Intermodal service has come a long way over the decades, but what are shippers demanding from it now? Erik Hansen, vice president of sales and marketing for intermodal with Kansas City Southern, addresses the question.
SCB: What is the biggest concern of rail shippers today?
Hansen: Intermodal shippers, aside from general trade and economic uncertainties, are concerned over the long term about supply-chain security. That includes the quality of the product, and optimizing production capacity and productivity. In addition, they’re seeking from transportation companies assurances of timeliness. They want the goods at the right time, at the right place as promised.
SCB: In the early days of intermodal, rail scheduling wasn't exactly precise. That was a concern when shippers were trying to make the decision between long-haul truck and intermodal. Have the railroads and intermodal services stepped up their game in recent years?
Hansen: I think we have, and we continue to do so. I see it as a continuous improvement. It's not about rebuilding a rail network that’s been in place for 130 years, and suddenly you have a more reliable product. It involves many processes and people who need to be educated, so that you can plan better.
SCB: A lot of shippers today are placing more emphasis on risk management. How does that translate into what they’re asking of you as an intermodal service provider?
Hansen: What they try to do is manage that risk by not putting all their eggs in one basket. You can ask any shipper, “give me all your freight,” and hopefully they’ll say no. You want to diversify. Whether it's the route, gateway or mode of transportation, you can’t rely on one single way to get your goods from point A to point B.
SCB: Has the nationwide driver shortage, especially for long-haul trucking, brought more business to intermodal?
Hansen: It has, on and off. People get concerned about driver shortages and look to diversify. If you take the current environment in 2019, we're not really seeing a significant driver shortage. But there’s still the prediction that it will come back in the next 20 years.
SCB: How have intermodal strategies, concerning such things as length of haul and decision to transload, changed over the years?
Hansen: They’re changing, but not necessarily in a predictable way. You see transloading on the West Coast from international 40-foot containers into 53- footers in order to move into the hinterland. But it’s not changing as the result of a specific trigger.
SCB: How has the relationship of railroads and shippers changed over the years? In the old days, you usually had a shipper's agent standing between the railroad and the ultimate shipper. What’s the situation now?
Hansen: For us, we act as a wholesaler for intermodal, meaning that we sell to the intermodal marketing companies. Whether it’s an asset owner or non-asset entity doesn't really matter. Of course, we engage together with the IMCs, with the beneficial cargo owner [BCO] in the background. The message we're hearing from those two segments is basically the same. They need to be listened to in terms of what they need, and the railroads need to deliver that to the extent possible.
SCB: What has been the influence of technology on intermodal services, and what type of technology is helping you to do a better job of serving your shippers?
Hansen: The whole planning aspect for the railroad at is coming into its own in terms of deploying technology. Visibility of the freight is a focus of most railroads today — allowing the cargo owner to monitor the shipment as it moves through the transportation chain, including while it's on the train. There’s still a long way to go for us to be highly efficient in that space. But technology in this day and age has the ability to help us do that.
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