Capacity Constraints Impact Intermodal

MercuryGate Blog - Technology Category

How to Be First in Line for Available Space

Are intermodal capacity constraints coming around the bend, like the train in the traditional Johnny Cash song, “Folsom Prison Blues?” No, it is already at the station, according to industry analysts. With trucking capacity continuing to be tight, more shippers are turning to intermodal rail as an option for volume or long-haul freight — worsening an existing capacity shortage for rail providers. 

As we move into the traditional peak season for intermodal rail, shippers are looking for ways to be first in line for any available space.

In this blog, Shelli Austin, President of InTek, an intermodal transportation management provider, shares her perspective about the current intermodal capacity constraints and how to operate effectively in this environment.

Q. Is intermodal capacity constrained?
A. Intermodal capacity is more constrained than I have ever seen it in my 15+ years in the Industry. It is not just one rail line or one market that is constrained it is all over the map. When looking at Intermodal there are different types of constrained capacity. You have power constraints and you also have equipment constraints. In today’s world both are a challenge.
With the ELD mandate the options for Intermodal conversion, based on rate, are reduced because the dray carriers need shorter miles to make more turns in the amount of time they can drive. As a result, the longer dray miles are almost priced so as not to win the business. The equipment is another large factor.
The balance of the equipment is key when servicing the business on the rail. Traditionally California — and at times Chicago — was the only market that always hit constrained capacity “peak season.” But this year you pick a major ramp and it has hit constrained capacity at one time or another and has stayed volatile.
Q. If so, Are Capacity Constraints more pronounced than a year ago?
A. In my opinion, the capacity constrain started after the hurricanes in 2017 and has never gone back to what it was prior to the hurricanes. We are in the “New Normal” of trucking, which impacts directly what the Norm is for Intermodal.
Not only did the trucking constraint spill over into the Intermodal market to create a vast increase in volume, but the challenges that you read about in the trade publications detail how some railroads caused another push of capacity into the other railroads, which in turn created congestion and backlog at all the major ramps.
Q. How can shippers and 3PLs who are users of Intermodal make sure they are first in line for the capacity that is available?
A. The honest answer is if they were not already signed up and committed there is not much of an option right now to be first in line. The railroads are very loyal to their commitments with their existing customers and prioritize based on those commitments. The best advice I have for the shippers and third-party logistics providers (3PLs) is to continue to be open minded for alternate intermodal solutions than what has always been the comfort zone in the past.

See if you can find a provider that has trailer capacity that can move on the rail. How about small boxes? Can we use 40’s or 45’s to move our freight versus the traditional 53’s? Not to give a statement to the transportation management system (TMS) on this, but it is a true statement that having a robust TMS during this market is what helps a 3PL or shipper get to the best capacity solution in the quickest way possible because you do have to search outside the norm to provide consistent coverage.

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