Arranging efficient intermodal transport across North America is among the world economy's most pressing and complex logistics problems. Of the ten million trailers and containers moved annually across the country by intermodal, half are associated with international trade. These cargo movements are expected to double or triple by 2020 without corresponding improvements in existing infrastructure. Though railroads like Burlington Northern and Santa Fe Railway (BNSF), where international business grew 26% last year, have long established partnerships with truckers and steamship lines to move goods, a looming problem for the entire industry is the speed and reliability with which this can be done. "Efficiency is becoming more and more important," says Association of American Railroads spokesperson Tom White. "Anything that can cause delay or disrupt the supply chain will cause you to be without product."

The primary source of such delays and disruptions is bottlenecks, particularly at already overburdened ports from Los Angeles to Vancouver on the west coast and Savannah to New York in the east (not that there's less potential problems in-land caused by outdated public and private infrastructure). "The whole cargo transportation system is approaching gridlock," says Joni Casey, president of the Intermodal Association of North America. "Right now it's regionally confined for the most part, but you're starting to see the congestion spill over into other areas."

In the face of this common threat, the system's diverse stakeholders are working independently and in tandem to improve individual and overall efficiency across the continent. A new range of operational logistics enhancements, exciting infrastructure additions, and innovative on-port and inland cargo management strategies are evolving to manage growth and maximize efficiency in the difficult decade ahead.

The Joys of Scheduling

Perhaps the most significant advance in modern intermodal logistics is scheduled railroading. This system schedules and reserves every process involved in moving freight from establishing work orders to readying cars to off-loading deliveries. No company has implemented it as widely or as successfully as the Canadian National Railway Company, whose routes span from Halifax and Vancouver east to Toronto, Montreal, and Chicago, and south to New Orleans.

Intermodal service represents nearly twenty percent of CN's revenues (of which over forty percent are international shipments). To improve service, reliability, and predictability of this traffic, the railroad turned to scheduling, explains spokesperson Mark Hallman. "We have a service plan which establishes not only the specific schedule but also the connection times between trains at terminals. Each car and container unit has a trip plan measured in hours, not days from a particular origin point to a final destination." Other parts of the service plan include new web-based reservations which reduce driver down time and pricing pegged to activity to maintain a constant daily capacity.

Canadian National is not alone in this aim. At Union Pacific, the largest freight railroad in North America, "we stress consistency rather than speed," says John Bromley, director of public affairs. "Our customers want to know whether we can commit 5 days to go from A to B." Accordingly, Union Pacific measures its operating performance with client-oriented metrics. "For intermodal one of the major measures is intermodal box availability. That and other components are weighted and given a score on our service delivery index, a formula closely followed by management and our customers."

According to Canadian National's Hallman, such metrics are radically changing the fundamental intermodal model. "The old model is that intermodal units would flow in at any time. Our terminals often acted as storage yards, resulting in congestion and service failure. We attempted to handle all demand any day of the week. Customers were unsure on which train traffic would depart on. Boxes stacked up. The operating plan for the railway would be adjusted on a daily basis."

In the company's new model, only container units with reservations are allowed into its terminal. The result? "We're eliminating the use of the terminals for container storage and we've effectively fixed car supply and train schedules by day of week, so it's not lower capacity one day and higher the next," Hallman says. Balancing traffic flow, he concludes, best utilizes the railroad's assets.

Infrastructure on Pace

Managing traffic flow out of the Port of Halifax is far easier than at larger ports like those of Los Angeles and Long Beach (through which more than forty percent of the country's waterborne cargo travels and which together comprise the third largest seaport in the world). Though roughly half the containers entering Long Beach and Los Angeles are eventually transported by rail, about eight-five percent have to be handled by trucks en route to yard facilities and distribution centers as far as 60 miles inland. Unplugging choke points along this route is no simple task.

"The one imperative right now is we have to keep infrastructure and air quality improvements on pace with the port growth," says John Doherty, chief executive officer of the Alameda Corridor Transportation Authority (ACTA), a joint powers agency formed by the cities and ports and Los Angeles and Long Beach and the Los Angeles County Metropolitan Transportation Authority. As Doherty sees it, southern California's logistics issues will soon be all of North America's. "As all the ports increase in size, we're all going to keep our market share and we're all going to share the same struggles. If we don't keep pace, there's basically nowhere else this cargo can go."

By far ACTA's most prominent project to that end is the Alameda Corridor, a two-year-old, 20-mile-long rail cargo expressway linking the ports to the transcontinental rail yards near downtown Los Angeles. The $2.4-billion construction's centerpiece is an open trench 10 miles long, 33 feet deep, and 50 feet wide, which consolidated 90 miles of branch rail lines and eliminated over 200 grade crossings between the port and downtown. User fees based on 20-foot-equivalent container units (TEUs) finance debt on the project (at last count ACTA had assessed the railroads approximately $60.9 million).

"The Alameda Corridor was a two-pronged success," says John Bromley of Union Pacific, which transports more cargo from Los Angeles and Long Beach than any other ports. "From a logistical standpoint, it expedited trains from the port to on-dock trains and the intermodal terminals," says Bromley. "For the public good, it eliminated scores of railroad crossings that caused traffic congestion."

At the same time, however, Bromley and other analysts agree the Corridor's example may not be widely replicable. "Los Angeles is unique in the sense that it's so large and so concentrated," says Bromley. Indeed a recent study by the Foundation for Intermodal Research and Education suggested similar short haul corridors between the Port of New York/New Jersey and Buffalo and Pittsburgh are economically feasible only if facility and terminal costs are offset by a public entity other than the railroad. Likewise, Norfolk Southern Railway's planned Heartland Corridor, a dedicated double-stack container line connecting Virginia, West Virginia, and Ohio, will require consider public investment toward its estimated $266-million price tag.

"The railroad industry is a very expensive business, particularly in capital costs," says Bromley, noting Union Pacific spends over one billion dollars a year maintaining and expanding its infrastructure. "We don't operate it on a 'build it and they will come' basis. Public-private partnerships are out there, but we don't think that's a panacea for all capital projects."

In fact, ACTA may prove more influential in its smaller infrastructure projects, such as a new 1.5-mile-long grade-separated structure to carry trucks across three lighted intersections and five at-grade crossing outside the terminal. And when ports can't convey vehicles closer to railroad centers, sometimes the centers themselves move closer to the ports. In Los Angeles, for example, BNSF plans both to expand its existing facility 20 miles from the port and open another near dock "to improve goods movement in and out of the ports," says spokesperson Lena Kent. In the decade since the merger of Burlington Northern and Santa Fe, BNSF has invested $20 billion in infrastructure and new equipment, including a massive new Chicago-area multimodal facility that integrates rail, truck, and transload service with distribution and warehousing at a single location.

Optimizing Existing Operations

Far more financially palatable than billion-dollar infrastructure additions are new management strategies to maximize on-port and inland cargo movement with current equipment. "We're are all looking at various initiatives to optimize the use of the existing infrastructure," says ACTA chief John Doherty. Even when the money for expansion is available, space constraints may make it impossible. "Terminals are so many acres and can't be expanded either due to lack of physical property or local government restrictions such as environmental issues, so you're carrying more freight in the same geographical area," observes Intermodal Association President Joni Casey. "If you're looking for ways to circumvent bottlenecks at the terminal side, you're seeing a lot more sophistication and technology being employed at the terminals."

Optimal container stacking is a case in point. "In grounded operations, when containers come in off the ship, they're stacked on the ground," explains Casey. "The flow in and out of the terminal isn't as fluid as in a wheeled operation, but it takes a lot more space to store a wheeled operation because you can't stack on wheels."

Even something as seemingly simple as extending gate hours at the ports is more difficult than it appears. In Los Angeles and Long Beach, for example, adding shifts after 5 PM would distribute the same amount of cargo out over a longer, less-trafficked time period. Yet it costs significantly more money to operate night-time gates. Operators pay a premium for their labor without handling as many boxes per crew hour. What's more, the warehouses and receivers of these goods must also be open late and ready to remove cargo from containers.

In southern California, representatives of all the stakeholders-cargo owners, terminal operators, ocean carriers, truckers, unions, local agencies, and city governments-have formed a regional goods movement efficiency team to address these issues. "It's very much data-driven," says Doherty. In the effort to extend terminal hours, for example, the team is considering a combination of day-time fees and an all-appointment system comparable to Canadian National's. Further strategy sessions between terminal operators, port engineers, and railroad representatives try to combine loads across terminal to fill container trains. As Doherty explains it, their task is "to work out the logistics to assemble trains from multiple terminals able to leave the ports without blocking the flow of the regularly-scheduled trains." Other proposals include truck-only lanes on the 710 freeway and a web-based "virtual container yard" listings to route empties to export centers rather than holding yards at the ports.

Strengthening the Weakest Link

These proposals are so important because congestion issues are already altering the economies of short-haul intermodal transport. As many 20,000 containers a week are trucked out to inland distribution centers in the Los Angeles area. At present, transporting that cargo by rail would cost about $100-150 more per container. Yet "as highway congestion increases, the cost of trucking increases," says Doherty. "Truckers who used to be able to make two round trips a day can now take only one trip." One alternative is a pilot shuttle rail program to move cargo directly to inland facilities served by trucks. "Instead of trucking 60 miles from ports," Doherty says, "you might truck 5 or 6 miles to local warehouses."

Unfortunately, optimizing port operations only moves bottlenecks farther down the line. "When we constructed the Alameda rail corridor, we took the weakest link in the transcontinental rail network and we made it the strongest," says John Doherty. "All that did was create another weak link." Indeed, though "intermodal service is designed to counterbalance congestion on the highway, you can encounter similar issues with the line haul portion of the movement by rail," admits Joni Casey. Both say as cargo volume increases, rail lines east of Los Angeles will struggle to add capacity.

To that charge, Union Pacific's John Bromley promises, "We're putting together a very ambitious capacity program on our key corridors." As he sees it, improved and increased east-bound tracks and streamlined north-south routes will win the industry an increased share of the cargo trucking cannot handle. "By the nature of our technology, we can absorb more freight than the highways can. That," he says, "presents opportunities for railroads. What we have to do is convince customers that rail is a competitive alternative for them for price, performance, or consistency."

Sidebar: Security Seals and Readers Enable Containers to Move Safer and Faster

Options from the security industry are expanding rapidly, according to David Jones, current chairperson of the National Cargo Security Council. "Advances in trailer and container locking systems will decrease the amount of intrusion. But we're also looking at a higher degree of education for our members, for Congress, and especially for local law enforcement," he notes. Jones believes local law enforcement doesn't take cargo theft seriously. He claims cargo thieves often get a slap on the hand and are quickly back on the street. "We want to educate police departments and develop more teams to deal with cargo crime-task force teams with representatives of local, state, and federal law enforcement."

Increased scrutiny by law enforcement people won't excuse shippers from monitoring shipments more closely themselves. "Shippers need to qualify carriers," notes Gene Corinescu, Director of Compliance with Hub Group. "While most carriers now do a background check on drivers, it's good to ask if the carrier has a security process in place."

Alternatively, use a third-party logistics provider that includes tracing, contacting carriers, and knowing where a shipment is in transit as part of their service.

"When a shipment is on a train, it's pretty safe," suggests Corinescu. "We've been linked to the railroads for ten years. They update us continuously. The bigger trucking companies also link electronically. But there are many small trucking companies. We have to talk directly to their dispatchers."

Railroad countermeasures
After September 11, 2001, the railroad industry beefed up its security processes, according to the Association of American Railroads (AAR) website. The industry as a whole examined its weak areas and now has a security plan that matches intelligence community best practices. Security measures include increased Web security, limited access to railcar location data, employee identification checks, increased tracking and inspection of selected shipments, new encryption technology for sensitive data communication, better security for physical assets, and more employee training.

Seals of protection
"Whether on a truck or railroad, shippers are increasingly aware of the value of spending a dollar or two on a seal with a little resistance," suggests Corinescu. Burlington Northern Santa Fe publishes specifications on seals that are difficult to penetrate. If shippers use a seal that doesn't measure up, the railroad won't be responsible for loss.

In the past, shippers depended on bolt-type seals to indicate a trailer or container may have been tampered with. "Over time, thieves learned how to bypass the seal, so we evolved to using intrusion detection devices," says Lani Fritts, Vice President, Business Development, with Savi Technology. "Now we can deploy a series of sensors to detect intrusion in different parts of a container."

Fritts claims there's been dramatic evolution over the past two years as security issues have gained importance. Savi is working with major importers on its Smart Seal, a device that goes on a container where it is filled. They've installed readers at key checkpoints such as ports and terminals in Asia, Europe, South Africa, and South America. Those readers automatically check seal status. Status is checked again at the U.S. intermodal terminal and at the customer's facility.

The cost of a network to support smart seals is a deterrent to using it for low-value freight. "However, most U.S. trucking companies now have satellite systems on each truck," comments Fritts. "Integrating to that system may make economic sense." - Helen L. Richardson

Richardson is a freelance writer who has covered logistics and supply chain issues for 15 years. She can be reached at 1218hl1944@centurytel.net.

Sidebar: How The Port of Long Beach is Managing Security, Cargo Flows

The port complex of Los Angeles-Long Beach is one of the busiest in the world and is surrounded by the densely populated Southern California region. Issues such as security, the efficient movement of cargo, and environmental concerns are at the top of the list for Richard D. Steinke, Executive Director, the Port of Long Beach.

These issues promise to become even more pressing as the port's volume continues to undergo significant growth due to booming Asian imports. WORLD TRADE spoke recently with Steinke about the port's strategy.

Q: How is the Port of Long Beach managing to accommodate increasing cargo volumes while at the same time improving security?

A: "There's always a balancing act between increasing cargo security and facilitating the movement of freight. In the past couple of years we certainly have increased security from our own sources, and Customs and the Coast Guard have certainly improved safety and security of the harbor and in their respective areas. We just took to our board [in early April] a $3 million contract to implement Radiation Portal Monitors, which will be installed at all of the container terminals here at the Port of Long Beach. The Port of Los Angeles will be doing the same thing. That means that every single truck that leaves the container terminals will go under a Radiation Portal Monitor, and if any radiation is detected it will go through a second screening by customs agents. That's the latest in many attempts to further secure the port. U.S. Customs in the past few years has established a number of programs-the Container Security Initiative (CSI), C-TPAT, Operation Safe Commerce-so there's a myriad of programs that are tightening supply chain security. We're certainly safer than we were before 9/11 and with the ongoing programs we'll be a lot safer in the future. It's U.S. Customs' goal to have all of the Radiation Portal Monitors up and running in the Port of Long Beach by October 2004. There are already some Radiation Portal Monitors at the Port of New Jersey, and I believe they have some at Virginia Port Authority."

Q: The Southern California freeways, and especially those in the port vicinity, such as the 710, are very congested. What can be done to alleviate congestion on the freeway system?

A: "Certainly, the challenge in the future is how we intend to manage cargo growth. We know that transpacific trade is going to increase, that ships are going to get bigger, and trade with China is continuing to explode. So, those being what we have in front of us, it's 'how do we utilize these assets here in Southern California much more efficiently than before?' We need to wring out those efficiencies, not only within the terminals but along the freeways. Probably the best way we do that is to expand the terminal gate hours-if we can shift traffic inside the terminals to off-hours-anything after 5:00 or 6:00 p.m., that will spread the volume over the other periods of the day. We're looking at extended gate hours, some kind of incentive program to shift volumes from day to night; we're looking at appointment systems; and additional technology within the terminals to move things faster and more efficiently. We're also looking for infrastructure funding-state and federal help to do things like increase capacity of our freeways and bridges."

Q: This spring we again experienced bottlenecks and service delays along the nation's rail system. Is rail the weak link in the intermodal transportation system?

A: "We haven't coordinated as well as we should have with rail. In defense of the railroads, certain things could maybe have been forecasted, but not to the extent to which they have happened. The closure of maquiladoras in Mexico and the manufacturing shift to China, which means all that freight has to be put on rail on the West Coast, is certainly a dynamic that has probably pinched the railroads. The same thing [service delays] happened back in 1997-the rail industry acquisitions caused slowdowns, during the same time freight volumes were increasing. In the future, when we sit down with the railroads and the retailers, the railroads need to understand the forecasts and need to increase the number of cars and locomotives, and basically put more into the system, because by all accounts cargo is going to continue to flood the system into the West Coast ports."

Q: What about the railroads' ability to improve security?

A: "Part of the Radiation Portal Monitor program requires that all containers going onto on-dock rail undergo screening. That will be a challenge for those terminals here that have on-dock rail. What we don't want to have happen is to have cargo checked after it's been loaded onto the train. You don't want to have to stop a train once it's already starting to move out of the terminal. Of the seven container terminals at the Port of Long Beach, only two don't have on-dock rail."

Q: Environmental concerns have been a big issue at the Port of Long Beach for some time. What's the latest?

A: "As we continue to grow, we know we have a big responsibility to our community and our customers to make sure we grow responsibly. We also have to mitigate the impact of that growth. We have been involved in a program over the last year called Healthy Harbor Long Beach, which looks at air, water, and wildlife quality issues. Things like retrofitting equipment within the terminals-almost 600 pieces of yard equipment will be fitted with diesel oxidation catalysts and will burning a cleaner form of diesel. We're currently teaming with the Port of Los Angeles on a voluntary speed reduction program, whereby vessels reduce their speed to 12 knots as they enter within about 20 miles of the harbor area. That slower speed reduces air emissions. Furthermore, we're working now with our short-line rail, the rail locomotives that come back and forth into the harbor, to help them purchase new locomotives to reduce air emissions. Our board has also been presented with a cold-ironing feasibility study [cold-ironing means that vessels would run on shore-side electricity while in port, rather than run their engines]. We think that cold-ironing may be practical in some situations, particularly for those users who have high demands and call our port quite often." - Lara L. Sowinski