The Changing Landscape of Global Logistics: Intermodal vs. Multimodal Transport & The Role of FTL Shipping  

Emerge

The Changing Landscape of Global Logistics

Over the course of the last 30 years, the U.S. has experienced explosive growth in global trade and, in particular, a massive influx of goods coming in from Asia via container ships. Long before the pandemic, thousands of ocean containers arrived every day at ports around the country, each of which had to be cleared through customs, hauled off an ocean terminal, and transported to its final destination.

Import growth creates new opportunities

Apart from the vital role that U.S. rail and truck carriers have played in domestic trade, import growth created new opportunities for transportation providers in segments that include intermodal, multimodal and Full Truckload (FTL) shipping. In fact, it can be argued that the expansion of the Asia-U.S. trade lane is really what drove common carriers to develop sophisticated networks for both intermodal and multimodal shipping services. 

Whereas U.S. shippers have historically employed a fairly even combination of intermodal and multimodal transport, recent changes in global supply chains have swung the balance towards an increase in multimodal. In turn, this shift has had a significant impact on FTL moves around the U.S. At this point, a series of clarifications and examples will illustrate how these changes have altered how FTL carriers support U.S. import/export trade. While applicable to both imports and exports, we’ll start with an import model for illustration purposes.  

Intermodal vs.multimodal shipments

By way of clarification, an “intermodal” shipment consists of two or more modes of transport, all of which are executed under a single bill of lading. For imports, the traditional intermodal move consists of an importer contracting with an ocean carrier or freight forwarder for container transport to a U.S. port, along with rail and trucking to an inland point, all using one B/L. Aptly named “Inland Point Intermodal” (IPI), importers have used this mode of transport for years.

“Multimodal” shipping, on the other hand, also involves two or more modes of transport for a container shipment, but with each leg under its own bill of lading. With this model, the importer contracts for ocean, rail, and/or trucking services separately, each having a separate B/L. There are a number of strategic and tactical reasons why a shipper would choose intermodal vs. multimodal transportation, but both require that shippers use some form of trucking service.

There’s been a big shift over the last two years away from intermodal towards multimodal for reasons described below. And while multimodal may seem more difficult to coordinate, the causes behind this trend are real, the results of which create both opportunities and challenges for the import/export community. Here’s what those underlying reasons are, along with some ideas on how shippers and common carriers can respond to these new market conditions:

Ocean carriers are limiting the number of containers going to inland points.

Steamship lines have never liked sending containers to the interior of the country because the cost of repositioning empty containers to a port is high, and it takes too long for them to get back. Fast forward to the Pandemic Era, ocean carriers are in such a hurry to return containers to Asia that they’re forcing importers to terminate bills of lading at the first port of discharge. 

This means that instead of moving containers to the interior of the country as an ocean/rail/truck intermodal load, importers have to strip ocean containers near the port of discharge and transfer goods to 53’ trailers for either FTL or rail shipping to final destination. With ocean carriers limiting these “IPI containers”, importers have put greater pressure on FTL carriers to move loads coming out of U.S. ports to multiple points across the country.

Port drayage has become more of a thing.

A big part of maritime shipping is the “drayage” that takes place when containers are trucked off of an ocean terminal. Defined as the short-haul trucking of container and trailers to/from ports and/or rail ramps, drayage serves as the link between international ocean freight and domestic U.S. shipping.

Certainly applicable to both intermodal and multimodal shipping, as well as imports and exports, the demand for port drayage has increased in lock step with the growth of imports into the U.S. over the last two years. Many common carriers have added drayage to their existing portfolio of long-haul trucking services. 

The import Transload model has grown by leaps and bounds.

When importers have ocean containers stripped at facilities close to a port and then transfer goods into 53’ trailers for on-forwarding to multiple U.S. destinations, it’s known as “transloading”. Although transload has been in play for well over 25 years, more and more importers have turned to this model now that they have to terminate ocean containers at the port of discharge.

Transload offers multiple opportunities for common carriers willing to make adjustments to their service portfolio. First, there’s the drayage of full containers to a transload facility, as well as the return of empties to the port. Second, once a container is stripped, 53’ trailers have to be on-forwarded by truck or rail. For FTL shipping, long-haul opportunities abound, and even when 53’ footers are moved by rail, truckers can still do the dray for full, and empty trailers. 

Export Transload came out of nowhere.

Fewer IPI moves to U.S. inland points mean there aren’t as many containers available to exporters. This critical shortage of “export boxes” in the central U.S. has forced shippers to send 53’ trailers via FTL to ocean ports, where they are then transloaded into ocean containers for subsequent export. 

The inverse of an import transload, exporters have increased the need for FTL loads heading to East Coast, West Coast, and Gulf ports. In relative terms, export transload has grown faster than its import counterpart, and given current market conditions, the demand for outbound FTL capabilities will remain hot. As such, exporters from Indiana to Arizona will continue to scramble for FTL capacity to the coasts, thus creating yet another wrinkle for export-oriented shippers.

What can importers & exporters do to balance FTL capacity and rates?

It should be clear that now, more than ever, shippers of all types have to take more direct control of their container and trailer moves. Especially true with the previously mentioned  trend towards multimodal shipping, importers and exporters need access to reliable and competitive FTL services to exercise control over their international logistics chains. 

Always a step ahead of changing market conditions, the Emerge Freight Procurement Platform features capabilities that allow international shippers to adjust to ever-changing market dynamics. Here’s a look at how Emerge facilitates goods movement for importers and exporters alike:

Multiple RFP events in support of import & export transload.

Just like domestic FTL shippers, importers and exporters can support their transload operations by executing multiple RFP events per year on the Emerge platform. This is an especially important feature because import/export operations tend to be seasonal (e.g. import surges in advance of the Holiday Season) and shippers need to adjust to fluctuating FTL volumes and rates throughout the year. 

So, whether it’s a steady flow of 53’ trailers moving from Tulsa to an export transload facility near the Port of Houston, or seasonal imports of wearing apparel heading from Long Beach to Chicago, shippers can manage FTL capacity needs and rates by running multiple RFPs on the Emerge Freight Procurement Platform. 

On demand spot rates.

International trade has always been unpredictable, and the last few years have only served to worsen that uncertainty. In recognition of volatility across global supply chains, importers and exporters need access to FTL spot pricing in addition to the contract rates they secure via multiple RFP events.

These days, it’s not unusual for an importer to experience periods when very few containers are arriving to the U.S., only to see dozens arrive all at once. Depending on the time of year and surge volumes, importers can use the spot rate functionality of the Freight Procurement Platform to supplement their contracted rates. Of course, the same principle applies to exporters that need to get multiple export loads to an ocean port as quickly as possible.

Port drayage via the Emerge partnership with EDRAY.

Anyone who deals with drayage knows it’s an exercise rife with disruption and blind spots regardless of the port or rail ramp. Integral to both intermodal and multimodal models, the ability to efficiently move containers to/from a port terminal is truly the lynchpin between international and domestic shipping.

In recognition of these challenges, Emerge has partnered with the collaborative port logistics platform EDRAY to provide a unified offering that maximizes access to drayage capacity and market pricing, all while enabling control and visibility into full container moves, empty returns and street turns. A rare innovation, the combined strengths of Emerge & EDRAY optimize port logistics and set the stage for more efficient Transload operations and FTL moves.

The More Things Change, the More they Don’t Stay the Same

Whether one speaks of domestic or international shipping, the Full Truckload industry has always served as the backbone of the U.S. logistics network. And it is without question that when it came to facilitating import & export activity in the early years of globalization,the truck carriers that made intermodal and multimodal shipping a reality. 

With the above said, times have indeed changed, and seismic shifts in global logistics have forced shippers to adjust to a number of new realities. Through our own efforts and supercharged by relationships with partners like EDRAY, the Emerge Freight Procurement Platform serves as the digital bridge between international and domestic shipping, with capabilities that transcend import, export, intermodal and multimodal shipping models.

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