MHI Solutions

Industry Trends

Industry Focus: Intermodal

Transportation trends are reflective of what’s happening throughout the supply chain.

By Sandy Smith

Intermodal hasn’t escaped the larger trends that affect all of industry, including material handling. Higher demands, faster shipments, tighter margins and disruptive technologies all are at play. But because of the unique nature of intermodal—with each form of transport enduring its own challenges and opportunities—getting a handle on where intermodal is, and where it’s going, isn’t easy.

Still, it’s clear to see, intermodal transport is being broadly impacted by some of the recent trends in the supply chain.

The demands are high and the challenges, perhaps even higher. e-commerce has touched virtually every corner of consumer purchase and delivery is expected to be faster and cheaper. Roads are clogged with traffic and most positions throughout the supply chain are faced with worker shortages. Pricing pressures are paramount.

“The Internet culture and the demand for faster everything puts stresses on intermodal,” said Bryan Jensen, chairman and executive vice president for MHI member St. Onge. “The cycle time needs to go down. We see more use of an air leg in transportation than ever before. When intermodal first became a buzzword, everyone meant stack trains. Now you see companies like Amazon experimenting with using small, local airfields to air freight into a distribution center and do the last leg from there.”

Trucking and rail both continue to be important legs of intermodal. Rail is about 80 percent of capacity, said Frank Harder, principal at The Tioga Group. “They are also looking at a scenario where the economy is good and trucking capacity is short and, as a result, we’re seeing that railroads are expecting to take in market share from the over-the-road truckers in the next few months.”

Trucking has its own challenges, too. Federal regulation that took effect in December required electronic trucking logs; many industry analysts feared this would drive mom-and-pop operations out of business. “A lot of those companies are barely subsistence companies and unable to make that kind of investment,” said Steve Sashihara, CEO of Princeton Consultants. “It’s going to exacerbate problems of trucking, including a driver shortage.” That shortage will only get worse, with many drivers in their late 40s and early 50s.

While rail may have capacity, more demand could drive up prices for both rail and trucking, Harder said, because of a “shortage of available transportation.”

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Emerging technologies such as IIoT, robotics and artificial intelligence provide exciting opportunities for supply chains. They also mean an exponential growth in the amount of data these supply chains generate. When properly utilized, this data can provide crucial information to improve efficiency, reduce costs, enhance transparency and customer service. But it comes with risk. The more digitized a supply chain becomes, the more it is at risk of cyberattack. Hackers are constantly finding new ways create data breaches they can exploit. The reality that most supply chains require third-party suppliers down the chain only heightens this threat. No matter the scale of your supply chain, it is essential to have solid cybersecurity processes in place to manage and mitigate the growing risk of cyberattack. That’s what this issue of MHI Solutions is all about, from cybersecurity threats in an IIoT world to dark data to the human factor in cybersecurity to blockchain as a potential solution.
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