According to Logistics Management magazine many over the road trucking companies are considering or in process of converting operations to intermodal.  There is no question that more traditional truckload and LTL traffic, especially longer haul, is moving on the rails. While these changes can result in significant cost savings and efficiencies, the barriers to conversion are formidable.

Elements of Intermodal

• TOFC/COFC   piggyback
• Landbridge
• Efficiencies compared to OTR
• Changing OTR role to more regional service
• 3PL’s to coordinate movement via multiple modes
• Mode choice function of total cost, accessibility, speed, capabilities

KPI’s for both OTR and Intermodal

• Correct Invoicing
• On Time Delivery
• % damaged shipments
• Equipment availability
• Turndown ratio

OTR Issues

• Driver shortages
• Tight capacity
• Fuel costs
• Rationalize demand/supply

OTR Advantages

• Flexibility/accessibility
• Speed
• Best option up to 600-700 miles

Trends in OTR

• TL carriers getting into Intermodal business
• Shortening length of haul to best use assets (trucks and drivers) and reduce fuel costs
• Comparison w/Intermodal measured by miles (600-700) or “1 driver, 1 day”

Contact Ad Hoc Logistics for details about:

• Intermodal and OTR Customer Requirements for all companies and specific requirements for small, medium, and large shippers
• Barriers to conversion from OTR to Intermodal

Here is a basic outline for negotiating/evaluating 3PL contracts. It should be noted that this outline is a starting point and tactical in nature. It does not address higher level 3PL performance such as full integration with client business strategies and C level involvement.

• Overview– 3PL should use knowledge and buying power to get best price/terms for services needed
• Analyze–  Existing agreements, pricing, invoicing practices, benchmark
• Plan/Organize– RFP development and/or improvement, vendor and carrier evaluations, negotiation strategy, what if scenarios
• Execute– Implement cost savings plan, re-negotiate existing contracts, develop problem solving protocols
• Control– Ongoing audit and reporting, regular status reports, quarterly review with vendors and carriers to hold accountable for contract terms

Common shipper client complaints:

– Not getting 3PL A team

– Surprise costs

– Lack of ideas and innovation from 3PL

– Lagging in technology

While 3PL’s want to be more strategic they are often seen by clients as tactical operators and cost reducers.