Beyond containerization: the broader concept of intermodalism.

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.

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