Beyond containerization: the broader concept of intermodalism.

* The use of transload will reflect many of the same characteristics that are currently found within the intermodal context, such as the desire to contain costs and the obtainment of alternative transportation options. What was not anticipated in developing the propositions for the conceptual model, but became an important part of the research, was the small number of those interviewed who had a "good" concept of what intermodalism is or how it can be explained. Approximately one-third of those interviewed had no definition or had not even heard of the word intermodal, while another third related it to containers or trailers moving on rail or ship. Because of the lack of a clearly expressed meaning for the word intermodal, a more precise term was sought to facilitate nomological validity of the transportation process being researched. One term that was used in the pre-study interviews was transload. Early references to this term describe it as a transfer between modes without containers, but unitized in another type of device.(15) Other transportation references relate it more to a consolidation or less-than-truckload technique. For example, Sampson and Farris state that "in transloading, the carrier may combine several loads of different shipments in a single vehicle for his own convenience."(16) A very recent definition provided by Muller indicates that transloading is the "practice of transferring bulk shipment from the vehicle/container of one mode to that of another."(17) Although definitions and explanations for transload exist, they are very limited within the literature. Therefore, it was not unexpected that this term had an even smaller recognition factor, with only about half of those interviewed even using this word to describe their transportation process. However, among those who did have a definition, there was some general agreement as to what was involved in the operation. Most of those who had a definition for the word transload used it as a verb. Interestingly enough, several of those interviewed defined transloading by the modes of transportation with which they deal. Since this is the typical way each uses transload as a part of their transportation strategy, these descriptions seemed to accurately reflect the concept. Reasons for not having a single unified term for the transload process ranged from perceptual (it's not just a reload center) to past regulatory forced separation of modal activities. INTERVIEW AND RESEARCH FINDINGS Type and Characteristics of Commodities Involved in Transloading Previous transload research has tended to be mode and commodity specific. For example, Allen and Voorhees focused their studies on rail-barge movements of grain and coal.(18) The case studies conducted for this research examined nearly forty commodities currently moving in transload operations. As shown in Table 3, the listing includes dry and liquid flowables, as well as a significant number of non-flowable products. Several of the commodities are relatively new to the transload operations and represent business that was in some instances a part of an acquisition or an alternative to loss of another means of transportation. An overall assessment by the interviewees seemed to be that across a variety of criteria, transloading was the most suitable option for their specific needs. There is a strong relationship between the viability of transloading and the characteristics of the commodities being transported using this strategy. An examination of the different commodities revealed several important characteristics which most or all of the commodities shared. First among the characteristics is that they all move in large volumes, or are large (in terms of physical size) in their transported state. An inherent advantage of barge, rail, or pipeline is carrying capacity; it is therefore expected that transload activities involving these modes would seek to utilize this aspect. Table 3. Commodities Involved in Transloading Dry Flowables Liquid Flowables Non-Flowables Alumina ore Asphalt Aluminum bars Ammonium nitrate Caustic soda Aluminum ingots Cements Chemicals (misc.) Bagged barite Chemicals (misc.) Diesel fuel Brick Coal and coke Gasoline Coiled steel Fertilizers Methylene chloride Lumber Flour Motor oils Machinery Grain Processing oils Newsprint Grain products Pipe Gypsum Scrap metals Iron sulfite Steel parts Plastic pellets Steel wire Polypropylene powders Structural steel Rock Roofing granules Salt Sand Zinc ore The ability to handle the product is another issue which may define a preferred commodity characteristic for transload practices. For most of the commodities in this study, multiple handlings are not a major issue if certain procedures are followed. Few of the commodities involved in transloading appear to be extremely sensitive or readily damageable by the additional handling needed to make the entire move. Most of the transload commodities are industrial or commercial in nature and thus are bought and sold in large volumes and/or sizes. The products are items used by industry as either raw materials or components for production of other commodities for the consumer or commercial market. Selection and Arrangement Process Research findings indicate that the commodity shippers generally take primary responsibility for initiating transload movements. Few transload terminals have their own marketing staffs, and many reported that they rely on shipper or carrier inquiries for new business. However, there are exceptions to this arrangement. CSX Transportation, Inc. (CSXT), a railroad, uses a subsidiary, Bulk Intermodal Distribution Services, to manage more than seventy transload terminals for the company. Just as with many other transload terminals, the subsidiary has no real marketing staff. Instead they have a fairly uncommon arrangement whereby the commodity marketers within CSXT solicit much of their business. The subsidiary also uses a carrier-neutral operator at each terminal to provide maximum carrier flexibility for the shippers. Counter to the philosophy of direct center control, the Norfolk Southern (NS) Railway uses a system of railroad-owned centers operated under contract by firms such as motor carriers. In addition to contracting, NS also markets to some extent transload centers owned and operated by others. Terminal operators appear to be satisfied with these types of arrangements in that a dedicated carrier at a center provides a guaranteed vehicle supply, allows for consolidation, and leads to increased utilization of equipment. It was also reported that such practices add an incentive for the firm to move freight through the center knowing that regardless of original customer contact, each party will experience a growth in business. Additional synergies are gained in that two skilled teams of marketing personnel may be in the field and at corporate levels to bring new business in the operations. There appears to be no one arrangement process that leads to a successful transload operation. Port and land facility transload operators also acknowledged many differences between their operations and that each tended to customize their own system. The differences in arrangements can be partially attributed to the fact that most transload centers are built customer- or commodity-specific. An exception to this finding is third parties that promote specialization or separation of responsibility and tasks. For transloading, transportation specialties are a regular practice within this segment and some firms are established just to serve that role. Transload facility operators serve a connecting function between the various carriers used in the movement. Carriers have also been selected to function in this manner. The separation of tasks contributes to the lack of throughput data for intermodal freight movements, and if reported may lead to overestimation of volumes as several of the involved entities may assume ownership of the arrangement and subsequently over-report the data. It appears in some instances that transload and warehouse/storage facilities designed for transload purposes have been used as competitive weapons to prevent total domination by any one mode or carrier. For example, the state of Montana used federal rail funds to construct a gain loading facility for access to another railroad other than the one currently serving the traffic. Another case where transloading has been utilized to increase competition is in the soda ash mining area of southwestern Wyoming. In this arrangement, shippers use a truck-to-rail transload operation to reach the competing carrier. Even though a small portion of the total volume moves via this method, it is a sufficient amount to keep the primary rail carrier from obtaining full domination over the traffic. Issues Related to Modal and Carrier Involvement Involvement in a transloading operation often came about for pipeline, railroad, and water carriers because of their lack of direct access to a number of customers. Carrier reported a dependence on other modes for the pickup and delivery function due to limitations with their own infrastructures. Water carriers were especially vocal in their need for modal connections at port facilities and for third parties to oversee the transload operations. In contrast, connecting highway carriers interviewed for this study demonstrated little loyalty to the operations and seldom marketed their existence. This attitude was in direct conflict with other case practices where a railroad uses a dedicated motor carrier at each facility, building a partnership characterized by mutual goals and objectives. While mode and carrier participation with transload is often based on attracting or maintaining business, modal characteristics which influence transportation price seem to determine roles for the various modes. Further research is needed to fully explore the interrelationships that impact the level of involvement. Impact of Company Size and Corporate Strategy The case study results indicated that company size was not necessarily the driving force behind shipper participation in transload. Instead, the one common factor among all those interviewed was the need or ability to move enough product to justify the use of the larger capacity mode and the added handling expense required to make the modal transfer. Large international firms to small local and regional firms reported benefits from the ability to transload their product. It appears that there is a minimum shipment size or value required for the use of the transload strategy. In several instances, transloading was viewed as a viable transportation strategy to a more costly investment alternative to get their product to the marketplace. While investment decisions are highly dependent upon the specific priorities and situations of a firm, most firms will choose to expend limited investment resources in areas where feasible options are not available. Because transload participants have, in general, customized transportation to meet the specific service needs of a customer, the practice is often viewed by large and small firms as a feasible option to infrastructure investment. As previously stated, the impact that company size and strategy seemed to make is in the ability to meet certain volume quantities to satisfy the requirements of the modes involved. That it tends to result in lower cost operations, often with better service characteristics, is a desirable outcome for any company. The research found a number of differences in the way that transload is used, and how it is related to a company's corporate strategy. Firms have developed their own unique systems for control of the process, choice of modes, the process of evaluation, and price versus service concerns. This is the essence of a good strategy, i.e., it differentiates and is not easily imitated in the marketplace. Carrier/Shipper Relationships For the most part, carriers and shippers reported good or positive relationships with those who are a part of the transload process. This was not always true, however, at the beginning of the partnership as some shippers were apprehensive about whether the plan would be feasible and/or reliable. As the process became routine for the shippers, carriers, and transload operators, many of the problems were worked out and relations improved along with the success of the operation. The quality of the service provided made the relationship advantageous when one or more parties possessed an expertise lacking in the other movement partners. From a carrier's standpoint, transload seemed to be a means of gaining new business or controlling at least part of a product's movement. Shippers and the general public benefit from an elimination of duplicate facilities, a reduced need for new infrastructure, or more competition and transportation options. In some cases, the shipper and carrier create a partnership to provide the necessary equipment for the transload movement. The inland waterways and ports industry is an excellent example of this partnership practice. This is because many of the commodities moving on the river systems are bulk materials (such as coal, grain, and ores) which require a transfer to or from land transportation systems. At one port, the bulk material handling facilities and equipment were designed to provide for continuous movement for low-cost intermodal transfer. To further ensure that the material flow was logistically linked, a half-mile rail spur was constructed to facilitate the transloading of coal from barges to railroad hopper cars. This endeavor was made possible through a sharing of development costs by the transportation and port participants. Thus, this partnership between the port and its water and rail connectors allowed the development of the connecting infrastructure at a cost feasible to all involved. Interestingly, this same factor - relying on others - was also cited as one of the major disadvantages of transload. Business isolation, the need for additional communications, questions of liability, loss of control, and the fact that extra coordination effort was needed were additional disadvantages cited by those interviewed. Osswald also reported the involvement of several parties with potentially differing goals and objectives as one of the main disadvantages of intermodalism.(19) Yet despite these disadvantages that might negatively influence likely participants, many of those interviewed understood that everyone shares in the benefits of a successful relationship in which disadvantages have been diffused. While most of the firms studied reported some initial problems in their transloading operations, the majority did not have an established evaluation process. Instead, many facility and transportation managers stated that performances were at best evaluated informally, and that most changes were in response to problems. Generally, daily customer contact was used to judge customer satisfaction. This was evidenced by the high usage and importance of telephone and personal contact in the transload industry as a system for facilitating the process. Much of the success in the carrier/shipper relationship can be attributed to this emphasis on meeting individual customers' needs. The conclusions that can be drawn from this part of the research are that where transloading is working well, relations are generally good. New movements are typically experiencing some uncertainty and/or problems in the relationship. Although this follows the trends of most relation research, this sample was not intended to be the basis for a definitive conclusion in this area. Benefits and Drawbacks for Carriers and Shippers Among the carriers interviewed, most felt that transload operations had more benefits than drawbacks. These benefits included such things as attracting new customers, opening new markets for existing customers, making their services attractive over a larger geographical area, controlling freight movements off of their normal system, and maintaining business volumes even after partial abandonment of services. The Massachusetts Central Railroad is a good example of these advantages. While directly serving a territory only along their 25-mile line, they had used their centralized location in New England to serve the entire region via transload. For most of those involved with transloading products, there does not seem to have been a single, unified issue which led to the activity. Location, service abandonment, service needs, and process evaluations were all reasons cited for the use of transload. However, total logistical costs of the movement appear to be the primary reason for the technique's selection and continued involvement in the practice. Several of those interviewed stated that the actual transload process and terminal has little to do with the desire to use this multimodal freight option. The total cost factor for the movement from origin to destination was mentioned as an important criterion by more than 75 percent of those interviewed for the study. In most cases, cost was not the single determinant in the firm's transportation evaluation process. The service level provided as a part of the intermodal package was also an important factor. The service level consisted of several components, including hours of operation, mode and equipment availability, storage capacity, handling time, and damage and loss potential. There is very clearly a minimum service level that must be offered by the transload operation, regardless of price or cost of the service. Few intermodal drawbacks have been reported.(20) In addition to transportation organization incompatibility, increased damage and transit time due to additional product handling, differences in modal capacity, and market skepticism, the interviews with carriers have added several other drawbacks to using transload. The most severe problem seems to be the added competition with an existing transportation service. Several carriers stated that they have lost some of their more profitable long-haul business to transload, even though they have benefitted in the area of short-haul movements. Complications in contract negotiations, receiving payment, and assessing responsibility for product damage are also drawbacks noted. For the shipper, the drawbacks already mentioned are also appropriate. The most common problems stated with transload were the lack of one carrier ownership of the move, fixing responsibility for product damage, and delays in payment when shipment times are extended by the practice. Additionally, several shippers listed the problem of having an additional operation to oversee when an off-site transload facility is maintained and used. CONCLUSION Before many of today's practices were developed and accepted, intermodalism was more a concept than an operational reality. Many of the early definitions dealt more with modal connectivity than limited modal coordination of containerized freight. There are many different entities involved in domestic and international transportation. Creating a seamless transportation system that meets these needs is the goal of both the public and private sectors. Shippers' needs in the 1990s will require global coverage enabled by flexible and reliable partnerships with carriers that provide creative and flexible transportation options using integrated systems. The importance of intermodal transportation in this environment cannot be underestimated. What should be recognized is that the way in which this goal is achieved may vary for each of the participants. By narrowly defining intermodalism, carriers and shippers have missed opportunities to enhance their service scope and reduce the cost structure and capital requirements. In some cases, this opportunity could have meant increased utilization of existing equipment or increased market share. For this reason, and others previously discussed, it is time to expand the current role of intermodal transportation to facilitate the growth and development of transloading for true transport coordination. This research has attempted to address the main issues and topics related to the further development and use of transloading as a strategic component of multimodal capability. The case studies have provided a basis for understanding what research questions should be asked at the next stage of study. More research is needed to confirm/disconfirm the case findings against the industry as a whole. Specifically, the following areas should be considered: