Not easy being green: Finding truckloads to convert to intermodal when the low-hanging fruit is already picked

With shippers ramping up sustainability efforts, the conversion of truckloads into intermodal units seems like a natural place to start. In addition to typically saving shippers 10%-15% in freight costs and halving the fuel surcharge, intermodal releases commensurately less greenhouse gas. 

But, analyzing the real-world freight shipments of major CPG companies reveals the complications and constraints of that conversion process. Most truckload origin-destination pairs are incompatible with intermodal service because they are too short, not near a major rail terminal or cannot economically be moved in a dense intermodal corridor. Many other truckloads are simply too time-sensitive or service-sensitive for intermodal to be considered. 

What’s also clear from analyzing shipment data is that many of the largest consumer goods shippers have already converted the most obvious applicable shipments to intermodal. For example, Shipper X (an aggregation of two household-name CPG companies) uses intermodal for ~90% of its dry loads in a number of dense long-haul lanes. As a result, we have avoided discussing the denest intermodal lanes like LA to Chicago and LA to Dallas in this report. 

That’s not to say that intermodal conversion opportunities are no longer available, just that the largest CPG companies haven’t been sleeping on this. In this report, we highlight four lanes (Atlanta to Dallas, St. Louis to Harrisburg, Pennsylvania, St. Louis to San Bernardino, California, and Harrisburg to Jacksonville, Florida) where we recommend that Shipper X make greater use of intermodal than it already does. What those lanes have in common are long hauls, short drays and adequate density in addition to there being apparent room for additional intermodal conversion by this particular shipper.   

We estimate based on different spot rate estimates contained in SONAR that Shipper X could save over $1,000/load in certain long-haul lanes by converting to intermodal. While the magnitude of that savings is partially due to a tight truckload market and heightened imbalances in domestic freight flows, our analysis suggests that intermodal conversion can go a long way toward offsetting the carbon impact of dry van shipments (offsetting the carbon impact of 45-plus dry van loads for every long-haul shipment converted to intermodal), if Shipper X wants to use the savings in that manner.