The capacity struggle: Finding hidden potential in intermodal freight operations

In the past few months, I’ve been actively following what’s happening in the global container shipping sector. I focused mainly on the “water side” and the big container ships now ruling the industry, so I somehow missed another surprising trend. Namely, while big container liners struggle to find enough volume to fill up their vessels, inland operators face the reverse – their capacity is so strained that providing basic adequate service is already tough to achieve.

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The railroad network gridlock

Ted Prince, a columnist for The Journal of Commerce, talks about this struggle from the perspective of rail intermodal operators*. In the past, it was standard practice for railroads to undercut competitors to compete for volume. However, following de-regulation and international trade boom, rail intermodal companies failed to develop their operations as fast as manufacturers. The future doesn’t look bright – the growth in cargo movements via any rail network is expected to be close to 0% in 2015. This is due to equipment shortages, and results in dreadful service.

What Ted explains in his short commentary is that “…the impact of service problems is frequently exacerbated by the lack of timely and accurate communication between operating and customer service groups. Indeed, it’s often difficult to discern any operating plan at all. If a plan is in place, it’s often beyond the ability of anybody available to explain it.”

The takeaway here is that while the railroad network gridlock could be expensively solved with large infrastructure investments, relying on better planning (one that doesn’t seem to be made by a blindfolded planner and could actually be explained to the shipping customer) is the next best step to take.

The 4-point checklist to unlocking hidden potential

Rail freight and freight forwarding companies need to ask themselves the following questions:

  • Can you maximize the efficiency of your operations?
  • Are you able to load your wagons optimally?
  • Are you able to identify – and minimize – empty capacity early?
  • Do you have the right tools to revise plans quickly according to company KPIs?

If the answer to any of those is ‘No’, there is still some hidden potential waiting to be uncovered in their intermodal planning operations. The question is, how do you find it?

Planning for superior service levels

Intermodal freight logistics planning is challenging due to the large number of constraints that need to be taken into account within a highly uncertain environment. These may include execution time, terminal and crane capacities, loading types, crane movements, loading and labor rules, and so on.

The exact destination of a container is often known right before departure when it’s unloaded at the inland terminal. So, the day-of-operations planning requires last-minute changes – and fast. These short notice changes make efficiency and wagon utilization hard to achieve. It’s vital when variations exist, you can react quickly, taking into account customer agreements and service levels, while keeping costs at a minimum.

How can you combine all the different modalities while taking constraints into account? Minimize costs and keep your promise to the customer?

Quintiq’s logistics planning expert, Martin Thesling, will host a webinar later this month to answer the questions above and explain how to uncover hidden potential in your intermodal freight operations.

When: August 25, 2015

Time: 10:30AM – 11:00AM CEST (Amsterdam)

Don’t miss this opportunity to solve your planning problems and boost your intermodal freight operations. Sign up for the webinar.

*Reference: Intermodal shippers hungry for more service, capacity, pricing / Ted Prince, Journal of Commerce, May 25, 2015

CATEGORY

Transport & Logistics

AUTHOR

Hristina Stefanova.

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Hristina Stefanova

About Hristina Stefanova

My obsession with Scrabble and puzzles brought me to the fascinating world of Quintiq. Joining the company “connected the dots” between my enthusiasm for marketing, interest in operations management, and background in maths and programming. As a marketing executive in the Logistics team, I make sure businesses with logistics operations are aware of Quintiq and our unique approach to solving their planning puzzles. Outside the office, I enjoy mountain hiking, rollerblading, loud music and Mediterranean cuisine.