While meeting growing consumer demands, shippers are utilizing multimodal transportation to minimize costs and environmental impact. Multimodal transportation refers to using at least two different modes of transport in a journey to move goods from one point to another.
By integrating various modes of transport, such as road, rail, air, and sea, multimodal transportation optimizes the flow of goods, offering a host of benefits for supply chain efficiency, sustainability, and resilience.
Shippers often achieve efficiency and flexibility when using multimodal transportation in supply chains. For example, by leveraging the strengths of different transport modes, businesses can optimize routes, reduce transit times, and capitalize on the cost advantages of each transportation mode.
By using a combination of modes, shippers can take advantage of lower rates and avoid costly surcharges. In addition, multimodal transportation may save on insurance costs. Insurance companies often charge higher rates for shipments that are transported using only one mode of transport because they are considered riskier. But if the shipment is transported using multiple modes of transport, the risk is spread out over different modes and insurance companies often offer lower rates.
Multimodal transportation also offers flexibility. Supply chain managers can tailor transport solutions to suit specific needs, such as the type of freight, delivery timelines, or geographic constraints. By combining different modes, companies can create customized logistics solutions that align with their operational goals and mitigate potential risks.
Supply chain disruptions, such as natural disasters, labor strikes, or geopolitical issues, can also impact the reliability of a single mode of transport. The Red Sea Crisis, for example, has caused longer ocean freight shipping times around Africa’s Cape of Good Hope instead of through the shorter Suez Canal. As such, some shippers are using a combination of air and sea to reduce time in transit.
Multimodal transportation is beneficial in these types of situations as it offers built-in redundancy, allowing shippers to switch modes if one becomes unavailable. This resilience minimizes delays and ensures continuity in the face of unforeseen challenges.
Sustainability is becoming an increasingly important factor in logistics decision-making. Shippers looking to reduce their carbon footprint should consider multimodal transportation, as it enables the use of greener modes like rail and sea for most of a journey. These modes produce significantly lower emissions compared to road or air transport, helping businesses align with environmental goals and regulatory requirements.
According to a blog post from logistics provider Geodis, multimodal transport allows for a 70-80% reduction in greenhouse gas emissions compared to an equivalent road transport operation.
In addition, Geodis notes that with road transport alone, the maximum cargo weight is limited to 40 tons but with the rail/road combination, this figure increases to 42 or even 44 tons, which means that transport capacity can be increased.
Before jumping into scheduling multimodal shipments, make sure it makes sense from a cost and strategic perspective. Shippers should first analyze current logistics processes and identify where multimodal transport could help. Next, choose the right logistics provider that can manage the overall freight movement to maintain efficiencies and on-time deliveries.
Lastly, invest in technology such as logistics software and automated route planning tools.
Effectively managing multimodal shipments requires technology - otherwise switching between various transportation modes might lead to blind spots in shipment tracking and create uncertainty about the cargo’s exact location and potentially result in higher costs.
Advancements in technology, such as real-time tracking, rate management, and data analytics, have further enhanced the effectiveness of multimodal systems. These tools provide supply chain managers with greater visibility and control over shipments, enabling proactive decision-making.
As supply chains become increasingly complex, the adoption of multimodal transportation will continue to grow. Investments in technology and partnerships are essential to unlocking its full potential. By embracing a multimodal mindset, businesses can build robust, sustainable, and agile supply chains that drive long-term success in a competitive global economy.
Ship Angel is a cutting-edge rate management platform for BCO shippers, offering innovative solutions in rate management, amendment guard, invoice auditing, and sustainability reporting. Powered by AI, Ship Angel helps shippers manage rates efficiently, ensure contract accuracy, and optimize cost savings. With a commitment to transparency, Ship Angel works across industries to help companies avoid costly disruptions and stay ahead in a rapidly evolving global trade environment.