Rails Coax Brokers, Shippers to Fill Trains Via Intermodal

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SAN ANTONIO — Transportation brokers have an underused opportunity to move freight via intermodal shipping, but those rail shipments can require special attention, several industry experts said.

Speaking on March 22 at the Transportation Intermediaries Association meeting here, Shelli Austin, a vice president at broker IDS Services, said, “I don’t want you to think [intermodal] will fix all your problems. [Brokers] have to educate shippers and learn about it as well.”

While offering that guidance, Austin also said IDS uses intermodal for 80% of its loads because the rails can handle multiple shipments with a single phone call. As a result, one employee can do 40 loads daily using intermodal, compared with 12 for those using load boards, she said.

A TIA report found that the percentage of brokers using rail rose to 60% at the end of 2011 from 40% in mid-2010 (see related article, p. 5). The same report showed that brokers used intermodal for less than 1 million loads per year, far less than 1% of all truck shipments.

“Brokerage is our fastest-growing segment,” said Kari Kirchhoefer, assistant vice president at Union Pacific’s Streamline brokerage subsidiary. She said brokers placed 100,000 loads on the railroad last year, which also was about 3% of its intermodal business. The 2011 totals, however, represented 60% year-over-year growth.

“We are looking to play a larger role with TIA members,” said Sam Niness, assistant vice president for Norfolk Southern’s Thoroughbred Direct brokerage unit. “We need you guys to fill up” trains, he said.

Niness said brokers account for $60 million of NS intermodal revenue, or about 3% of the NS brokerage unit’s intermodal revenue.

At CSX, Tami Parsons-Dicks, director of sales, said brokers’ freight generates about 20% of CSX’s intermodal revenue.

Each rail executive outlined the advantages of using door-to-door intermodal, meaning that the railroads arranged drayage on both ends of the move, saving brokers of the time and cost of finding local truckers, in an effort to make the rail move as easy to arrange as truckload.

Even though the rails arrange door-to-door trucking, the drayage portion still can create headaches, several officials said.

Austin said that long drayage moves, such as 250 miles, can raise the cost of intermodal and “defeat the purpose of the cheap” rail move.

Drayage, “at the end of the day, is the dark period,” where brokers can’t get immediate information about shipment locations, Kirchhoefer said.

She added, however, that UP’s draymen are required to report in every 30 or 60 minutes and that the railroad was planning to add more information technology to improve that process.

Another variable is different rail pricing and capacity strategies.

Norfolk Southern will provide equipment for brokers at peak periods when trucks may be scarce, based on usage throughout the year, but rates may change, Niness said.

On the other hand, CSX’s Parsons-Dicks said her railroad will commit to rates year-round, but equipment at peak periods is doled out on a first-come, first-served basis.

UP also sets its equipment allocation and rates on overall usage, Kirchhoefer said.

Still another variable is actually moving a load.

Niness said that to get a confirmed price, a broker has to provide a Department of Transportation number to demonstrate that he or she is not a shipper.

“We don’t let people shop our rates,” Parsons-Dicks said. “They have to go through the credit [review] process.”

UP has the same policy as CSX, Kirchhoefer said.

While pricing and capacity strategies varied, all three railroad representatives said it was simple for brokers to do business with railroads and that they could move their first load within a day after initial contact. Each carrier also has Web-based rate quote tools.

Austin also said that the railroads could help themselves by having more consistent fuel surcharge programs and better tools for brokers to know which routes are conducive to rail.

Shawn Rorie, president of BAT Logistics, recommended truck/rail moves, saying, “All I have to do is train our folks as to how to sell intermodal. I don’t have to train them on managing drayage.”