Imagine Christmas Eve, with your desired gifts stuck at ports, unable to reach you. This wasn't a hypothetical scenario but the harsh reality of the 2021 global supply chain crisis. Multimodal transport, traditionally hailed as an efficient logistics solution, found itself mired in unprecedented challenges. Industry expert Larry Gross addressed these issues head-on during the RailTrends conference, analyzing both the current struggles and future prospects of multimodal transportation.
From "Solution" to "Problem"
Gross began with a sobering observation: when supply chains make headlines, it's rarely for positive reasons. 2021 proved exceptionally difficult for multimodal transport. Data shows that despite strong demand, multimodal freight volumes peaked in March before beginning a steady decline. While extreme weather exacerbated the situation, the root cause lay in an overwhelmed international shipping system.
Ports operated at maximum capacity, with additional ships unable to improve throughput. Rail networks consequently faced choke points. Gross likened the supply chain crisis to "peanut butter," with responsibility spread across multiple stakeholders—freight railroads, shippers, chassis providers, ocean carriers, and ports. Each entity made decisions based on self-interest, yet the collective result proved disastrous.
When all freight attempts to move through identical routes simultaneously, bottlenecks become inevitable. The ports of Los Angeles and Long Beach emerged as prime examples, becoming major congestion points during the holiday season. Capacity constraints led to declining multimodal participation relative to import volumes. Increasingly, businesses opted for transloading over inland point intermodal (IPI) to bypass congested hubs like Chicago.
Trucking: The Emergency Release Valve
Under normal circumstances, multimodal transport serves as the supply chain's safety valve. In 2021, however, trucking assumed this critical role. Lacking sufficient capacity, multimodal systems couldn't flexibly accommodate demand surges. Despite persistent driver shortages, trucking companies managed to increase freight volumes. Southern California witnessed exorbitant trucking rates as shippers shifted cargo from rail to road for faster delivery.
Data from IANA and Gross Transportation Consulting confirmed this trend. Between Q2 2020 and Q3 2021, dry van and refrigerated trailers saw significant market share declines in the 500+ mile transport segment. By Q3 2021, multimodal's market share had plummeted to its lowest level since Q4 2009, effectively erasing all gains achieved since the Great Recession.
Gross emphasized that trucking consistently recruits sufficient drivers. For multimodal to expand, it must compete on merit rather than relying on trucking's labor shortages. In essence, the sector must enhance its inherent competitiveness.
Future Outlook: Challenges and Opportunities
Gross predicts steady freight volumes through 2021's final weeks rather than seasonal peaks. Improvement will only come when inbound shipments decrease, potentially in 2022's first half or later. Meanwhile, elevated freight rates will persist as carriers absorb higher driver wages.
He anticipates 2022 will end the relentless demand surge, with smoother operations unleashing significant latent capacity. Additionally, thousands of delayed Chinese domestic containers—originally scheduled for 2021 arrival—will finally reach destinations.
Trucking capacity utilization should ease, potentially returning to 2019 levels. Gross advises stakeholders to "buckle up," noting that while 2021's damage is reparable, recovery requires substantial effort. He highlights the crisis's silver lining: operational improvements could position multimodal for greater future success.
Many supply chain paradigms—just-in-time inventory management and globalization among them—face reassessment. Gross expects slowed offshoring and freight movement, with import TEU growth aligning more closely with economic expansion. This shift holds particular significance for multimodal transport, as domestic markets will likely drive most future growth.
Building Supply Chain Resilience
Gross identifies resilience as the critical frontier. Over-optimized supply chains crumble under unexpected shocks—climate events, geopolitical disruptions, or public health crises. Businesses must incorporate buffers alongside efficiency.
Capacity shortages compound these challenges. When chassis turnaround times double from 4.5 to 9 days, maintaining output requires doubling chassis inventories. Operationally, congestion creates productivity death spirals that prove difficult to escape.
Proactivity emerges as the key lesson. Reactive responses arrive too late. While current congestion persists absent volume declines, Gross observes early signs of change. Supply chain issues are evolving from universal problems to localized West Coast port challenges.
East Coast ports like Savannah and New York/New Jersey demonstrate superior congestion management. Gross expects many IPI routes will bypass Los Angeles/Long Beach, though this disadvantages railroads. He predicts freight will shift eastward while trucking gains market share. Once conditions improve, changes will occur rapidly—though timing remains unpredictable.
In summary, 2021 delivered unprecedented challenges for multimodal transport. Yet within this crisis lies opportunity. Only through honest assessment and proactive improvement can the sector regain—and ultimately strengthen—its competitive position.