Office of Operations Freight Management and Operations

IV. Implications for the Transportation System

Orange juice must be there for breakfast. Products must be available when we go to stores to purchase them. Factories must have the materials they need to keep production lines going. Critical documents must be delivered to offices. Supplies and personnel must be where the military needs them. These are needs that are easily understood by the general population. However, how goods move and what is required is generally invisible to the public.

The distribution and logistics required to meet these needs are less visible to the general public and, therefore, less understood. Accordingly, translating reliability, transit time, efficiency and cost parameters into the implications for the nation's transportation system would seem an even more difficult task. However, that is not the case.

The overall demand for freight can be estimated based on economic trends such as the demand for certain industries' product. Reliability and transit time are based on capacity and congestion considerations. For example, congestion can cause unpredictable transit times and affects reliability. Congestion can also affect the efficiency and cost of operations.

Existing and future transportation infrastructure must consider and accommodate the dimensions of equipment moving into use. As noted previously, transportation providers are continuously introducing new equipment as a means for increasing efficiency and reducing their costs. Older elements of the transportation system may not be able to accommodate the 53 foot long, 102 inch wide, 13 foot six inch high trailers that have become the industry standard in the U.S. Railroads are similarly dealing with providing adequate clearances for taller doublestack trains. U.S. ports are also wrestling with providing adequate channel depth for the new class of mega-container vessels.

Greater Demand and Greater Stress

All of the trends described previously ultimately increase the volume and frequency of freight movements that must be accommodated by the US transportation system and simultaneously increase the amount of stress placed on the system, particularly at intermodal connectors.

Growing demand even with optimization. Freight is derived demand. Freight moves in response to the needs of its customers. In a period of economic expansion, more goods need to be moved to support production lines, construction, and consumer activity. Shippers and transportation providers must also respond to customers who increasingly require more frequent and precise delivery of smaller quantities.

Shippers are making a concerted effort to optimize the use of transportation equipment (for example, through initiating back haul programs). Together with transportation providers, they are also shifting as much freight movement as possible to off-peak periods (when travel times tend to be more consistent and roadways less congested). New types of equipment is being introduced to increase efficiency. Nevertheless, a healthy economy both generates and requires a freight transportation system that can support it.

Increased stress on the transportation system. The increased emphasis on meeting delivery windows and reducing the amount of inventory maintained on site heightens the need for a transportation system that provides the reliability, transit time, efficiency, cost and damage minimization sought. When the transportation system cannot meet these parameters, then the cost to the economic well-being of the country can be tremendous. Estimates of the economic impact of the UPS strike and congestion on the UP/SP have ranged into the hundreds of millions. In reporting problems with imports from Asia, the Wall Street Journal noted as a example:

"Getting on a ship isn't even the end of the problem for some companies. Totes Isotoner Corp. got a shipment of 50,000 pairs of gloves squeezed onto a vessel to the U.S. from Asia on time, only to have them get stranded in a Chicago rail yard for a week, awaiting delivery to the company's base in Cincinnati. With so much cargo coming in, there aren't enough truck-trailer chassis to handle cargo boxes."[6]

The additional surges that could be generated by the military could further stress the system, affecting both military and commercial traffic.

Modal Integration – Striving for Connectivity in the Supply Chain

With shippers becoming both more demanding in their freight needs and less involved in the actual physical process, it is increasingly the transportation providers and third parties that must arrange and manage the entire trip from origin to destination. As discussed previously, the "door-to-door" move sought by shippers may involve several different modes of transportation. The overall objectives are to make the door-to-door move as seamless and invisible to the shipper; to meet the overall reliability, transit time, efficiency and cost parameters set by the shipper; and to carry out the move as effectively as possible so that it can generate revenue for the transportation provider.

Within this context, the ability to integrate the various modes in the transportation system – air, water, truck and rail – becomes crucial. Such integration must occur at two levels:

  • Physical integration whereby the appropriate facilities and infrastructure exist to physically conduct the transfer of cargo between modes in an efficient manner; and
  • Information and technology integration which provides the "backbone" that ties the modes together by expediting the movement of documents, payments, and tracking information. Information integration facilitates the exchange of documentation, orders and payments and provides critical tracking information. This tracking information allows the in-transit visibility and flexibility sought by shippers in a seamless move.

From an infrastructure standpoint, freight facilities become more of a meeting and integration of the modes. For example, ports are more than facilities that load and unload vessels – they are intermodal hubs where cargo is moved among modes to speed it to and from customers. Truck and rail access are as key to a port's success as waterside access. As one 3PL recently noted, "You can get a great ship rate and then have that go away real quick if the customer can't get in and out of the port." Similarly, truck access is critical to successful cargo operations at airports.

The Role of Intermodal Connectors

Accordingly, the intermodal connectors increasingly play an essential role in ensuring the reliability, transit time, efficiency and cost sought by shippers. Intermodal connectors allow transportation providers to use the best of each mode and to provide seamless door-to-door movements. Because shippers are further removed from the physical elements of freight movement and the general population rarely sees actual cargo operations today, the key role played by intermodal connectors may not be fully realized. However, the consequences of not having effective intermodal connectors has been made abundantly clear.

Opportunities and Barriers to Facilitating Intermodal Connectors

The importance of intermodal connectors would seemingly make them a priority for both the public and private sectors. Indeed, the need for system efficiency alone is an objective sought by both sectors. However, a number of issues remain for optimizing and investing in intermodal connectors. These include:

  • Infrastructure Considerations – Coordination among the modes has advanced among transportation providers and pubic sector infrastructure providers. The public and private sectors need to continue to work together to optimally plan access for multiple modes at facilities. This may be complicated in many urban settings by an insufficient availability of land and older transportation system segments that cannot accommodate the newer equipment and vehicles being used today.

    Planning and investment in passenger facilities and connections also compounds the infrastructure issues for freight movement. For example, full service airports that are land constrained may place a priority on passenger service considerations.
  • Operational Considerations – As freight traffic increases in general and surges become larger and more pronounced, operational issues will need to be resolved. For example, steamship lines are seeking to load and unload the new mega-class of container vessels in the same time as the previous, smaller class of vessels. To accomplish this, more cranes and labor are necessary to work the vessels. More equipment must be used to quickly move containers to and from on-dock rail facilities, and more capacity is needed for the additional truck and rail traffic generated. Information systems among the entities involved in the movement of goods are also still being woven together to expedite the flow of data and documents and to provide the detailed tracking data sought by shippers.

    In addition, reliability and transit time are often not based on freight movement throughout the day, but rather the demand for freight movement that must be met during certain portions of the day. Inbound traffic attempts to arrive by early in the morning or at the start of the business day. Outbound traffic generally leaves in the afternoon or evening.

    Many businesses and transportation providers have, where possible and cost effective, already adjusted their distribution channels and shifted to off-peak periods (generally at night) to obtain more consistent travel times. However, it should be noted that night time is increasingly the time allocated by departments of transportation for road work and maintenance. In addition, some communities are imposing delivery curfews in order to reduce noise, forcing trucks back into peak periods. Further, there are companies and operations that must continue to receive and ship freight during peak traffic periods. Peak period congestion at intermodal connectors to airports, rail terminals, and port facilities is one of the key situations that requires investment and results in delay, increased costs, lower efficiency and unpredictable travel and delivery times.
  • Regulatory Considerations – The range of regulatory issues that must be resolved include size and weight considerations. For example, many ocean containers are considered overweight for highways. To use the roadways, the products within the containers must be reloaded into trailers that comply with regulatory requirements. Environmental, noise, and hazardous materials handling regulations must also be reviewed within the context of facilitating intermodal connections.
  • Financial Considerations – The shared goals of the public and private sectors would appear to make intermodal connectors an ideal forum for joint ventures. Indeed, several such ventures are under consideration or in the planning stages, including the "Portway" project linking the maritime facilities in New Jersey with rail terminals in the area via a dedicated truck road. As another example, the Seagirt Intermodal Container Transfer Facility (ICTF) in Maryland involved financial commitments by the railroads, the Port, nearby businesses and governmental agencies. The innovative financing elements of the TEA-21 legislation also provide a mechanism for facilitating such joint ventures.

    However, it is equally important to note that private sector entities tend to move much faster than the public sector in their business planning and investment and seek shorter pay back periods. These divergent time lines can impact the effective use and development of intermodal connectors.
  • Competitive Issues – While coordination among the modes is increasing, competition among the modes and among transportation providers for customers will remain. Balancing the need to work together and the need to expand customer bases can be difficult. For example, it was recently noted that rail intermodal volumes have grown at less than one percent in 1998 in comparison with an average growth rate of seven percent over the previous four years.[7] Cost and service issues have been noted as traffic has converted back to over-the-road trucking. In an increasingly competitive and low profit margin environment, such issues will most likely continue.

    Competition is not limited to the private sector; geographical regions also compete for commerce. Under the new freight transportation parameters, the least expensive route that can meet transit time and reliability needs will be used, regardless of the actual distance or modes involved. Accordingly, federal investment can affect routing and modal decisions.
  • Institutional Considerations – Freight movement remains one of the least understood elements of transportation. There is a continuing need to educate public sector agencies, elected officials and the general public on the role of freight movement in the economic well being of the country. Efforts to involve citizens in the general transportation planning process have been successful. Similar efforts are needed to fully and productively engage companies and freight transportation providers in public sector planning processes.
  • Meeting Other Public Goals – In enabling the highest and best use of each mode, intermodal connectors can help achieve safety, environmental, economic development, land use, and other public objectives. However, explaining and illustrating the value of intermodal connectors relevant to these objectives is still needed for the general public, state agencies and MPOs. Without an understanding of that value, intermodal connectors, similar to freight movement in general, may not receive the appropriate level of prioritization in regional and local planning and investment.

In conclusion, the growing importance of increased reliability and efficiency, combined with reduced transit time and cost, points to the vital need to provide adequate capacity for access to major intermodal terminals that serve international, national, and regional commerce. Congested, inadequate, or functionally obsolete intermodal connectors can be an obstacle to the seamless, reliable cargo movement that US businesses and security requirements demand now. Meeting the more stringent requirements anticipated in the next century may be far harder to achieve. Efficient intermodal connectors promote the best use of each mode and support the performance standards of goods movement necessary as the country moves forward into the new century.

  1. Anna Wilde Mathews, "Holiday Imports from Asia Jam Shipping Lanes," The Wall Street Journal, September 22, 1998, page B1.
  2. Rip Watson, "Intermodal sector warned it's flirting with flat-line growth," Journal of Commerce, September 25, 1998.

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