Introduction
In 2021, global supply chains faced unprecedented challenges that frequently made headlines, revealing an industry under significant strain. Larry Gross, president of Gross Transportation Consulting, painted a clear picture of the difficulties multimodal transportation experienced during his presentation at the RailTrends conference. Addressing senior freight rail and intermodal executives, Gross acknowledged that despite sustained high market demand, intermodal volumes and efficiency had been declining since peaking in March. This article examines the current state of multimodal transportation, the factors creating bottlenecks, the complexity of supply chain crises, market shifts, declining market share, future prospects, and key strategies for enhancing supply chain resilience.
I. Definition and Importance of Multimodal Transportation
Multimodal transportation refers to the movement of goods from origin to destination using two or more modes of transport, coordinated by a single Multimodal Transport Operator (MTO) responsible for the entire journey. This system optimizes the strengths of different transportation methods to improve efficiency, reduce costs, and better serve customer needs.
As a critical component of modern logistics, multimodal transportation decreases transit times, reduces cargo damage, and enhances overall supply chain competitiveness. Its development promotes regional economic growth, industrial optimization, and international trade competitiveness.
II. The Challenging State of Multimodal Transportation in 2021
2021 proved exceptionally difficult for multimodal transport. Contrary to historical patterns where intermodal systems thrived during economic recoveries, this year saw declining volumes and efficiency despite strong demand.
1. Volume Decline
After reaching record highs in March, intermodal volumes steadily decreased, indicating systemic failures in meeting market needs. Congestion, port capacity limitations, and equipment shortages collectively constrained transportation capabilities.
2. Efficiency Reduction
Longer transit times, increased costs, and higher cargo damage rates reflected worsening operational efficiency. These issues stemmed from the same systemic constraints affecting volume capacity.
III. Multiple Factors Creating Bottlenecks
Several interconnected factors contributed to the current challenges:
1. Polar Vortex Impact
The February polar vortex severely disrupted North American domestic transportation, with recovery still incomplete months later. This extreme weather event caused widespread infrastructure paralysis that continues to affect operations.
2. International Inland Point Intermodal (IPI) Decline
IPI shipments (international cargo moving inland via rail/truck after ocean arrival) showed five consecutive months of decline since October, signaling either reduced international trade demand or intermodal's inability to service existing needs.
3. System Congestion
Excessive freight volumes moving through limited corridors created severe congestion and velocity reductions, mirroring domestic intermodal issues. Infrastructure limitations, poor coordination, and communication gaps exacerbated these problems.
4. Port Capacity Constraints
Operating at maximum throughput, ports became critical choke points. Regardless of vessel arrivals, the system couldn't process additional cargo, subsequently limiting rail operations.
IV. The Complex Nature of Supply Chain Crises
Gross likened responsibility for the ongoing crisis to "peanut butter spread" across multiple parties—freight railroads, shippers, chassis providers, ocean carriers, and ports. The fundamental challenge lies in thousands of companies making individually rational decisions that collectively produce disastrous outcomes.
Pre-holiday demand surges further strained systems as unprecedented volumes converged on Los Angeles/Long Beach ports destined for U.S. interiors.
V. Market Shifts
Capacity constraints reduced intermodal's share of import movements. Gross observed a trend from IPI toward transloading, as businesses rerouted cargo to avoid inland congestion (e.g., Chicago).
Remarkably, trucking assumed the traditional "safety valve" role this year. Southern California trucking rates reached extraordinary levels as freight shifted from intermodal to faster truck deliveries.
VI. Market Share Reversal
Data from IANA and Gross Transportation Consulting shows intermodal's 500+ mile market share for dry van/reefer shipments declined about 6.3% through Q3 2021—the lowest since Q4 2009. Contrary to expectations that driver shortages would push freight to rail, trucking adapted by recruiting drivers, leaving intermodal unable to capitalize.
VII. Future Outlook
Gross anticipates a plateau rather than peak season for 2021's remainder, with recovery unlikely before 2022's first half absent import declines. Strong rate environments will persist as carriers pay premium wages to attract drivers.
VIII. 2022 Predictions
The endless freight wave should subside next year, releasing pent-up capacity. Thousands of domestic containers ordered from China—delayed by 2021 congestion—will arrive in 2022.
Trucking capacity utilization should ease toward 2019 levels. While 2021's damage is reparable, recovery requires substantial effort.
IX. Challenges and Opportunities
This crisis presents both. Operational improvements could position intermodal strongly post-disruption. Maintaining the status quo would represent a missed opportunity.
X. Necessary Changes
Gross emphasized that supply chain "truths" like just-in-time inventory and globalization aren't immutable. He expects slowing offshoring and trade flows, with future TEU growth matching (not exceeding) economic expansion. Intermodal must grow inland to expand.
XI. Building Resilience
Future growth depends on enhanced supply chain resilience. Maximum efficiency leaves systems vulnerable to climate, geopolitical, or health disruptions. Adding buffer capacity is essential—for example, chassis requirements double when turnaround times extend from 4.5 to 9 days.
XII. Operational Improvements
Congestion reduces intermodal productivity, creating vicious cycles. Proactive prevention—not reactive response—is critical. While pessimistic about near-term resolution without demand reduction, Gross sees positive signs as problems localize to West Coast ports rather than affecting entire supply chains.
XIII. East vs. West Coast Ports
Eastern ports like Savannah and New York/New Jersey handle congestion better than Los Angeles/Long Beach, though challenges remain. Significant IPI freight may bypass West Coast ports, potentially harming rail volumes.
Conclusion
2021 challenged multimodal transportation through intersecting bottlenecks and complex supply chain failures. Facing market shifts and share losses, the industry must improve operations and resilience to capitalize on future opportunities.
Future Outlook
Multimodal transportation faces both uncertainty from global economic volatility and promise from technological advancement. Key developments include:
1. Technological Innovation
IoT, big data, and AI applications can optimize routing, tracking, and scheduling to boost efficiency.
2. Environmental Sustainability
Intermodal's inherent emissions advantages position it well for greener logistics demands.
3. Regional Cooperation
Shared infrastructure and seamless intermodal hubs enhance system-wide performance.
4. Policy Support
Government initiatives encouraging intermodal adoption and infrastructure investment remain crucial.
5. Workforce Development
Specialized training ensures sufficient skilled personnel for complex intermodal operations.
Navigating these challenges and opportunities will determine multimodal transportation's ability to support future economic growth.