Since the pandemic hit in early 2020, Australian businesses and consumers are continuing to deal with supply chain problems. Experts say the issues will last well into 2022.
There's long been a misunderstanding of the global supply chain to regular consumers. But, the pandemic-induced problems make it obvious how global the system is. To better understand the global supply chain, one must learn about intermodal vs. multimodal shipping.
In this article, you’ll discover the differences between intermodal and multimodal options and learn which one might suit your business best.
What Is Multimodal Transport?
In multimodal transport, one contract covers the entire journey of the cargo. That means one carrier is responsible for door-to-door delivery, even if they use other modes along the journey. These modes can include:
- Any combination of these
From origin to destination, there is only one Bill of Lading because the sole carrier is responsible for moving the shipment through each leg of the journey.
Let's look at an example. If a business wants to send cargo from Sydney, Australia, to London in the UK, the shipment needs to move through several modes.
First, the carrier will pack the cargo in Sydney and move it by truck to the port of departure. This is most likely the Port of Botany. Then the carrier will load the cargo onto the vessel, and the freight will move to the Port of London.
The carrier unloads the cargo from the discharging vessel onto trucks. The shipment travels by truck to the consignee and its final destination in London. However, if the final destination is elsewhere in the UK, the cargo may first need to travel by rail.
Regardless of what modes the cargo uses, there is still only one contract for the whole process.
Some shipping companies have all modes of transport available to them. That makes it really simple to work with them to send cargo.
Those shipping with an agent may also use this shipping method. The shipper holds the single contract while the agent does all the negotiations behind the scenes. The agent also takes care of coordinating loading, unloading, and delays.
Benefits of Multimodal Shipping
There are several multimodal shipping benefits. The biggest advantage of this method is less overhead for shippers. This is because the shipping provider manages every aspect of the shipping process. In addition, multimodal shipping companies can handle delays independently in one leg of the shipment.
This means tracking shipments using the multimodal method is efficient and easy. Also, businesses can access remote parts of the world with a partner who is responsible and liable. The shipper will face fewer logistics coordination expenses too.
The multimodal method is excellent for businesses who want to be less hands-on but still have access to robust shipping routes.
What Is Intermodal Transport?
Intermodal shipping also moves cargo from origin to destination using several modes of transport. However, a different carrier operates each mode of transportation, and each leg has an independent contract.
In the example from above, a new contract is in place each time the cargo switches modes. The truck from the warehouse to the Port of Botany is one contract. The vessel from Sydney to London is another contract. And so on.
Since each leg is a different contract, intermodal trucking handles the first and last mile of cargo someone has shipped by rail, ocean, or air. While it is part of the intermodal shipping method, it only encompasses a small part.
Benefits of Intermodal Shipping
There are also several advantages of intermodal transport. A great benefit to intermodal shipping is having the freedom to negotiate terms separately with each company. This could lead to better shipping rates and fewer expenses.
But unfortunately, it also means more overhead for shippers. This is because the shipper needs to handle multiple contracts and coordinate delays between companies.
Yet, the intermodal shipping method gives shippers flexibility and specialised handling of loading and unloading goods at different ports. They can also reduce their carbon footprint by working with environmentally-friendly shipping companies.
As consumers become more vocal about the environmental impact of global shipping, this benefit is becoming more critical.
The intermodal method also gives shippers increased security of their products during transport. Plus, shippers can better control capacity and transit schedules with this method.
Intermodal vs. Multimodal: Which Is Better?
Both multimodal and intermodal transport move cargo from origin to destination. And, they both use more than one method of transportation. They each combine the most efficient transportation modes to:
- Optimise lead times
- Reduce inventory costs
- Keep the level of freight costs down
- Increase environmental sustainability
- Reduce the carbon footprint
Both methods also require a transportation management system (TMS) to ensure tracking visibility. In addition, a TMS allows businesses to perform routing scenarios to provide the best shipping costs and transit times.
The only difference is in the contract. So, which one should shippers use?
For now, many businesses still prefer the multimodal method. The advantages of the intermodal method could soon outweigh the benefits of the multimodal approach. However, the efficiency of a single contract remains vital.
With less flexibility, quality control remains tight. However, it is also easier to manage delays using multimodal shipping. This is an important distinction as the world faces many supply chain problems because of delays. Businesses also have a much easier time with insurance on cargo with multimodal shipping.
Even though businesses may save money from intermodal shipping, consumers still see lower costs from multimodal shipping. The initial operation cost is higher, but better routing efficiency leads to fewer expenses.
There is no denying the consumer benefits from multimodal shipping compared to intermodal shipping.
Find Your Shipping Partner
Whether you choose to ship using the intermodal vs. multimodal method, it's most important to find a reliable partner. Working with a transparent, trustworthy, and timely company is essential. Contact us at TransVirtual to get a free trial of our shipping platform and features. We offer user-friendly, scalable, and door-to-door solutions for all your shipping needs.