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Mixing Modes: Why OTR is Giving Way to Intermodal

As over the road (OTR) transportation continues to rise in higher fuel costs and present additional challenges such as capacity shortages and environmental concerns, shippers are turning more and more to intermodal solutions as a cost-efficient and environmentally friendly option.

Here’s a look inside intermodal and why it could be the ideal solution for your company’s shipping needs. 

What is intermodal?

Intermodal refers to moving cargo by using two or more modes of transportation—generally OTR truck plus rail, ocean plus rail, ocean plus OTR truck, or all three modes. For example, stackable containers are designed to move across multiple modes of transport such as tanker, rail and truck, without unloading and reloading cargo.

Rail intermodal is the long-haul movement of shipping containers and truck trailers by rail, combined with truck or water movement at one or both ends. In 2016, intermodal accounted for approximately 24 percent of revenue for major U.S. railroads. Intermodal transportation provides shippers with an efficient option to transport their products with low energy usage and reduced costs.

To reduce risk and ensure there is enough product in the pipeline, many businesses have the option to consider dividing freight on the same lane between intermodal and OTR. Industry experts recommend that shippers look for these opportunities to convert to intermodal every six to nine months.

Shipping freight in transferable containers rather than dedicated trucks can significantly lower shipping costs and overhead. Integrating rail as one component in the cross-country shipping process reduces the fuel surcharge that you will be required to pay — and with gas prices fluctuating so much, dedicated OTR shipping can be astronomical.

Breaking down the benefits

Here are some of the reasons it makes sense for your company to consider an intermodal shipping strategy:

  • Statistics from the Association of American Railroads show that rail is the most environmentally sound way to move freight over land. On average, trains are four times more fuel efficient than trucks. They also reduce highway gridlock, lower greenhouse gas emissions, and reduce emissions of particulate matter and nitrogen oxides.
  • According to the Intermodal Association of North America, a typical intermodal train is equivalent to 280 truckloads, and can move one ton of freight 470 miles on a single gallon of fuel. This translates to fewer trucks on the highways, less congestion and greenhouse gas (GHG) emissions, and fewer accidents.
  • With the price of diesel often topping $4 per gallon, shipping by truck has become increasingly expensive. Transporting a medium- to long-distance load via intermodal costs 15 to 40 percent less than moving the same load by truck. And even considering the fuel surcharges railroads typically impose, shipping by rail is still three to four times more fuel efficient than shipping OTR.
  • Customers, environmental advocacy groups and regulatory agencies all are putting pressure on companies to reduce their environmental footprints. Shipping freight on the rail is fuel efficient and produces lower greenhouse gas emissions. A ton of freight shipped by train produces two-thirds less in greenhouse gas emissions than the same volume shipped by truck, according to the U.S. Department of Transportation’s SmartWay Transport Partnership.
  • With the ever-tightening capacity for OTR shipping, intermodal also alleviates a personnel challenge for shippers: Given the ongoing shortage of long-haul truck drivers, new safety regulations and requirements; a shift to intermodal means an alternate solution to the need for long-haul drivers.
  • Intermodal’s freight loss and damage statistics have steadily decreased over the past 20 years. Since 1995, the loss and damage experienced by Class 1 railroads has dropped by 75 percent.
  • While intermodal might be slightly slower than OTR transport, the lower cost of intermodal shipping can be worth a day or so of extra transit time — and many railroads offer expedited service to accommodate urgent freight.

What’s the best approach to intermodal?

Although transportation managers often shy away from integrating rail into their freight and logistics plans in the past, more and more companies are making intermodal a key element of their transportation strategies. Over the road trucks currently handle more than 50 percent of all goods moving across the country at any given time, and as such play an incredibly important part in getting these products to thousands of customers daily. A savvy shipper knows how to work intermodal rail into their shipping matrix to allow flexibility in lanes that are highly competitive in transit times while compromising very little in comparison to over the road trucking. 

Agforce Transport Services specializes in transportation solutions for our customer’s specific business needs. From trucks and chassis to domestic and international containers, Agforce has the experience to maximize the efficiency and effectiveness of your intermodal transportation experience.

To learn more about how we can help simplify your path to market, contact us today for a free consultation. Give us a call at 844-713-6723 or email us at inquiry@agforcets.com.


Sources:

Intermodal Factbook: An Introduction to Intermodal Freight Transportation
Intermodal Association of North America (IANA); 2017
https://intermodal.org/

Rail Intermodal Keeps America Moving
Association of American Railroads (AAR); April 2017
www.aar.org/

How to Get Ahead of Logistics Challenges

By Andy Tuley, Vice President, Business Development

Here’s an article recently published in Logistics Management. I’m sharing because it  provides some insightful analysis of logistics and encapsulates how Agforce Transport Services (ATS) approaches these kinds of hurdles in transportation.

Our organization focuses on business process improvement by deploying technology and streamlining communication. In order to cut through the noise and constant onslaught of apps, new rollouts and more, it’s critical to have an experienced and innovative logistics partner. ATS can help you sort through the clutter and find what best fits your business. We add value and help control costs by providing our deep experience in this realm. Fuel costs, the economy, driver shortages and government regulations are second nature to our teams—we can’t control them, but we can monitor and advise our customers how best to navigate these issues and what levers to pull when.

I hope you find this article as insightful as I do, and explains the value of having the right partner in your business to help monitor, advise, build a plan and execute it in a rapidly changing environment.

At Agforce, we’d love to discuss your current needs and challenges you may face as discussed in this article.  Please contact any member of our team at 844-713-6723 or email us at inquiry@agforcets.com.


Source:

Logistics Management: By DDC FPO; November 1, 2017

Riding the Storm Out


The recent flurry of foul weather doesn’t just wreak havoc people who live and own businesses in hurricane-ravaged regions. Destructive hurricanes like Harvey and Irma also can have lasting aftereffects on the transportation sector.

“The chaos begins even before the storm hits,” says Michael Preisinger, managing director of Agforce Transport Services.

“Leading up to the storm, prices for transportation begin to rise as truck drivers know they are going to have a hard time getting out of these regions with freight,” Preisinger says. “They are also looking out for their own safety.”

After the storm, there typically is an uptick in demand from shippers trying to get goods to the affected areas. This creates a surplus of trucks in the regions affected by the storms, which results in skyrocketing prices for trucks heading those directions. “They know there will be very limited amounts of cargo leaving the areas they are delivering into,” Preisinger says.

But it’s not just the regions in the eye of the storm that are affected: As prices rise to move cargo to the storm-affected areas, truckers will leave their regular routes to find the highest paying cargo heading to these areas. This tends to drive up prices around the country, as demand for trucks will outstrip supply.

Another problem that affects the market is when ports have to close due to storms. This causes ships to move cargo to alternate ports, which drives up demand for trucks in those new port regions that the ships go to. “That generally happens during hurricanes, which can cause a lot of damage and prolong the market disruption as the region rebuilds,” Preisinger says. “It can happen during big winter storms too, but in those cases the market typically rebounds in a few weeks.”

How to Be Ready:

  • Be patient and flexible. Demand for trucks will go up, which means you may not be able to ship your product on the exact day you want. Ideally, having a shipping window of several days will increase your chances of getting the load moved.
  • Be prepared for temporary price increases. Basic supply and demand principles apply here. As demand goes up, so do prices.
  • Consider moving your cargo a different way. For example, move your over-the-road cargo to the rail, or vice versa (this is known as modal conversion).

Agforce Transport Services is storm-ready. We work with our customers to provide customized solutions for moving their cargo when the market has been disrupted.

Agforce would like to tip our hats to all our colleagues across the transportation industry who assisted in the hurricane relief nationwide. Convoy after convoy of utility trucks, fuel tankers, tree-cutting crews and box trucks made their ways south to help.

To learn more about storm-ready solutions and how we can help simplify your path to market, contact us today for a free consultation. Give us a call at 844-713-6723 or email us at inquiry@agforcets.com.


Market News – Flatbed and Oversized Freight Options


Businesses with larger loads requiring special equipment utilize flatbed and oversized options to move their freight. This mode meets specific size and weight requirements with various types of equipment including:

  • Standard step decks
  • Standard flats
  • Double drops/lowboys
  • Hot shots
  • 53’ trailers

Flatbed demand is thriving this year. According to DAT, load-to-truck ratio has doubled year-over-year with an increase of 102% – ascending since August 2016. What markets drive these demands? According to DAT, there are four significant markets to watch:

  1. Oil, natural gas, and plastics
  2. Wind energy
  3. Construction
  4. Automotive

Read more about DAT’s findings in their article 4 Markets Driving Skyrocketing Flatbed Demand

Finding the right partners to discuss flatbed and oversized options and equipment requirements mentioned in this article can make it easier to reach your business goals.

Agforce Transport Services specializes in customized transportation solutions for our customers’ specific business needs and requirements. To learn more about how we can help simply your path to market, contact us today for a free consultation. Give us a call at 844-713-6723 or email us at inquiry@agforcets.com.


Related Stories

For additional information related to changes in the marketplace, status of the logistics industry and what’s ahead, check out these articles:

Food Logistics:  Spot Truckload Rates, Demand Stay Hot into August

Food Logistics provides an overview of the freight surge summary that reports the end of July moving into early August.  The article shares the four-week trend lines and national averages for van, flatbed, and refrigerated rates.

Read full article…

DAT:  How Natural Gas and Plastics Impact the Truckload Spot Market

DAT provides insight on how new natural gas and petrochemical production investments have created a noticeable impact on the trucking spot market.

Read full article…

Rising Flatbed Demands Could Impact Freight Decisions


Since August of last year flatbed demand in the United States has increased steadily. It’s critical that any business considering flatbed transportation as an option for its shipping needs understand the many contributing factors that impact supply and demand—not to mention cost—of flatbed freight. Regardless of your industry, knowing the forces at work when it comes to using flatbed services will help you make the right decisions for your business.

Flatbed demand has been steadily increasing: In April, DAT Solutions reported a load-to-truck ratio of 43.7 loads per truck for flatbeds—the highest in years. That’s due to a number of reasons across several industries:

  • An increase in demand for natural gas both domestic and worldwide transported by flatbeds.
  • New petrochemical projects. Since 2010 the American Chemistry Council has invested $185 billion in these new projects, which creates more freight that require flatbeds.
  • The expansion of the clean energy market. There are 50,000 wind turbines in the U.S., each constructed from 8,000 parts—many of which are large and require flatbed transport.
  • New home construction. According to the U.S. Census Bureau, between March of 2016 to March of 2017 the sales of new single-family homes increased 15%. Supplies for these ventures are primarily transported on flatbeds.

These and other factors will impact flatbed availability and cost. Understanding the market influence will help your business make informed decisions about flatbed transport. Finding partners who will collaborate on freight options based on current market demands can make it easier to reach your business goals.

Agforce Transport Services specializes in customized transportation solutions for our customers’ specific business needs and requirements. To learn more about how we can help simply your path to market, contact us today for a free consultation. Give us a call at 844-713-6723 or email us at inquiry@agforcets.com.


Related Stories

For additional information related to changes in the marketplace, status of the logistics industry and what’s ahead, check out these articles:

Food Logistics:  Spot Truckload Rates, Demand Stay Hot into August

Food Logistics provides an overview of the freight surge summary that reports the end of July moving into early August.  The article shares the four-week trend lines and national averages for van, flatbed, and refrigerated rates.

Read full article…

DAT:  How Natural Gas and Plastics Impact the Truckload Spot Market

DAT provides insight on how new natural gas and petrochemical production investments have created a noticeable impact on the trucking spot market.

Read full article…

Evaluating Freight Bids and Transportation Strategies


As a decision-maker in the industry, you are likely in the midst of the bidding season and planning process. This is the best time to evaluate the economic demands and supply chain complexities that impact your freight transportation model and strategy. It’s also a vital time to evaluate your existing and new carriers and brokers to ensure that they add concrete value through services, achieving your goals while meeting supply chain demands.

According to industry economic forecasters, shipping demand will continue to grow in 2017. The Freight Transportation Services Index (TSI), which reports freight amounts carried by the for-hire transportation industry, released results in March. Here are some interesting facts from the report:

  • Index highs and lows: For-hire freight shipments in January 2017 (123.2) were 30.1 percent higher than the low in April 2009 during the recession (94.7). The January 2017 level was 1.6 percent lower than the historic peak reached in July 2016 (125.2).
  • Year-to-date: For-hire freight shipments measured by the index were at the same level as in January compared to the end of 2016.
  • Long-term trend: For-hire freight shipments are up 10.6 percent in the five years from January 2012 and 12.3 percent since January 2007.
  • Same month of previous year: January 2017 for-hire freight shipments were up 0.8 percent from January 2016.

Due to supply chain demands, shipping rates and ongoing regulatory changes, we’re also seeing shippers reevaluate choices and partnerships across the supply chain. Finding the balance between managing supply chain complexity and choosing partnerships that meet and exceed expectations is crucial. 

Therefore, as part of your planning and bidding process, it’s also the best time to look at existing carriers and brokers whose services add tangible value. When making decisions, consider key factors that are most important to you and your business such as seasonality, transportation options and price, technology and organizational structure.

These factors should impact decision-making along with thought to the following suggestions:

  • Work with carriers that are flexible, who offer and have more options to negotiate better prices, gain quicker transit times and provide various modes of transportation services.
  • Spread out shipments and loads to gain pricing efficiencies and better use of carrier services.
  • Consider intermodal options where fuel is less of a factor in pricing (moving from intermodal boxcar to rail, etc.).
  • Align networks and embrace collaboration. For example, carriers can signal changes in their network with pricing, which allows shippers to take advantage of these changes.

The complexity of the supply chain and economic demands will continue. However, finding partners whom will collaborate on new opportunities can make it easier to reach your business goals.

Agforce Transport Services specializes in customized transportation solutions for our customer’s specific business needs and requirements. To learn more about how we can help simply your path to market, contact us today for a free consultation. Give us a call at 844-713-6723 or email us at inquiry@agforcets.com.


Related Stories

For additional information related to changes in the marketplace, status of the logistics industry and what’s ahead, check out these articles:

Logistics Management:  25th Annual Masters of Logistics

Logistics Management highlights results of the “25th Annual Trends and Issues in Transportation and Logistics” study which suggests three factors – transportation, technology and organizational structure – are impacting strategies and desired financial performance.

Read full article…

Food Logistics:  Fixing Food Loss with Disruptive Tech

Food Logistics reports that more than one-third of all food is spoiled or damaged before it reaches supermarket shelves and discusses a new initiative aimed to change the food system through innovation and collaboration.

Read full article…

Logistics Management:  Study Identifies Best Approaches to Survive Supply Chain Complexity

Joint APICS and Michigan State University study offers solutions to a major industry challenge.

Logistics Management shares insight from a report that addresses the increased complexity of today’s supply chain flow and challenges, and ways in which to approach it effectively.

Read full article…