Intermodal transportation, which involves moving goods in containers using a mix of rail, truck, and ship, shows great potential to cut costs and boost efficiency. Yet, despite years of investment in physical and digital improvements, it hasn’t reached its full potential. Indeed, the main roadblocks are ongoing issues with interoperability, both digitally and physically. While intermodal transport offers attractive pricing, it struggles to compete with the faster transit times of truckload services as long as these interoperability issues persist.

So in this article, I’ll start by looking at how intermodal transportation has successfully addressed key physical interoperability challenges in the past, like using standardized containers. Next, I’ll examine the unique features of intermodal and the current interoperability issues it faces. Positively, these challenges are mostly physical rather than digital, and they hinder the benefits of digital technology investments. Finally, I’ll suggest ways for intermodal operations to tackle these physical and digital interoperability issues that prevent it from reaching its full potential. Indeed, a major breakthrough is needed for intermodal transportation to become a seamless shipping option.

1. Fundamentally Intermodal Transportation Has Not Changed in Decades Though Its Potential Is Unlimited.

At its core, intermodal transportation has not fundamentally changed in decades. Goods are still loaded into standardized shipping containers that are transferred between ships, trains, and trucks. Now, the containers themselves have become more sophisticated, in some cases, with features like sensors and GPS tracking. However, the process of intermodal shipping remains largely manual and fragmented. 

Indeed, this lack of change is surprising given the advances in logistics technology and the pressure on supply chains to become more agile and resilient. However, the failure of intermodal to make fundamental improvements has resulted in it losing market share to truckload services. Indeed, this is despite of intermodal having a significant cost advantage. So, let’s look back at the revolutionary innovations that enabled the intermodal industry to expand rapidly many decades ago, but now has stagnated in terms of growth and competitiveness.

a. Intermodal Innovations 1960s Through 1980s.

Prior to the 1960s, most freight was shipped using a labor-intensive process called “break bulk,” where items were packed by hand into ships, trucks, and trains. This process was costly and slow due to constant loading and unloading at each transfer point. Then there were several innovations that revolutionized multimodal transportations. These included:

• 1960s – Standardized Intermodal Containers. Indeed, standard intermodal container sizes like 20 ft, 40 ft, and 53 ft allowed goods to be transported in the same container across different modes of transportation without unloading and reloading the contents. This significantly reduced costs and increased efficiency. Indeed, this was especially true for the transport of freight over rail and international ocean shipping.
• 1980s – Double-Stack Intermodal Rail Cars. Another innovation was the capability for intermodal rail cars to carry two stacks of containers, enabling intermodal shipments to transport more cargo. This made rail transportation a particularly efficient mode of transit.

b. Rapid Expansion of Intermodal in the 20th Century, But Now Stagnation.

Since these two great intermodal transportation innovations, transportation providers have mainly focused on capitalizing on these revolutionary ideas that originating decades before. For instance, ocean container ships have increased significantly in number and in size, expanding international commerce. Also, ground-based intermodal transportation and facilities increased significantly in the last century. However, stagnation is now setting in. Indeed at least in the U.S., ground-based intermodal traffic is trending lower in recent years. 

For more on the history of intermodal and its current status in the market, see Inbound Logistics’ article, What Is Intermodal Transportation? History, Benefits, Examples.

2. Intermodal Transportation Advances in Interoperability Has Stalled Despite Investments in Digital Technologies.

Despite significant investments in digital technologies aimed at enhancing interoperability, progress in intermodal transportation has stalled. Like other industries, investing in digital technologies promises increased efficiency and reduced costs. However, achieving seamless coordination and hand-offs between different modes and operators remains a major challenge for intermodal transportation. In this section, I will identify specific opportunities for digital technologies within the transportation industry. Additionally, I will examine the unique characteristics of intermodal operations compared to other transportation modes such as truckload. Lastly, I will identify the unique challenges intermodal operations face in adopting digital technologies.

a. The Potential of Digital Technologies in Transportation.

Indeed, digital technologies have the potential to transform not just intermodal transportation, but fundamentally change the way all transportation and supply chains work. Specifically, digital technologies can enable operations to automate manual processes and provide seamless information exchange. Further, it can improve decision-making and even provide new service offerings. As a result, implementing these technologies can result in lower costs and better service for customers. Below are examples of the potential of digital technologies to transform the transportation industry.

Examples of Digital Technologies Potential Within the Transportation Industry

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• Empower Fleet Management Leveraging Internet of Things (IoT) Tech.
• Gain Visibility of Shipments and Logistics Activities Using Tracking Tech.
• Better Decision-Making Using Data Analytics.
• Anticipate Future Events and Demand Using AI-driven Predictive Analysis. Click here for more on artificial intelligence empowering supply chains.
• Streamline Freight Payment and Financial Tasks Using FinTech Solutions.
• Achieve Seamless Data Interoperability Between Systems To Make It Understandable, Usable, Secure.

Now, the challenge to implement these information technologies is to do it in a cost-effective manner and leverage their full value to empower transportation. Now, let;s look at the unique characteristics of intermodal transportation. Positively, the unique character of intermodal has a direct effect on both its technology priorities and how it is implemented.

b. Unique Characteristics of Intermodal Transportation.

Indeed, when it comes to intermodal transportation, it has several unique characteristics that distinguish it from other transportation modes. In fact, many of these characteristics make it even more challenging to effectively implement digital technologies. These unique characteristics include: 

• More Transportation Operators.  Intermodal shipments involve handoffs between multiple modes of transportation, each with its own operators, systems, and standards. As a result this requires complex coordination and integration to ensure smooth transitions and avoid delays or losses. 
• More Regulations and Standards to Contend With. Intermodal shipments often travel long distances and cross borders. So, this necessitates compliance with various regulations and standards. 
• More Stakeholders. Lastly, intermodal transportation involves a multitude of stakeholders, including shippers, carriers, terminal operators, customs brokers, insurance companies, financial institutions, and freight forwarders. This increases complexity as these many stakeholder must all share information and collaborate to be effective.

c. Intermodal’s Unique Challenges With Leveraging Digital Technologies and Achieving Interoperability.

So despite the promise of digital technologies, the unique nature of intermodal transportation makes it very difficult for the industry to leverage information technology. Indeed, achieving true interoperability, both digitally and physically, has proven difficult due to several unique intermodal challenges. These include:

Intermodal’s Unique Challenges

• More Physical Transport Complexity. Intermodal operations are complex. Indeed, it  involves numerous handoffs, milestones, and stakeholders. 
• Lack of Incentives to Collaborate. Further, there are often competing interests and incentives between different stakeholders, which can impede collaboration and information sharing. 
• Technical Challenges Setting Up Data Exchange with Many Systems. With intermodal shipping and financial data siloed within many systems, it is a technical challenge as well as labor-intensive to set up and maintain these numerous data interfaces. 
• Lack of Data Standards to Exchange Meaningful Information. Even if key stakeholders can exchange data in a timely manner, much of the data gets “lost in translation”. This is due to a lack of both definitive industry lexicon as well as a lack of data interoperability standards that can convey meaningful information to all stakeholders.
• More Likelihood of Operational Disruptions. Finally, intermodal transportation is inherently susceptible to more disruptions such as weather events, congestion, and customs issues than other modes of transportation. Indeed, this can derail even the best-laid plans and require rapid adaptation and response.

For more information on the state of intermodal transportation, see CEVA Logistics’ article, Intermodal Logistics. Specifically, this article provides a simple explanation on how intermodal works and key commerce documentation requirements for different modes of transportation. Also, see Tive’s article, Enhancing Intermodal Shipping: The Power of Real-Time Visibility. This article provides a technical perspective on the pluses and challenges of intermodal transportation leveraging digital technologies.

3. Physical Interoperability is the Primary Reason Intermodal Takes Two or More Transit Days Than Truckload.

Now, the intermodal transportation industry has a critical need for digital technologies. However, that will not necessarily solve its slow transit times as compared to faster truckload services. Indeed, intermodal transportation has another problem, namely a major challenge with physical interoperability despite using standardized containers. This problem makes it difficult for intermodal to compete with truckload services. In fact, it is quite common for intermodal providers to admit that their services are on average two days slower than equivalent truckload services. At the same time, Intermodal is an attractive service in terms of lower costs and lower carbon footprint.

So, the primary reason that intermodal takes two or more transit days than truckload is because of its physical interoperability challenges. Positively, without intermodal transportation professionals addressing these physical interoperability challenges, digital technologies will not significantly improve transit times or make significant improvements in intermodal operations. So, to overcome these physical interoperability challenges, it calls for both innovation and collaboration much like what happened in the 1960s with standardizing intermodal containers. To list, below are the key physical interoperability challenges for the intermodal industry to overcome and mitigate.

Physical Interoperability Challenges within the Intermodal Industry. 

a. Lack of Intermodal Facilities.

The lack of sufficient intermodal facilities in strategic locations hinders the efficiency of intermodal transportation. For instance, there are many U.S. shipping locations that are more than a 100 miles from intermodal facilities for trucks to drop off containers for rail transport. 

b. Takes too Long to Transfer Containers Between Modes.

Transferring containers between modes can be a time-consuming process due to manual handling and paperwork. For example, if containers must be unloaded from a ship and then loaded onto a train, any delays or inefficiencies in this process can hold up the entire shipment. 

c. Cutoff Times and Scheduled Departures for Rail and Ocean Shipping.

Unlike trucks, which have some flexibility in departure times, rail and ocean shipping have strict cutoff times and scheduled departures. So, if a truck with a container arrives after the cutoff time for a train or container ship, they will more than likely miss their planned departure. As a result, intermodal shipping can face costly delays until the next scheduled slot. Worse, this issue ends up being a reliability issue with shippers.

d. Regulatory and Compliance Hold-ups.

Intermodal shipments must comply with a myriad of regulations across different modes and jurisdictions, which can lead to hold-ups and delays. For instance, customs inspections and paperwork for international container shipping can cause significant delays if not completed correctly or if issues arise. 

e. Availability of Equipment and Containers.

Ensuring the availability of the right equipment and containers is crucial for smooth intermodal operations. For instance, if there is a shortage of chassis to move containers from the port to warehouses, it can lead to congestion and delays.

For more discussion on the differences between intermodal vs truckload services, see Vizion’s article, A Guide to Intermodal Freight Shipping: Managing Costs & Understanding Rates. Also, see Freightwaves’ article, Can intermodal rail increase its market share by 25% by 2030?. This article includes an interview with Andrew Howell, EDF, on recommendations on what needs to be done for intermodal rail to be more competitive with the truckload market.

4. If Intermodal Transportation Really Became Seamless, It Could Compete Not Only on Price But Service Too.

So, what if intermodal transportation could overcome its interoperability challenges and become a seamless shipping option? Indeed, intermodal could then compete with trucking not just on price but also on service levels too. This would truly be revolutionary for the industry as it would allow intermodal to capture more mode share and reduce its reliance on just being the cheapest option. Indeed, shippers would no longer have to sacrifice speed and reliability for cost, allowing intermodal to become a more viable shipping option for a wider range of goods. Furthermore, the increased use of seamless intermodal transportation would reduce the strain on highways and lower emissions, making it a more sustainable shipping option. 

However, achieving seamless intermodal will require a breakthrough in interoperability, both physically and digitally. Specifically, this would include stakeholders collaborating to overcome physical interoperability challenges and better leverage digital technologies to share meaningful data. To advance intermodal interoperability, intermodal operators need to pursue two paths, one physical and the other digital. See below, for ideas on the best paths to follow to overcome and mitigate the unique interoperability challenges in intermodal transportation.

a. A Path to Physical Interoperability – Physical Internet Initiative.

Indeed, there is already an intermodal initiative called the Physical Internet that is already attempting to address many of the physical interoperability challenges faced by intermodal transportation. This initiative was conceived by Benoit Montreuil several years ago and there are numerous pilot projects on-going, especially in Europe.

To explain, the Physical Internet (π) is a concept of a shared logistics network inspired by the digital internet’s open access and shared-use model. Its aim is to revolutionize supply chain efficiency by promoting interoperability and seamless goods transfer across carriers and transport modes. The π initiative envisions a system of standardized, modular, intelligent containers (π-containers). This capability enables supply chain networks to route these interconnected containers like data packets to their destinations via optimized, shared transport, storage, and handling. For a more detailed introduction to the concept of the Physical Internet see TOWARDS A PHYSICAL INTERNET authored by Benoit Montreuil, Russell D. Meller, and Eric Ballot.

What is notable about this π initiative  is that its key physical components are the same components that are used within any intermodal operations. Namely, containers, movers (modes of transportation), and nodes (intermodal facilities). Equally important, these π operational pilots and research papers are defining solutions and working to solve the same physical interoperability problems that exist within intermodal transportation operations. So, anything intermodal operators can do to move forward and apply these Physical Internet concepts to their operations, will greatly advance intermodal physical interoperability.  To summarize, the key components of this Physical Internet initiative include:

Key Components of the Physical Internet

• π-Containers. These containers must be easy to handle, store, and transport. Further, they must be simple to seal, snap to a structure, interlock together, load, unload, build and dismantle. Indeed, this π initiative envisions adding more, smaller standardized containers to enable intermodal to be competitive against Less-Than-Truckload (LTL) and parcel delivery services.   
• π-Movers (Modes of Transport). There are different types of movers within the Physical Internet that can transport, convey and handle containers within and between logistics nodes. 
• π-Nodes (Intermodal Facilities and Physical Systems). The nodes correspond to geographic sites, facilities and physical systems of the Physical Internet. This includes more intermodal and transload facilities as well as facilities to support for intermodal operations within urban areas.

Again, the intermodal transportation industry truly needs to address its physical interoperability limitations, and this Physical Internet Initiative is a step in the right direction. For more on my thoughts on the potential of the Physical Internet to advance logistics operations, see my article, Is The Physical Internet Logistics Concept Risky? Trade-offs With This Innovative, Awesome Way To Share Assets. Also, for more details on the Physical Internet as it relates to intermodal, see Intermodal Hubs in the Physical Internet and Britta Balden / Alessandro Vaglini’s presentation, Overview of a first European Physical Internet (PI). Now, that we have looked at a possible set of solutions to overcome and mitigate physical interoperability, let’s look at digital interoperability.

b. The Path to Digital Interoperability – Three Stages.

The path to digital interoperability is also challenging, but a necessary capability to be competitive in today’s digital world. Further, every business is wrestling with the problem of digital (data) interoperability. Indeed, with digital transformations occurring within all organizations, businesses must also achieve data interoperability. For instance, a supply chain cannot capitalize on its supply chain digitization efforts unless it can share data with all of its internal systems as well as its partner systems. Further, supply chain organizations, especially intermodal operations, need more than just have the capability to transfer data back and forth. In fact, there are three ingredients to achieving true data interoperability. These three components or stages of data interoperability include: 

The Three Stages of Data Interoperability

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• Data Communications Channels. Capability to exchange data between systems and devices. For example, this would include data transfer methods such as FTP or API. In fact, today most businesses have at least a rudimentary capability to transfer data.
• Common Data Terminology to Share Meaningful Information. All businesses and industries need to have standard terms and methods to effectively assure that the data transmitted is understood. For instance, organizations must have well defined business terminology and corresponding data standards that conveys meaningful information between partners’ systems.
• Method to Achieve Mutual Trust.  Also, businesses need to leverage digital identity technologies to achieve both confidence in the data exchanged and to trust digital network partners, software agents, and devices. For instance, this can include digital identification authentication approaches such as multi-factor security.

For more information and reference on data interoperability within supply chains, see my article, Logistics Data Interoperability: Advice To Make It Understandable, Usable, Secure.

Conclusion and More References.

So, intermodal transportation’s origins were based on true interoperability innovations that revolutionized both International shipping and the transport of freight by rail. Today, innovation is still needed to overcome the interoperability challenges that intermodal faces today. First, there is a need for new approaches to address intermodal’s physical interoperability ongoing issues. Indeed, by intermodal overcoming and mitigating physical interoperability roadblocks, it can also fully leverage digital technologies and data interoperability to make it a much better competitive transportation option.

Also, for more intermodal references used in this article, see Intek’s article, What Is Intermodal Transportation? The Complete Guide, Wicker Park Logistics’ article, Advantages and Disadvantages of Intermodal Freight Transportation, and Phil Yeager, Hub Group, article, What Is Intermodal Shipping…and Why Should Shippers Care?. Also, see Ab Ovo’s article, How to Manage Intermodal Container Transport Efficiently?. This article provides a software vendor’s perspective on intermodal, breaking out key logistics activities and transport status flows for a typical intermodal shipment.

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