Intermodal Origin Drayage Rail Linehaul Destination Drayage Billing Processes TOFC vs COFC Complexity of Operations

Intermodal Where Does Intermodal Work? Intermodal Terminal B Linehaul If you are outside the circle, the distance to the terminal makes it cheaper to ship directly to the receiver via truck Intermodal Terminal A Shipper of Origin Shipper of Destination

Intermodal Original Intermodal terminals were known as “Circus Ramps,” and they are still frequently referred to as “Ramps”

Intermodal BNSF Intermodal Yard in Chicago

Intermodal BNSF Intermodal Yard in Chicago

Intermodal Shipment Boxes Chassis Intermodal Rail Cars Lifts, Cranes & Packers Hostlers Intermodal Equipment

Intermodal Shipment Boxes Containers Do not have attached chassis Designed to be picked up and placed on rail cars and chassis Typically 20, 40, 45, 48, 53 ocean and domestic Trailers Actual motor carrier trailer with built-in chassis Virtually any motor carrier trailer, feet, including refrigerated Intermodal Equipment

Intermodal Intermodal Equipment Typical Container without Chassis

Intermodal Intermodal Equipment Typical Intermodal Container Chassis

Intermodal 28’ UPS Trailer on Typical Flat Car

Intermodal Well Cars Allows doublestacking of containers Articulated version has 3 to 5 cars permanently joined to form one unit which can carry up to 12 containers Intermodal Rail Cars Intermodal Equipment

Intermodal Intermodal Well Cars

Intermodal Intermodal Well Cars

Intermodal Double Stacked Containers in Well Cars

Intermodal Double Stacked Containers in Well Cars

Intermodal Conventional Designed to carry containers or trailers Can carry two trailers up to 40 feet in length. Doublestacking not possible Spine cars Same capabilities as conventional cars Less weight for better fuel economy Intermodal Rail Cars Intermodal Equipment

Intermodal Intermodal Equipment Conventional Intermodal Flat Car with Trailer

Intermodal Intermodal Spine Cars

Intermodal Intermodal Spine Car Connections

Intermodal Articulated Spine Car with Fifth Wheel and Shared Trucks

Intermodal Intermodal Equipment Intermodal Spine Car with Two 20’ Containers

Intermodal Intermodal Spine Car with 53’ Trailer Intermodal Equipment

Intermodal Terminal Equipment Lifts, Cranes & Packers Designed to move containers from chassis to flat car or vice versa or trailers from ground to flat car and vice versa Hostlers - A truck tractor designed for managing containers and trailers within the terminal Intermodal Equipment

Intermodal Straddle Crane

Intermodal Straddle Crane Loading Spine Cars

Intermodal Straddle Crane Loading Well Cars

Intermodal Straddle Crane?

Intermodal Alternative Mobile Lift

Intermodal Alternative Immobile Lift

Intermodal Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions

Intermodal Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions Realizing Intermodal Potential: A Total Cost Approach

Intermodal Intermodal Growth Fastest growing segment of the railroad industry 3 million trailers and containers in 1980 vs 8.1 million in 1996 More than 17% of rail revenues, 2nd only to coal at 22% Containers account for more than 60% of intermodal volume vs 40% ten years ago Still, enormous untapped potential

Intermodal Percentage Growth YearTotalTrailersContainersDifferenceTotalTrailersContainers 19906,206,7823,451,9532,754,829697, ,246,1343,201,5603,044,574156, ,627,8413,264,5973,363,244-98, ,150,4573,458,4063,692, , ,128,2283,752,5024,375, , ,936,1723,492,4634,443, , ,143,2583,302,1284,841,130-1,539, ,695,8603,453,0815,242,779-1,789, ,772,6633,353,0325,419,631-2,066, ,041,7713,298,0245,743,747-2,445, ,554,1843,219,1836,335,001-3,115, ,265,7612,413,9337,851,828-5,437, ,191,1422,344,1308,847,012-6,502, ,903,1212,400,5589,502,563-7,102, ,923,0362,639,54510,283,491-7,643, ,641,8722,584,26211,057,610-8,473, ,234,0742,432,92811,801,146-9,368, ,078,952 2,145,466 11,933,486 -9,788, ,659,4952,060,39911,599,096 -9,538, Growth in Domestic Intermodal Traffic:

Intermodal U.S. Domestic Intermodal Traffic Growth

Intermodal Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions

Intermodal Impediments to Intermodal Growth Lack of availability of IRT service Use by mainly larger shippers Shippers concern for service Lack of knowledge about IRT by potential users Poor perceptions in the minds of many users Transit-time disadvantage of IRT vis-a-vis MC options Complexity, coordination, and image due to the multi-party nature of IRT Source: Harper and Evers, Transportation Journal, (Spring, 1993), pp

Intermodal Intermodal Ramp Closings by Region:

Intermodal Type Number Percent AmountPercent A = Airport related F = Freeway related FT= Highway access to transit G = Grade separation IM= Intermodal freight related N = Needs/corridor studies Total Priority Intermodal Projects In ISTEA “The purpose of this section is to provide for the construction of innovative intermodal projects”

Intermodal Shippers Perceptions Survey of Manufacturers, Wholesalers, and Retailers in Arkansas, Missouri, and Oklahoma Sample size = 277 Importance of transit time reliability (TTR)4.3* Measurement of transit time reliability57.3% Use of TTR to aid in selecting carriers13.1% Use of TTR to compute inventory costs 0.0% * Scale of 1 to 5, 5 = Very Important Shippers perceive IM service to be poor, but few actually measure it and/or compare total cost of IM to other options

Intermodal Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions

Intermodal Total Cost = OC + CC OC = Order Placement Cost = A(R/Q) CC = Inventory Carrying Cost = 1/2(QVW) Where: Q = Optimal Order Quantity (EOQ) A = Cost of placing an order R = Annual Rate of use V = Value per unit W = Carrying cost as a percentage of average value of inventory Determining EOQ  Q * = 2AR VW EOQ = Source: Coyle, John J., Edward J. Bardi, and C. John Langley, Jr., The Management of Business Logistics, 6 th edition (St. Paul, MN: West Publishing, 1996).

Intermodal Total Cost = OC + CC + Tr + PC + It + SS + Other Where: OC = Order Placement Cost CC = Inventory Carrying Cost Tr = Transportation Cost PC = Product Cost It = Inventory in Transit Cost SS = Safety Stock Cost Total Cost Analysis

Intermodal Total Cost = OC + CC + Tr + PC + It + SS + Other OC = A(R/Q) CC = 1/2(QVW) Tr = rRwt/100 PC = VR It = iVRt/365 SS = BVW Where: Q, R, A, V, W = As previously defined r = Transportation rate per 100 pounds (CWT) wt = Weight per unit i = Interest rate or cost of capital t = Lead time in days B = Buffer of inventory to prevent stockouts Total Cost Analysis

Intermodal Computing Safety Stocks Where: S Dt = Units of Safety Stock required to satisfy 68 percent of sales levels during lead time t = Average delivery time S t = Standard Deviation of delivery time D 2 =Average Demand S D =Standard Deviation of Demand S Dt = (t)(S D ) 2 + (D) 2 (S t ) 2 

Intermodal Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions

Intermodal Annual Use = 100,000 units Cost to place orders = $30.00 Carrying cost = 20% Interest expense = 10% Service Level = 97.5% Variation in Daily Sales=+/- 10% Distance=1000miles Impact of Transit Time on Intermodal Shippers Examples Basic Assumptions: Rate/Mile Transit Time MC = $ days +/- 1 day IM = days +/- 2 days

Intermodal 8003,750120,000150,000123,288166,831563, ,750120,000125,000205,479330,816785,045 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Extreme Value Goods Computers Specific Assumptions: Weight per unit = 50 lbs Value per unit = $ Value per pound = $30.00 Economic Order Quantity =141 Shipments per EOQ=707

Intermodal 8003,75028,000150,00028,76738,927249, ,75028,000125,00047,94577,190281,885 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers High Value Goods Televisions Specific Assumptions: Weight per unit = 50 lbs Value per unit = $ Value per pound = $7.00 Economic Order Quantity =293 Shipments per EOQ=342

Intermodal 1,3332,25020,00090,00012,32916,683141,262 1,3332,25020,00075,00020,54833,082150,879 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers High Value Goods Microwave Ovens Specific Assumptions: Weight per unit = 30 lbs Value per unit = $ Value per pound = $5.00 Economic Order Quantity =447 Shipments per EOQ=224

Intermodal 4007,50010,000300,00020,54827,805365, ,50010,000250,00034,24755,136356,882 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Medium Value Goods Mattress and Box Springs Specific Assumptions: Weight per unit = 100 lbs Value per unit = $ Value per pound = $2.50 Economic Order Quantity =346 Shipments per EOQ=289

Intermodal 4, ,00030,0001,6442,22442,618 4, ,00025,0002,7404,41140,901 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Medium Value Goods Lamps Specific Assumptions: Weight per unit = 10 lbs Value per unit = $20.00 Value per pound = $2.00 Economic Order Quantity =1225 Shipments per EOQ=82

Intermodal 1,6001,8756,40075,0003,2884,44991,012 1,6001,8756,40062,5005,4798,82285,076 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Medium Value Goods Insect Spray Specific Assumptions: Weight per unit = 25 lbs Value per unit = $40.00 Value per pound = $1.60 Economic Order Quantity =866 Shipments per EOQ=115

Intermodal 16018,7508,000750,00041,09655,610873, ,7508,000625,00068,493110,272830,515 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Medium Value Goods Kitchen Appliances Specific Assumptions: Weight per unit = 250 lbs Value per unit = $ Value per pound = $2.00 Economic Order Quantity =245 Shipments per EOQ=408

Intermodal 4, ,00030, ,717 4, ,00025, ,10329,538 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Low Value Goods Empty Cases of Glass Containers Specific Assumptions: Weight per unit = 10 lbs Value per unit = $5.00 Value per pound = $.50 Economic Order Quantity =2450 Shipments per EOQ=41

Intermodal 8003,7502,000150,0002,0552,781160, ,7502,000125,0003,4255,514139,688 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Low Value Goods Xerox Paper Specific Assumptions: Weight per unit = 50 lbs Value per unit = $25.00 Value per pound = $.50 Economic Order Quantity =1095 Shipments per EOQ=91

Intermodal 8003,7502,000150,0002,0552,781160, ,7502,000125,0003,4255,514139,688 Order Order Carrying Transport Inventory Safety Total Mode Quantity Cost Cost Cost In Transit Stock Cost MC IM Impact of Transit Time on Intermodal Shippers Low Value Goods Xerox Paper Specific Assumptions: Weight per unit = 50 lbs Value per unit = $25.00 Value per pound = $.50 Economic Order Quantity =1095 Shipments per EOQ=91

Intermodal Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions

Intermodal SCTG DescriptionValue% RR% MC% IM% Othr 0All commodities Precision instruments Transportation equipment Pharmaceutical products Electronic and electrical equip Tobacco products Machinery Textiles, leather, and articles Motorized vehicles (incl. parts) Furniture, mattresses, lighting Misc. manufactured products Printed products Meat, fish, seafood, preparations Chemical products etc Plastics and rubber Articles of base metal Mixed freight Intermodal Potential Ton-Mile Market Shares by SCTG and Value

Intermodal SCTG DescriptionValue% RR% MC% IM% Othr 28Paper or paperboard articles Alcoholic beverages Milled grain and bakery products Live animals and live fish Prepared foodstuffs, fats and oils Base metal, primary/semifinished Pulp, newsprint, paper,etc Basic chemicals Other agricultural products Wood products Animal feed and animal products Fuel oils Waste and scrap Monumental or building stone Coal and petroleum products Intermodal Potential Ton-Mile Market Shares by SCTG and Value

Intermodal SCTG DescriptionValue% RR% MC% IM% Othr 19Coal and petroleum products Fertilizers Metallic ores and concentrates Cereal grains Nonmetallic mineral products Nonmetallic minerals Logs and other wood in the rough Coal Gasoline and aviation turbine fuel Natural sands Gravel and crushed stone Intermodal Potential Ton-Mile Market Shares by SCTG and Value

Intermodal Realizing Intermodal Potential: A Total Cost Approach Intermodal Growth Impediments to Growth Total Cost Analysis Examples Potential for Growth Conclusions

Intermodal Conclusions Intermodal Rail-Truck (IRT) has been growing rapidly However, it is barely 2% of the ton-mile market share IRT offers many advantages Many impediments to realizing growth potential One major problem is shipper perceptions of IRT service Related is that shippers do not actually measure cost of service Rate advantage may more than offset costs of poor service Shippers should use total costs to select shipment mode