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What is Multimodal Transportation?

by Murray Phillips,
May 22, 2024
what is multimodal transportation
what is multimodal transportation

Table of Contents

In today’s globalised world, transporting goods has become increasingly complex.

Shipments often need to travel across thousands of kilometres to reach their destination, meaning that multiple modes of transportation, such as trucks, ships, air transport, and planes need to be involved in the process.

Enter multimodal transport, one of the two major transportation methods used worldwide (the other being intermodal transportation). Multimodal and intermodal transportation present their own sets of pros and cons.

However, we’ll only be focusing solely on multimodal transport for this article as it’s a logistics strategy frequently adopted by most companies.

By the end of this article, you’ll learn what is multimodal transportation as well as its key benefits (and often-overlooked disadvantages). Let’s begin.

What is Multimodal Transportation?

Both intermodal and multimodal transport combining different transportation modes, from rail transport to maritime transport, to get cargo from a warehouse to its final destination.

However, intermodal transport uses different carriers for each leg of the journey, thus requiring separate contracts. Multimodal shipping (or combined transport) refers to the transportation of goods under a single contract.

Key use cases for multimodal transport include businesses involved in international trade, urban logistics, retail distribution, and the automotive industry.

How does Multimodal Transportation Work?

A multimodal transportation system is created by signing a single contract or bill of lading, which covers your cargo’s liability for the entire journey.

This is done by signing on with a multimodal transport operator (MTO), such as a large carrier who has a range of transportation options available within their fleet.

As an MTO, they play a vital role in managing your freight’s movement across different modes of transport, coordinating with various carriers and ensuring timely deliveries.

Another way to create a multimodal system is by signing on with an agent – who, similar to an MTO, negotiates with individual carriers behind the scenes to coordinate the journey and shoulders the burden of liability and liaison for you.

Using an agent can often be more expensive because they will take a commission, but the end result is ultimately the same: a single piece of paper that covers the whole trip.

The Pros and Cons of Multimodal Transport

Multimodal shipment presents definite advantages such as reduced overhead fees and cleaner, easier coordination and tracking throughout the journey. However, those choosing a multimodal solution also face the possibility of losing out in terms of the flexibility and specialisation offered by an intermodal approach.

But we’re getting ahead of ourselves, lets discover the pros and cons of multimodal transport below:

Benefits of Multimodal Transport

▶️ Lower overhead fees

The larger your operation, the more you can take advantage of discounts that come with multimodal transport. Often, carriers offer discounts when entrusted with larger loads over longer periods of transit.

▶️ More accurate and efficient tracking

Multimodal logistics is both fast and efficient.

This approach, where deliveries combine at least two modes of transportation under a single contract, ensures seamless transfer of information from backend to the customer. The data is centralised (typically via a transport management system), meaning you won’t encounter tracking “blackouts” and your team can easily track information whenever, wherever.

▶️ Less administrative overhead

Having a single agent or carrier as your port of call cuts down on the time, cost, and logistical headaches associated with coordinating between different carriers.

▶️ Higher carrier accountability

This pertains mostly to inventory management and handling.

Inventory is more likely to be harmed or lost when handed over between carriers, and it can be tricky to identify liability in these situations. These stressors are eliminated when using a single-contract solution.

supply chain efficiency

Drawbacks of Multimodal Transport

▶️ Shippers can’t control costs

When using a single carrier, you’re unable to take advantage of the lowest rates and deals offered at each leg of the journey.

When working with an agent, these discounts can end up being swallowed by middleman fees. For smaller or less frequent loads, this can result in higher costs.

On the other hand, intermodal transport involves different modes of transport. This can be more cost-effective as you get more service options and flexible pricing.

▶️ Less specialised equipment and services

A particular disadvantage for fragile cargo, multimodal transportation (particularly services that use a single, very large carrier) can sacrifice specialisation for a more wide ranging solution. Therefore, the expertise offered by smaller and more specialised carriers can sometimes be preferable.

▶️ Lower capacity control during surge times

Larger carriers often receive larger surges and lulls in business over the year, such as in busy periods like the Christmas holidays. This can put your cargo at higher risk of delays in surge times.

3 Ways to Optimise Multimodal Transportation

There are several steps that you can take to make sure that you’re ensuring best practices when you hit the roads:

▶️ Plan your deliveries

Planning is crucial to the success of a multimodal approach.

Incorporating multimodal transport systems into your delivery planning is essential for optimizing the efficiency of your operations. These integrated transport solutions, which combine roadway, railway, airway, and waterway transport, are rapidly developing in smart cities like London and Singapore. They aim to deliver seamlessly through integrated modes of transport, including metro, buses, light rail, and taxis.

Planning can help you get more bang for your buck by scaling capacity to your needs, and therefore being able to deal with busy periods with ease. For example, moving 700 truckloads of inventory across Australia in a single ship journey and then ferrying them to a warehouse individually will likely be cheaper and faster than taking each load entirely on the road.

Additionally, more than simply planning your routes, the best results are achieved when you engage in end-to-end supply chain analysis over time – using gathered data to identify the weak points in your operations.

▶️ Be flexible

Flexibility is the name of the game when it comes to multimodal transportation.

Being flexible about which modes of transport you use (another advantage of not having several different lock-in contracts) can help you to deliver faster and more cost-efficiently.

In many cases, train, ship or air travel may allow you to bypass congested roads, and in the case of unplanned delays (we’re looking at you, Suez Canal) – a high level of flexibility can help you move inventory in the most efficient way possible.

▶️ Be responsible

Best practice isn’t just about profit, it’s also about making sure your business makes a positive impact on the world – and environmental responsibility comes into that too.

While many consider intermodal transportation as the more sustainable solution, multimodal shipping can be eco-friendly too! You just need to go for the most eco-friendly modes of transport for the majority of your journey.

For example, shipping by sea can reduce CO2 emissions by up to 60%. Vehicles powered by renewable energy are also highly efficient and produce significantly lower emissions.

Is Multimodal Transport Best For You?

Multimodal transportation is an excellent option for a variety of different businesses, and offers perks by way of flexibility, cost efficiency, and time saving potential.

However, the shipping method that works best will always depend on your particular business needs, including frequency and bulk of orders, and type of cargo.

Understanding the concept of international multimodal transport is crucial for businesses with global operations, as it integrates various modes of transport, enhancing efficiency, and ensuring the smooth movement of goods across borders.

How TransVirtual can help as a Multimodal Transport Operator

Leveraging a transport management system, such as the platform we offer at TransVirtual, ensures that you’re managing deliveries efficiently across these diverse modes.

Chat with our friendly team today to see how a transport management system can streamline the management of different transportation modes for your business, or alternatively, you can book a free demo to see it in action.

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