Growing container traffic, global sourcing, bilateral trade, ballooning volumes of online purchasing are increasing the intensity of multimodal operations. Today, it’s not surprising to know that a product a customer orders sitting at her home in California is sourced from a facility based in France. This is not a new phenomenon, but the frequency and volume of such orders have risen by leaps and bounds resulting in increased logistics complexities, rising transportation costs and a growing need to improve multimodal visibility.
As the name suggests, multimodal visibility or intermodal visibility refers to the ability of an enterprise or business to track and trace cargo or freight movement across four major modes of transportation--through air, waterways, railways and road. It’s an essential aspect of end-to-end and comprehensive supply chain management.
The 21st century is witnessing multimodal transportation rapidly emerging as the anchor for international trade operations and an enabler for economical sustainability, integration and development. According to research, intermodal transportation has the potential to reduce cargo damages by 10%, shrink operational costs by 20%, curb highways traffic congestion by more than 50% and improve transportation efficiency by 30%. Hence, the growing adoption of multimodal transportation in some of the developed countries is not surprising at all. For instance, multimodal transportation accounts for 80% of total traffic in Canada. In the US, even though intermodal freight volume took a dip in 2020 owing to the pandemic, it caught up fast in 2021. In January 2021, multimodal freight volume was up by 12% as compared to January 2020 in the US.
On the other hand in developed countries, the need to leverage multimodal transportation is growing significantly. For instance in India, as much as 60% of freight transportation rely on roadways whereas in the US it's 37%, in China it’s 30% and in Europe, it's as low as 10%. Over-reliance on roadways is accompanied by another serious concern, rising levels of carbon emissions. Hence, emerges the significance of embracing intermodal logistics operations.
The major drivers of multimodal transportation are cost efficiency, curbing carbon emissions and global sourcing of products.
Optimizing shipping costs to increase delivery profitability is a key objective for any enterprise. To achieve that businesses need to reduce their dependency on transporting freight through roadways. The ratio of fuel consumption to freight via roadways is not efficient, making it extremely expensive to move goods via highways and increases shipping costs. Above this, chances of theft, pilferage, accidents and damage to goods increase significantly when enterprises ship freight by road.
When leveraging air and waterways to transport goods the fuel to road cost efficiency improves significantly. The sheer volume of goods that can be transported using these two modes of transportation positively impacts shipping costs. Then factors like lower risk of goods being stolen and reduced chances of packages being damaged also contribute to making transportation via air and waterways economical and viable.
According to research, when compared to over the road transportation (OTR), intermodal is close to two-three times more fuel-efficient. A single intermodal train can transport freight equivalent to the capacity of 280 trucks. In other words, one tonne of freight can be easily moved for about 460 miles consuming only one gallon of diesel. This drastically optimizes shipping costs.
Time efficiency is another key attribute of intermodal operations. More than two decades ago, moving freight via intermodal logistics through coast-to-coast took more than two weeks. But owing to rapid technological advancements and infrastructural development, now it takes less than eight days. It also eliminates downtimes resulting from traffic congestions, toll queues, road blockages and weighing station wait times.
Unfortunately, transportation is one of the major drivers of carbon emissions and increasing reliance on roadways makes it even worse. A considerable amount of carbon emissions can be reduced just by leveraging multimodal logistics. A report by Environmental Protection Agency (EPA) revealed that if enterprises replace over the road freight movement with intermodal transportation for shipments that travel 1000 miles, they can slash greenhouse gas (GHG) emissions by a massive 65%. The agency also highlighted that trucks drive as much as 16% more hazmat or hazardous material release than railroads.
For instance, a truck shipping 40,000 lbs of freight covering a distance of close to 3,000 miles will release approximately 4.35 tons of carbon emissions. Replacing the same with multimodal transportation will generate only 1.75 tons of carbon in the atmosphere. The numbers clearly point out why multimodal transportation operations are way more environmentally sustainable than over the road shipping.
Like we already said, the popularity of online purchasing is making the world a smaller place. Well, not literally, but it’s definitely bridging the gaps between geopolitical boundaries. Retail has historically been a major driver of global sourcing. Modern customers establish brand loyalty by keeping in mind the kind of products a business sells, especially when it comes to fashion. It often happens that apparels that customers are looking for are rarely manufactured in their country and hence surfaces the need to source the same from other nations. This is just retail, similar cases can found in industries like automotive, pharmaceutical, power and energy and more. Multimodal transportation happens to be the reason behind the availability of products that are being sourced from the global markets.
Now, that we have established the significance of multimodal transportation let’s delve deeper and understand how to efficiently manage this aspect of logistics. Deploying advanced tools that boost multimodal transport tracking operations is key to enhancing multimodal visibility.
But tracking multimodal transportation is not easy. Here is a problem to begin with. A logistics visibility provider needs to have significant expertise across four modes of transportation--air, water, rail and roadways. That's not an easy task. Then emerges the need to understand the granularity of information a customer needs. In the sense that for gaining high levels of multimodal visibility, enterprises, especially retailers, might need unit-level visibility. Some may want to gain visibility down to parcels and pallets that are being moved via multimodal transportation operations. Then comes the significance of achieving visibility over international compliance and regulations to move freight faster.
The stakes are high in multimodal transportation. The major reasons being the volume of cargo transported and the involvement of multiple stakeholders. Stakeholders here rage from countries, governments, ports, airway terminals, ship operators, aircraft operators, pilots, helmsmen, drivers and more. Hence, multimodal tracking and multimodal visibility become extremely important.
Just ponder on this thought. Today, a customer's anxiety levels shoot up when she cannot track her food or does not know when exactly will her grocery be delivered. Now, imagine not being able to track where millions of dollars worth of cargo are located!
Advantages of gaining high levels of multimodal visibility range from ETA adherence to reduced shipping costs. Here is a quick list of advantages that enterprises gain by deploying an advanced multimodal shipment tracking platform.
FarEye’s intermodal transport tracking platform is powered by machine learning, analytics, predictive intelligence, the internet of things, automation and more. It’s empowering large businesses across the globe to enhance multimodal visibility, reduce carbon emissions, boost productivity, improve carrier management and optimize intermodal transportation costs. To know how we can help you achieve the same, signup for a quick demo here.