And what are the pros and cons.
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In today’s globalised world, the process of transporting inventory has become increasingly complex. Shipments often need to travel across thousands of kilometers to make it to their destination, meaning that multiple modes of transportation, such as trucks, ships, and planes need to be involved in the multimodal transportation process.
There are two major approaches to this issue: intermodal and multimodal transportation. This article will break down the multimodal option: what it is, the pros and cons, and how you can best optimise the process.
What is Multimodal Transportation?
Multimodal transportation uses several different modes of transportation to get cargo from your warehouse to a client’s front door. However, whilst intermodal transportation uses different carriers for each leg of the journey, which each require a separate contract, multimodal transportation relies upon just one for the entire trip.
How does Multimodal Transportation work?
A multimodal transportation system is created by signing a single contract or bill of lading, which covers the liability of your cargo’s entire journey. The first way that you can do this is by signing on with a large carrier who has a range of transportation options available within their fleet – and will therefore have the manpower to get your freight from point a to b.
Another way to create a multimodal system is by signing on with an agent – who 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
Whilst multimodal transportation presents some definite advantages in terms of reduced overhead fees and cleaner, easier coordination and tracking throughout the journey – those choosing a multimodal solution also face the possibility of losing out in terms of the flexibility and specialisation offered by an intermodal approach.
We’ve listed out the major pros and cons below:
▶️ Lower overhead fees
The larger your operation, the more you can take advantage of the 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
Due to having centralised data and administration systems, the transfer of information from backend to the customer is made seamless, and not transferring carriers means no tracking ‘blackouts’, or frustrated customers.
▶️ Less admin
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 for inventory protection
Inventory is more likely to be harmed or lost in the handover between carriers, and it can be tricky to identify liability in these situations. These stressors are eliminated when using a single-contract solution.
▶️ Shippers can’t take advantage of the lowest rates for each leg of the journey
When using a single carrier, you’re unable to take advantage of the lowest rates and deals offered at each leg of the journey. Using an agent, these discounts can also be swallowed by middleman fees. For smaller or less frequent loads, this can result in higher costs.
▶️ Less specialised equipment and services
A particular disadvantage for fragile cargo, multimodal transportation (particularly the model that uses 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 key ways to optimise the process
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. 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 cheaper. 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. This can be done easily through a multimodal approach, which gives you the freedom to choose more eco-friendly modes of transport for the majority of your journey. For example, shipping by sea can reduce CO2 emissions by up to 60%.
Manage your systems with ease
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.
How TransVirtual can help
Whichever option you choose, a transport management system such as TransVirtual are essential for managing deliveries and maintaining a high level of communication with customers. Chat to our friendly team today to see how a transport management system could help your business or alternatively you can book a free demo to see it in action.