose the true shortage.

Read more about diminishing truck capacity here.


rise of transportation rates Freight Volume

  1. Inventory levels are high right now, but soon they will level out. Flat inventories lead to more aggressive production, which translates to higher freight volumes.
  2. Currently, the U.S. dollar is very strong, creating an import-heavy environment. It is expected to weaken in the near future, dramatically increasing export levels. Higher export levels mean more demand for freight services.
  3. The U.S. is near full employment levels. This will create wage raises, which, historically, leads to increased consumer spending levels. More consumer spending translates to higher freight volumes.

Read more about rising freight volumes here.

Key Takeaway

The important thing to realize is this: freight volumes will increase at a time of higher operating costs and lower capacity in the trucking industry, leading to a rapid rise in transportation rates.

Freight demand will bottom out as early as the third quarter of 2016, meaning in late 2016 or early 2017, the buyer’s market will be reversed.

Once these factors start to work in carriers’ favor, the rate hike will happen very quickly. Shippers can prepare by streamlining transportation processes and locking in low transportation rates now.

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