Intermodal 101: Equipment Availability
In our last post, we discussed the impact long-term rates had on the railroads as a contributing factor to the creation of rail controlled, door to door product. But there are other reasons the rails have created this service.
Equipment availability in a given area varies at different times of the year. There may be extreme variation in equipment that result in an area being completely out of equipment for some months and having an excess of equipment in other months. A good example of this would be the empty equipment supply in Los Angeles, CA. During fall peak season, equipment is very tight out of California due to all the import freight coming in from Asian markets that must deliver in the interior of the country so it is available for the holiday shopping season. During January and February, there has typically been a lull in shipping from the west coast, so they become over-supplied.
To take advantage of this fluctuation in equipment supply, the rails decided they needed to have more control. To do this, the rails had to begin offering a service that was more transactional in nature, something they could change to reflect more current flows and to have more control over the flow of the boxes.
Rails began taking on the operational requirements that had been the domain of the IMC. By working with drayage carriers they were able to cobble together a complete door to door offering. The rates put together are spot market rates, which allows the rails to consider their network and box supply to raise or lower prices based on a day by day rate basis.
There are other contributing factors to the rails deciding to offer door to door service, but rates and equipment supply are obviously at the top of the list. The rails have come up with a way to maximize their revenue. But the door to door offering doesn’t address every need, every day. There are still opportunities for the shipper and the IMC to participate. Next time, we will go over some of the advantages that can be realized by the shipping community.
Check in on the 1st and 3rd Wednesday of every month for more information on intermodal and how it can benefit you!