Four key levers shaping intermodal services in North America: Balancing reliability, coverage, cost-competitiveness, and sustainability in supply chains

2 May 2024

Art Singarajah Regional Head of First Mile & LCL

In today’s global marketplace, consumers have grown accustomed to the convenience of getting everything instantly. As a result, businesses face mounting pressure to meet customer demands for faster delivery at a lower cost and enhanced resilience to disruption, all the while having to rethink their sustainability practices.

While many companies think of fulfillment, ground transportation, and parcel delivery as the first checkpoint in building supply chain resilience, looking upstream in their supply chain toward seamless connectivity of their ocean and intermodal transportation is equally important. Connecting ocean to land should be the first thing logistics professionals look at to add more resilience and agility to their supply chain.

Why is intermodal transportation so important?

It is estimated that 95% of the world’s manufactured goods undergo intermodal transportation before reaching the end customer. Intermodal can be defined as your container rail and drayage transportation once discharged from an ocean port of call. As reported by Mordor Intelligence, the intermodal market is projected to grow at an annual rate of 8.27% by 2029, with North America holding the largest share of that growth. There are compelling reasons why this space is vital to monitor.

In this overview, we will explore the four key levers customers should consider in shaping their intermodal strategy in North America, effectively adding more resilience and agility to their supply chain:

Reliability and visibility are indispensable factors in modern supply chains

“Visibility goes hand in hand with reliability and is a central concern for businesses – you need both to manage your global supply chain successfully,” said Art Singarajah, Maersk’s Regional Head of First Mile and LCL for North America. Collaborating with a partner that can provide operational excellence in their intermodal services and end-to-end integrated solutions downstream and upstream with an owned asset model will enable enhanced flexibility and control of your supply chain. When all interconnected parts are in place, you can rely on continued operational consistency even when faced with disruptions. Your partner should be able to maneuver these challenges seamlessly and overcome any visibility gaps. They should also be able to facilitate seamless data sharing and real-time cargo tracking.

Coverage and operational control

Are critical aspects that businesses can achieve with the right logistic partner overseeing the transition from ocean to inland transportation. Across various industries, businesses greatly benefit from this agility. Take the example of a retail business that relies on a continuous flow of goods. By combining ocean and inland transportation, the company can easily collaborate with a single partner to swiftly switch to alternative and/or faster transportation modes in the event of a disruption. This ensures that timelines remain unaffected and end-consumers’ needs are met as planned. “The ability to swiftly respond in the face of disruptions is a key advantage of a provider that has a global reach with local coverage that is built on the back of an owned asset model,” said Singarajah. This flexibility empowers businesses with optionality to make decisions that align their business requirements with that of their customer promise.

Cost competitiveness

Is crucial in logistics, as long as it doesn't come at the cost-of-service quality. According to the American Transportation Research Institute, transportation expenses account for 66% of overall logistics expenditures. Cost optimization isn't always about finding the lowest-cost carrier. Route optimization, speed, mode of transport, and the integration of multiple products can all offer significant cost savings. For instance, acquiring your intermodal transport directly from your ocean carrier as a bundled solution can help trim costs in the form of reduced demurrage and detention exposure or lower procured chassis fees. Supply chain health checks are a good way for your logistics partner to help you uncover these opportunities.

Environmental sustainability

Has emerged as a critical focal point for businesses integrating intermodal solutions into their supply chains. According to the CDP Global Supply Chain Report 2020, organizations' supply chain emissions are, on average, 11.4 times higher than operational emissions, accounting for approximately 92% of an organization's total GHG emissions. This growing awareness of carbon emissions and environmental consequences has led both businesses and consumers to demand less environmentally damaging transportation options, emphasizing the need to integrate sustainability practices into supply chain operations for long-term value creation. Singarajah emphasized, "Collaboration plays a pivotal role in achieving ambitious sustainability goals within the industry.” Maersk's commitment to delivering 100% green by 2040 cannot be achieved without joint partnerships with their customers. Our customers’ increasing requirements for end-to-end logistics solutions, and the need for sustainable supply chains, make our logistics and services value chain emissions a priority. Our actions in this area focus on inland transportation, contract logistics and cold chains, and air freight. Furthermore, exploring alternative renewable fuel sources such as biofuels and battery-powered electric trucks in partnership with customers underscores a collective effort to reduce GHG emissions and embrace environmentally responsible practices in the realm of intermodal transportation.

The bottom line

Looking at ocean and inland transportation together offers businesses many benefits and opportunities to improve their agility and resilience. The most significant four levers include increasing visibility and reliability through data, partnering with a logistics company that has the right coverage and operational control, offering cost-competitive value propositions, and doing so while helping decarbonize their customers’ supply chains. In this context, intermodal transportation becomes an integral part of a broader strategy where businesses can optimize operations, adapt to changing circumstances, and align their practices with sustainable and efficient supply chain management principles.

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