Both intermodal and multimodal shipping describe the movement of cargo that uses several modes of transportation (e.g., trucks, rail, sea, etc) to a dedicated location. Both intermodal and multimodal transport can involve several different carriers throughout the delivery. Differences lie in how the contract or agreement is structured.
There are distinct advantages for specific use cases for those that use multimodal freight and distinct advantages for those that use intermodal freight. Making the correct choice can ease a lot of potential headache and, potentially, save a lot of money in the long run.
What is intermodal transportation?
Intermodal transportation is defined as shipping cargo or freight over several different modes of transportation while dealing with a wide variety of businesses. Each business may be responsible for single or several modes of transportation, but the customer signs contracts with each company independently.
As such, due to the way intermodal transportation is structured, the responsibility for the cargo is distributed evenly across all companies. Each is only responsible for the cargo during the transportation, loading, and unloading, but no further.
Intermodal transportation is also more complicated and prone to issues when compared to multimodal transportation. Negotiating and managing several contracts while communicating with several companies at once for deliveries adds complexity to the shipping process.
What is multimodal transportation?
Multimodal transportation also involves shipping cargo or freight over several different modes of transportation, however, the shipper only deals with a single contract. There may be several companies taking care of the delivery, but the shipper only negotiates a single agreement with all of them. It is more common, however, to ship with a single company under a single contract.
As such, in multimodal transport, the responsibility is no longer distributed evenly, rather it is mostly undertaken by a single company. Additionally, multimodal transportation is significantly simpler for the shipper as a single contract is necessary.
It is more complicated for the carrier, though. While some companies might be able to cover multimodal transport in its entirety, others might need to enlist other businesses if some mode of transportation is lacking.
Finally, multimodal transportation can be performed through freight forwarders or agents. These are companies that do not carry goods themselves, rather they have large networks of carriers and can help negotiate contracts or even take care of the entire shipping process by themselves.
Advantages of intermodal transportation
While intermodal transport is slightly more complicated for the shipper, it also provides more flexibility when compared to multimodal transport as the multitude of contracts gives companies more room for negotiation. Companies taking advantage of intermodal transport may get these benefits:
- Better negotiation opportunities for each intermodal transport leg;
- Better selection of carriers;
- Potential reduction in carbon footprint through carrier choice;
- Better access to equipment, capacity, and transit schedules.
Most of the intermodal transport benefits will boil down to the ability to get great rates and negotiating. While it may take more time, with a strong team of professionals and a large network, intermodal transport can greatly reduce both environmental impact and costs. For smaller businesses, however, multimodal transport will likely be the better choice due to less negotiating power and less experience with a transportation management system.
Advantages of multimodal transportation
Multimodal transport has significantly less overhead when compared to intermodal transport. All of the benefits, in this case, are derived from the fact that everything is managed under the same transport carrier (or, if several are included, under the same contract):
- Better shipment tracking as it’s all under one system;
- Better access to remote parts of the world while maintaining a single source of responsibility;
- Better delivery time efficiency;
- Minimization of overhead, coordination costs, and potential for errors.
All in all, having a single transport carrier is likely better for smaller businesses that have less regular loads to ship or less negotiating power. Handing over all of the responsibility to a single, highly experienced entity that can take care of the entire shipping process with ease will reduce internal costs.
In general, however, outsourcing activities is slightly more expensive, so every shipper should begin building their own transport carrier network. Over time, a transport carrier network may be used to switch to intermodal transportation or have a mix of both.
Digitalization and transportation
Regardless of the transportation method chosen, all parties should be concerned about tracking cargo. Various methods exist that make it easier to monitor the shipping process at any stage in the journey, ranging from basic telematics to advanced next-generation asset intelligence solutions.
Cargo tracking nowadays should focus more on taking advantage of asset intelligence solutions. Most of these are devices that are completely modular, enabling companies to collect various data points directly from containers (instead of from the vehicle, as is provided by telematics). Companies can collect information such as container coordinates, temperature, humidity, CO2 levels, impact events, and dozens more data points.
Those companies that implement asset intelligence solutions have the strict advantage of being able to monitor and improve their logistics operations. Not only do they get access to various data points such as GPS coordinates in real-time, but they also have an easier time negotiating during incidents as such devices can track impact events and transmit all the information. Finally, these devices usually come with advanced software solutions that allow companies to set up various alerting systems, upload digital versions of documents for easy access, and connect all of the information to databases and APIs.
Conclusion
The difference between intermodal and multimodal transport is founded upon the number of contracts and, most often, carriers that are employed in the shipping process. Intermodal transport provides more flexibility, better rates, and reduction in environmental footprint while multimodal transport makes managing shipping easier, makes deliveries faster and more timely, and has a single source of responsibility if something goes wrong.
Neither choice is better by default. All of these advantages should be assessed on a case-by-case basis as some businesses will want to negotiate as much as possible to get the best possible rates while others might find the reduced transportation management more attractive.
