intermodal-freight

What is intermodal freight?

Intermodal freight involves the transport of freight in a single unit using two or more forms of transportation. There are two types of intermodal freight: international and domestic. In the former, goods stay in 20 or 40-foot containers for the duration of transportation. In the latter, goods are transferred to larger containers and transported inland to domestic locations. The standardization of shipping containers means intermodal freight has various advantages such as reduced costs, faster delivery times, and safer and more secure transportation of goods.

Understanding intermodal freight

Intermodal freight involves the transport of freight in a single unit using two or more forms of transportation.

Intermodal freight utilizes a combination of two or more transportation modes such as road, rail, air, or sea. In this form of shipping, the goods are sealed in cargo transport units (CTUs) whose dimensions are standardized to allow the goods to remain in the same unit across multiple modes of transportation. 

This means that when a CTU is moved from one form of transport to another, it is the CTU itself that is handled and not the goods that are contained within. However, as we will explain later, there are some exceptions to this rule. Transfers occur in an intermodal station or terminal which contains specialized equipment. 

It’s also worth noting the difference between the intermodal form of transportation and two related concepts in transloading and multimodal freight:

  • In general, intermodal transportation does not involve the handling of goods until they arrive at a final destination. During transloading, however, goods are routinely consolidated or reconsolidated as required.
  • In intermodal transportation, there are multiple contracts for each separate carrier. Conversely, multimodal transportation is characterized by a single contract where the same carrier is responsible for moving goods across different transportation modes.

According to research conducted by Technavio, the intermodal freight transportation market is expected to grow by $46.55 billion in the four years to 2025.

The two categories of intermodal freight

There are two categories of intermodal freight:

  • International intermodal – these shipments travel in 20 or 40-foot containers between bulk carriers, trains, and trucks. Note that the products stay in the container for the entirety of the process.
  • Domestic intermodal – these are shipments that arrive at a port in the same 20 or 40-foot containers which are then transferred into 53-foot domestic containers. This occurs at a transload facility, cross-dock facility, or distribution center. From there, the goods travel inland to a “domestic” location.

Advantages of intermodal freight

The standardization of shipping container dimensions has clear benefits for companies and the industry as a whole:

  • Rapid service – containers result in the more efficient transfer of goods from one transport mode to another. Delivery times are reduced since the shipping company needs to spend less time loading and unloading.
  • Lower and more predictable costs – with less time spent on handling, costs tend to be lower. Many shipping companies also utilize rail transport for the longest distances to further reduce costs, with railroads in the United States able to move one tonne of freight more than 470 miles on a single gallon of fuel. Rail transport also tends to make costs more predictable as there are fewer unforeseen delays when compared to transporting goods by road.
  • Safety and security – intermodal rail freight tends to be a safer option for transporting flammable or hazardous materials because there is less chance of an accident. This also contributes to faster delivery as there are fewer restrictions that dictate how these materials can be transported. Intermodal freight is also inherently more secure than some other types. Since there is no requirement to handle individual items, there is less chance for opportunistic theft. What’s more, containers that are loaded onto railway cars are dropped into a well which makes them impossible to open.

Read Next: Transloading, Break-BulkCross-DockingSupply ChainAI Supply ChainMetaverse Supply ChainCostco Business Model.

Connected Business Frameworks

AI Supply Chains

data-supply-chain
A classic supply chain moves from upstream to downstream, where the raw material is transformed into products, moved through logistics and distributed to final customers. A data supply chain moves in the opposite direction. The raw data is “sourced” from the customer/user. As it moves downstream, it gets processed and refined by proprietary algorithms and stored in data centers.

Bullwhip Effect

bullwhip-effect
The bullwhip effect describes the increasing fluctuations in inventory in response to changing consumer demand as one moves up the supply chain. Observing, analyzing, and understanding how the bullwhip effect influences the whole supply chain can unlock important insights into various parts of it.

Supply Chain

supply-chain
The supply chain is the set of steps between the sourcing, manufacturing, distribution of a product up to the steps it takes to reach the final customer. It’s the set of step it takes to bring a product from raw material (for physical products) to final customers and how companies manage those processes.

Data Supply Chains

data-supply-chain
In a data supply chain the closer the data to the customer the more we’re moving downstream. For instance, when Google produced its own physical devices. While it moved upstream the physical supply chain (it became a manufacturer) it moved downstream the data supply chain as it got closer to consumers using those devices, so it could gather data directly from the market, without intermediaries.

Last Mile Delivery

last-mile-delivery
Last-mile delivery consists of the set of activities in a supply chain that will bring the service and product to the final customer. The name “last mile” derives from the fact that indeed this usually refers to the final part of the supply chain journey, and yet this is extremely important, as it’s the most exposed, consumer-facing part.

Backward Chaining

backward-chaining
Backward chaining, also called backward integration, describes a process where a company expands to fulfill roles previously held by other businesses further up the supply chain. It is a form of vertical integration where a company owns or controls its suppliers, distributors, or retail locations.

Revenue Modeling

revenue-model-patterns
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Pricing Strategies

pricing-strategies
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

Dynamic Pricing

static-vs-dynamic-pricing

Price Sensitivity

price-sensitivity
Price sensitivity can be explained using the price elasticity of demand, a concept in economics that measures the variation in product demand as the price of the product itself varies. In consumer behavior, price sensitivity describes and measures fluctuations in product demand as the price of that product changes.

Price Ceiling

price-ceiling
A price ceiling is a price control or limit on how high a price can be charged for a product, service, or commodity. Price ceilings are limits imposed on the price of a product, service, or commodity to protect consumers from prohibitively expensive items. These limits are usually imposed by the government but can also be set in the resale price maintenance (RPM) agreement between a product manufacturer and its distributors. 

Price Elasticity

price-elasticity
Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It can be described as elastic, where consumers are responsive to price changes, or inelastic, where consumers are less responsive to price changes. Price elasticity, therefore, is a measure of how consumers react to the price of products and services.

Economies of Scale

economies-of-scale
In Economics, Economies of Scale is a theory for which, as companies grow, they gain cost advantages. More precisely, companies manage to benefit from these cost advantages as they grow, due to increased efficiency in production. Thus, as companies scale and increase production, a subsequent decrease in the costs associated with it will help the organization scale further.

Diseconomies of Scale

diseconomies-of-scale
In Economics, a Diseconomy of Scale happens when a company has grown so large that its costs per unit will start to increase. Thus, losing the benefits of scale. That can happen due to several factors arising as a company scales. From coordination issues to management inefficiencies and lack of proper communication flows.

Network Effects

network-effects
network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.

Negative Network Effects

negative-network-effects
In a negative network effect as the network grows in usage or scale, the value of the platform might shrink. In platform business models network effects help the platform become more valuable for the next user joining. In negative network effects (congestion or pollution) reduce the value of the platform for the next user joining. 

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