Containers on a Train

Lecture objectives
1. What is intermodal?
2. Why use different modes together?
3. What makes it work?

Lecture Summary

What is intermodal?

Most products have the ability to trade time versus cost. As a basic rule - if the cargo comes in
full containers then it is a good candidate for intermodal. The key to intermodal is the use of
containers and its seamless transfer from one mode to another. Think about it this way – if we
can easily move freight from one truck to another then we can simply substitute another mode of
transportation that is more efficient on that part of the lane - the cargo in the container stays
untouched.

Advantages:

 On long distances rail transportation has a significant advantage over truck in terms of
fuel efficiency – which translates into a large cost advantage.
 On long distances (over 500 miles) rail is not much slower than truck
 Accessibility: by combining the advantages of rail and truck, the freight can reach any
spot a regular truck could reach

Express Delivery

Lecture Objectives
1. How do express delivery firms integrate different modes?
2. Cost structure is majority fuel and driver wages
3. Infrastructure is made up of vehicles and terminals

Lecture Summary
Express delivery firms use several modes to the best of their advantage:

1. Rail is the cheapest and reasonably fast over long distances

2. Motor is fast for short distances and can pickup and deliver everywhere
3. Air is fastest and cost is justified for certain items.

The general purpose of these terminals is fourfold:

1. To receive shipments from across their network

2. To send individual packages to customer
3. To collect individual packagers from shippers
4. To route packages to their destinations

Further Reading

Speed
Truck: approximately 50 miles (or 80 kilometers) per hour over the highway for up to 500 miles
(800 kilometers)

Train: approximately 30 miles (or 50 kilometers) per hour over almost any distance.

Air: upwards of 200 miles (or 320 kilometers) per hour for distances of more than 500 miles (800
kilometers), including ground operations.

Distance
Truck: up to 500 miles (800 kilometers) is the ideal distance, but there are still advantages over
the other modes up to 750 miles (1200 kilometers).

Train: for distances of more than 750 miles intermodal has some speed advantages, but the
average distance for intermodal is somewhere around 1,700 miles.

Air: at least 500 miles (800 kilometers) but typically more than 2000 miles.
Cost
Truck: current rates are highly variable, but $1.50 per mile is a reasonable starting value for a TL
shipment

Rail: intermodal freight shipments are typically much cheaper than TL and a common rule of
thumb is about 60-80% of the price of a TL shipment.

Air: typically we consider air freight to be about 6 to 8 times more expensive than truck