With new technologies like transportation management systems at their disposal, logistics and supply chain managers are getting more advanced in how they compare one shipping mode vs. another—and how often they make that analysis.

Tom Malloy, vice president of business development at the Intermodal Association of North America (IANA) in Calverton, Md., points out that TMS technology and WMS today lets supply chain managers weigh not only price and service options in particular lanes but more easily compare one mode vs. another. "Not just truck and rail, but all modes out there."

Retailers and importers are typically pushing the technology-based comparisons, Malloy says, as they can compare options based on size of shipment, lanes, timing of deliveries, weight, etc. But manufacturers are also making strides.

Casey Angelo is a senior transportation analyst at chemical firm Degussa in Parsippany, N.J. and says a large part of his job is watching various modes and markets and looking for opportunities to reduce costs and improve service. Lately, with trucking capacity on the rise and rates on the decline, shippers like Degussa are re-evaluating decisions they made in a different market.

"In the past six months trucking rates have come down drastically as capacity has increased," Angelo says. "For example, we have a lane from Ohio to the West Coast which we've flip-flopped from truck to intermodal a few times based on market trends. When trucking rates increased in 2005, it became cheaper to put that shipment on the rail. It was a no-brainer at that point. But today, it's in play again."

Angelo says service has improved on the rails while truckload carriers have scaled back on some longhaul coast-to-coast lanes due to driver shortages. "Some of our coast to coast truckload shipments go on expedited trains anyway," he says. "And at the same time, some ramps in the Northeast were closed recently, which made it cheaper for us to ship into that region by truck."

Malloy also notes that an increasing percentage of what's shipped on rail today comes from truckload carriers that continue to struggle to find longhaul drivers. That likely wouldn't be an alternative without the reliable service and shipment tracking available on the rails today.

Shippers are evaluating intermodal options more frequently in today’s volatile markets.

Rail carrier Burlington Northern Santa Fe has been promoting its investments to help shippers. In March BNSF highlighted its work to help Wm. Bolthouse Farms, one of the world's largest suppliers of fresh carrots, with the location of a new refrigerated distribution facility in Hodgkins, Ill.

But the service improvements and investments don't come cheap to intermodal shippers and buyers. Angelo reports an increase in intermodal rates as providers "know they just have to be a little bit cheaper than truck to be competitive." Angelo emphasizes that rates on full container shipments are very lane-specific so "you have to keep sending different lane combinations to providers until you hit on something they want. I am always watching the costs in both modes to compare the costs, so that analysis is done continually."

He also notes that fluctuating fees to ship hazardous materials on rail have made rail less cost-effective for a chemical shipper in certain lanes. BNSF Railway in April unveiled a plan "to encourage shippers to use the most enhanced and upgraded available cars" for hazmat shipments by assessing tariffs and restructuring rates based on car risk factors, effective in 2008. BNSF says the move is an effort meet new AAR guidelines which require that any tank cars built after Jan. 1, 2008, meet stricter specifications and all shippers must convert their entire fleet to these cars by Dec. 31, 2018.

Where can intermodal shippers really save? Given the dramatic influx of intermodal shipments going from the West Coast eastward in the U.S., rail and intermodal providers are offering some great discounts on Westbound shipments. One shipper even provided Purchasing with an offer from a 3PL offering a short-term special discount in an effort to reduce its empty miles.

"There are some very special rates in place for a minimum of 20 days because of equipment imbalances East vs. West," the offer said.

When asked what areas intermodal providers need to work on most, most shippers point to equipment standardization. One shipper recently told Purchasing that intermodal providers need to "Standardize equipment so all containers are 53 feet. Trucking companies need to partner with rail lines and bring additional business instead of competing for the same business." Angelo also pointed to container sizes as a hurdle in shipping intermodal in certain lanes.