To obtain the best routing is not the same as getting the best total shipping cost. Using a combination of different transport carriers is sometimes better to achieve the best total shipping cost for door to door movements. However, it requires more logistics coordination and hands-on involvement. Using a single transport carrier to provide a door to door movement, may achieve the best routing. It requires less logistics coordination and paperwork.When shipping using a variety of forms of transportation, you may have run into the terms intermodal and multimodal. Sometimes these terms are incorrectly used interchangeably.
When using a carrier for your cargo, understanding the difference and communicating your wants properly to your providers can help alleviate any misunderstandings. Let us take a look at the difference between intermodal shipping and multimodal shipping.
Simply put, intermodal shipping is when your shipments are handled by several different shipping companies.
Intermodal is defined as the movement of cargo from origin to destination by several modes of transport where each of these modes have a different transport carrier responsible, each with its own independent contract. Multiple carriers during a single journey. Each leg of the shipment is be handled by a separate transport carrier. The Shipper will have several contracts, one with each transport carrier to handle their specific leg of the shipment.
To obtain the best routing is not the same as getting the best total shipping cost. Using a combination of different transport carriers is sometimes better to achieve the best total shipping cost for door to door movements. However, it requires more logistics coordination and hands-on involvement. Using a single transport carrier to provide a door to door movement, may achieve the best routing. It requires less logistics coordination and paperwork.
Let us say that you need to move a large amount of cargo to another site. Both of these sites are land locked and on different continents. This could mean in order to move your cargo, you will contact a trucking company to transport your shipment to a rail yard. Once at the rail yard, you will move your cargo to a shipping port. The cargo will be loaded on to a ship and moved overseas to another port- where it will be unloaded and moved to another rail carrier. Finally the shipment will be trucked from the rail yard to your destination location.
When using intermodal shipping, each leg of that shipment will be handled by a separate company. This means that you will have to have several contracts, one with each carrier to handle their specific leg of the shipment.
There are some advantages to doing this. You can negotiate terms separately with each company. This also means more overhead for you, as you will need to keep track of several contracts with different providers. You may also be responsible for handling coordination of delays, as one company will not be aware of the delays that another company might be having.
Advantages of Intermodal transportation are associated with:
a) Shippers can choose carriers to take advantage of lower rates for each transport leg;
b) gain flexibility and specialized handing of loading and unloading goods at different ports;
c) reduce their carbon footprint by choosing environmentally friendly carriers;
d) increased security of the products being transported; and
e) Shippers have more access to equipment and can better control capacity and selection of transit schedules.
Multimodal is defined as the movement of cargo from origin to destination by several modes of transport where each of these modes have a different transport carrier responsible, However under a single contract or bill of lading. Single carrier during a single journey. The same transport carrier is responsible for moving the shipment in all legs, in all modes. In simple terms, Multimodal is using various modes of transport but with one transport bill of lading.
The differentiation between multimodal and intermodal lies in the contract/ bill of lading and transport carrier responsibility / liability of the movement.
If we look back to our example above, multimodal shipping would be where one company or one contract would handle all legs of the journey. This means that the same company is going to responsible for moving your shipment in all legs, in all modes.
This can be set up in a couple of ways. You could go with a company that has all of these modes of transport available to them. Another way to set up a single contract for yourself is to use an agent. An agent would do all the negotiation on the back end for you while you only have one contract to keep track of. The agent would also be responsible for coordinating loading, unloading, and delays.
This method holds several advantages, the first being less overhead for you. Companies that handle multimodal shipping will be able to handle delays in one leg of the shipment in relation to the other legs without you needing to be involved. This method provides a one stop shop service, so every single aspect is handled by one provider, giving you that ease and peace of mind.
Advantages of Multimodal transportation are associated with:
a) Shipment tracking efficiency able to monitor with one transport carrier from door to door delivery;
b) access to remote parts of the world with responsibility and liability of the movement with one transport carrier;
c) efficiency in delivery time; and
d) minimization of logistics coordination expenses of a shipper
In summary, in terms of transportation, intermodality is related as a operation where the cargo is transported since its origin up to its destiny, by several modes, with one different contract by segment (its implies in partial responsability of each transport provider).
Multimodal (what MacAndrews offers) is the transport operation where despite the use of several modes, a single provider (and a single contract) assumes the entire responsibility since the cargo origin until its destiny.
The advantage of both Intermodal and Multimodal Transport is given by the most efficient combination of multiple transport modes, optimising lead times, reducing inventory costs and keeping the level of freight costs under control. This combination results in increased environmental sustainability, reducing the transportation carbon footprint.
Regardless of your choice with Intermodal or Multimodal, Shippers require a transportation management system (TMS) to ensure door to door tracking visibility, ability to perform routing scenarios to determine the best overall total shipping cost with the best overall routing transit time. The transportation management system must have capabilities for coordination with and between transport carriers and suppliers, along with freight rates and contract management.
For more information on rates or how multimodal transport may benefit your supply chain contact a MacAndrews specialist.