Are Resilience Investments the Answer to Freight Booms?

“Our whole collective endeavor here is really designed to have the intermodal product be as competitive as possible in the truck,” said Oliver Wyman consulting firm partner of surface transportation, Adriene Bailey, at the recent Intermodal Association of North America’s Intermodal Expo.

Bailey also served as a moderator for the panel at the exposition, where participants from the intermodal freight industry debated the amount of investment funding that should be allocated toward resiliency-boosting infrastructure and other expenditures. The push for these kinds of infrastructure upgrades comes after the industry disruptions and demand surges brought about by the coronavirus pandemic.

The group discussed whether or not system overcapacity may lower overall efficiency while chassis availability continues to be a major issue for trucks moving containers. In fact, at the root of the overarching issue is that there is currently an excessive number of containers waiting on any given chassis for a longer period of time than necessary before they’re finally unloaded–meaning the equipment being used in those movements are occupied for days, according to Georgia Ports Authority director of strategic operations, Duke Acors.

The intermodal freight industry as a whole needs to make major changes to its turnover times if any efficiency improvements are going to become realistic, Acors added.

“I am not positive that if you threw another 5,000 chassis into the pool it would make a difference,” he lamented. “The entire supply chain needs to be evaluated.”

Still, there are not enough of the needed chassis types in the areas they are most necessary, causing the current difficulties for the intermodal industry to meet the demands of intermodal freight to increase quickly, explained C&K Trucking president, Mike Burton.

“Everything that we are focused on is…’What we can do to get more chassis?’” he said. “Having to chase all over the city to find a chassis kills our productivity and causes a number of delays.”

The exponential increase of shipments coming in and out of ports across the country in the wake of the pandemic–and the e-commerce boom that came along with it–has overwhelmed many industry professionals without any break in sight.

“We are now going [on] a year–14 months or so–that we have struggled,” said director of international sales at CSX Transportation, Jay Strongosky. “Every stakeholder is struggling, and no one is happy with their service.

CSX, for instance, had to hire an additional 300 conductors in 2021–more than were onboarded in the past two years combined, Strongosky added. This isn’t unique to his company, though. Many companies throughout the industry expected a potential recession during the first year of the pandemic and decided to lay off many employees. Now, with freight volume numbers ending up through the roof, those same companies are currently understaffed and scrambling to boost their recruitment numbers–in the midst of a worsened truck driver shortage.

Luckily, though, the Expo’s panelists unanimously agreed that the intermodal industry has been able to stay steadfast throughout various labor issues, emergency weather events, or other month-or-two-long disruptions that regularly occur throughout the country. Georgia Ports Authority, in particular, has worked to stay ahead of potential downfalls by keeping its capacity at around 20% above demand.

“Last year, we grew on 20%, so we are going to have to reevaluate,” added Acors.

Rising demand will also be aided by improvement projects taking place as soon as possible or in the long-term, such as Georgia Port’s efforts to speed the process of infrastructure initiatives like the project working to boost twenty foot-equivalent unit capacity by 650,000 at the state’s facility in Savannah.

Should the industry allocate capital to a rainy day fund, such as when UPS Inc. began stockpiling equipment before reaching the winter holiday shopping season? It’s hard to tell, because this unprecedented freight increase brought on by an unprecedented pandemic has been impossible to predict and incomparable to any regular busier-than-usual season.

“The pandemic is like a 100-year flood,” said Burton. “As a group, we are not solving it. Customers are not happy across the board. We are broken, and I don’t know that we can fix it.”