I have written about intermodal transportation several times over the years that I have been preparing this blog.  I became a big fan of intermodalism during the 90’s when I ran Canada’s largest IMC (Intermodal Marketing Company).  Each time I wrote a blog on this topic, I felt that the service was on the brink of making a major breakthrough in customer acceptance and market penetration.  While intermodal activity has shown steady growth over the past 10 to 15 years, this mode of transport is still viewed as a niche market by some folks or a slow and unreliable mode by others.    

These attitudes and perceptions appear to be changing.   Mark Yeager, Vice Chairman, President and CEO of the Hub Group, one of North America’s largest intermodal operators, has labeled 2012 a “transformational” year for Intermodal transportation.    A year is a short period of time.  My own belief is that by the end of the decade, intermodal service will reach significantly higher levels of market acceptance.  Here’s why.

Rails have made and are continuing to make major Investments in Infrastructure

The six class 1 railways in North America have all made significant investments in their intermodal operations.  As examples, Norfolk Southern’s 1400 mile Crescent Corridor and its Heartland Corridor and CSX’s National Gateway (that is one third complete and will be fully operational in 2015) are just three examples of the major investments being made by two railways to allow taller trains carrying more cargo to move through the east coast of America.  The rails are better equipped to handle more intermodal traffic than ever before.

The Service in better

I have been writing a blog on the transportation industry for five years.  During this period I have received hundreds of postings and e mails from readers.  Every now and then I receive an e mail that stands out.  This week I received a thoughtful and interesting e mail and article from a truck driver, David Robson.  In the article, he shares his thoughts on what trucking companies can do to improve driver retention and increase trucking company profits.  With permission, here is an edited version of the article.

 The Future of the Professional Driver

“I was looking up the top 50 trucking companies and reviewed a few of the well-known companies CSA scores from the FMCSA website.  I was surprised and disappointed with what I saw.  Many of these carriers advertise on the backs of their trailers, “We hire only safe and professional drivers.”   If you saw their CSA scores I would think that the owners would be embarrassed to display those signs.  Perhaps the owners are not aware of their scores.

The first thing I noticed was that many were near the 60% intervention score. The other common factor involved “Subject to Placardable HM Threshold.“

I found some violations that were commonly high among most of the carriers.

Over the past two months Stephen Harper has presented a clear and compelling vision of where he wishes to take Canada during his tenure as Prime Minister.  First there was the border Security and Trade Agreement with the United States that he and President Obama announced to the world in December.  He followed this announcement with an important speech this week in Davos, Switzerland at the World Economic Forum in which he outlined his plans to expand trade with nations around the world.

It is important to put these initiatives in context.  Canada has the 10^th largest economy in the world.  Thirty percent of the country’s GDP comes from exports.   The United States is Canada’s largest trading partner receiving 73 percent of Canada’s exports and 63 percent of its imports.  Canada receives 23 percent of U.S. exports and 17 percent of its exports.  Canada is the number one export market for 35 of the 50 U.S. states.  Trade with Canada is more than twice the volume of all U.S. trade with the nations in the European Union.  While the north/south flow of goods has changed over the years due to the rise in the value of the Canadian dollar against the U.S. dollar, this is still a very large and important trading relationship for both countries.   

The Security and Trade agreement announced in December will facilitate freight flows by reducing the number of inspections and integrating the trusted trade programs of the two countries.  The rhetoric and political posturing over the past few weeks concerning the Keystone Pipeline project has overshadowed the size and scope of our trading relationship with the United States and the initiatives being taken to take this relationship to a new level.  “We will also continue working with the Obama administration to implement our joint ‘Beyond the Border’ initiative, our plan to strength and deepen our economic and security links to our most important partner,” stated Prime Minister Harper in Davos.

This week the Prime Minster made it very clear Canada will not put “all of its eggs in one basket.”  The nature of the Canadian economy, the need for Canada to market its energy, wheat, potash, pulp and paper and manufactured goods requires the country to sell and distribute these goods to other markets.  “However, at the same time, we will make it a national priority to ensure we have the capacity to export our energy products beyond the United States, and specifically to Asia.  In this regard, we will soon take action to ensure that major energy and mining projects are not subject to unnecessary regulatory delays - that is, delay merely for the sake of delay,” commented Prime Minister Harper.

“We will continue to advance our trade linkages.  We will pass agreements signed, particularly in our own hemisphere, and we will work to conclude major deals beyond it.  We expect to complete negotiations on a Canada-EU free trade agreement this year.  We will work to complete negotiations on a free-trade agreement with India in 2013.  And we will begin entry talks with the Trans-Pacific Partnership, while also pursuing other avenues to advance our trade with Asia.”

It is hard to believe that a year has gone by since I sat in on a presentation on Social Media in Transportation at the 2011 SMC3 Winter Conference.  This past week David Tuttle, VP, Digital Strategy at TMP Worldwide (who spoke last year) was back again and joined by Bobby Harris, President and CEO of BlueGrace Logistics.  In the short space of 12 months it is clear that social media have exploded in popularity. 

Here are a few statistics to reinforce this message.  There are 800 million global profiles on Facebook, Twitter has 175 million users and LinkedIn has 150 million profiles.  Facebook reaches 85% of logistics professionals on the internet – over 2.8 million people; Twitter reaches over 22% of logistics professionals on the internet; LinkedIn Reaches 19% of logistics professionals on the Internet.

Beyond the impressive user numbers, there appear to be two breakthroughs this year.  The first is in functionality.  Companies and individuals are now starting to figure out how to embed the capabilities of social media in their businesses. 

David highlighted the “follow me” feature on LinkedIn.  It allows people to stay up-to-date on employment opportunities and organizational changes at companies of interest.  Your “career page” beside your “company page” is a powerful tool to “inform active and passive candidates” of opportunities.  It can be used to “see who is following your company and send automatic updates.”   Twitter can be custom branded and used both as a tool to communicate with your followers and to follow them as well.   

David also noted that a Facebook page for your business, with photos that tie in to the website or other business activities, can play a key role.  Targeted ads can be placed on the right side of the Facebook page and can be tailored to the specific demographics and interests of your customers. Each company pays for these ads on a CPC basis.  He also spoke about the importance of scheduling your communication over a period of time to maintain the attention of your fans and followers.  Take advantage of opportunities to connect directly with your fans.

As I reach my 30^th anniversary in the freight transportation industry, I continue to be struck by the lack of innovation in this business.  While we have had some changes over the past three decades (e.g. transition from 48 to 53 foot trailers and containers, scheduled train service, the rise of international freight transportation, speed limiters, GPS tracking devices, more energy efficient engines and transportation management software systems, the industry has not changed much when compared to others.  If one looks at the retail industry and the advent of shopping over the internet, or the music industry and the advent if iTunes and iPods or the book and magazine publication industries and the advent of tablet computers, the transportation industry lags behind in innovation.

One can argue that changes in the transportation industry are constrained by existing road and rail infrastructure, government regulations and by the huge cost of changing transportation equipment standards.  The fact is that with hybrid and battery powered engines in their infancy, we still have diesel powered tractors and locomotives pulling trailers and rail cars as we have had for decades.  As a result, when a shipper or carrier tries to “break out of the box” and come up with something significantly different, we all should take a close look to see if this could be an opportunity to improve the competitiveness of North American supply chains. 

Four five decades, wood pallets have been the industry standard for moving packaged freight. Swedish retailer Ikea is replacing its wooden plates, not with plastic but with paper pallets.  Ikea uses 10 million pallets a year to ship its goods to its 287 stores in 26 countries. In January, Ikea will make the switch to paper with an expected savings of ten percent in transportation costs. 

The new corrugated cardboard design can support shipment weights of 1,650 pounds or 750 kilograms.  At two inches high, the paper pallets are one-third the height of wooden ones and at 5.5 pounds each, ninety percent lighter. The pallets will be recycled after each use.

The company will have to spend $124 million U.S. on paper and new forklifts.  Ikea expects to cut its transportation costs by $193 million U.S. a year.  This initiative is already being met with skepticism by those who believe that paper pallets may not meet the requirements for durability and may be adversely affected by weather.