Crucial Factors to Consider for Multimodal Freight Transportation

Written by Leong Teck Lee, DLSM

by Leong Teck Lee, DLSM

Crucial Factors to Consider for Multimodal Freight Transportation

Written by Leong Teck Lee, DLSM

by Leong Teck Lee, DLSM

by Leong Teck Lee, DLSM

Multimodal freight transport developed in the transportation sector as an alternative to unimodal transport faced with the challenges brought by the growing global demand for transporting goods. Multimodal transport is the transportation of goods using at least two modes of transport, usually door-to-door. The common transport modes include railways, maritime routes, and the roads. When restructuring and reconfiguring their logistics strategies, freight operators seek optimal operational plans to increase cost efficiency, improve customer service effectiveness, and enhance environmental sustainability throughout their entire supply chain network.

Multimodal Operational Planning

Multimodal operational planning is investigated from two perspectives: modelling modal shift policy and planning of multimodal freight transportation. The section on the modal shift focuses on evaluating modal shift transport policy measures and aims to raise awareness and consideration towards the change of transportation mode as a transport policy option. It also includes various collaboration settings throughout the freight flow from the origin to the final destination. The section on the operational planning discusses practical planning techniques and case studies that deal with the implementation of multimodal transport at the operational level in order to assess the feasibility of a modal shift.

Modal Shift Policy

The actors of the operational side of international multimodal transport are shippers, multimodal transport providers, and freight forwarders. A shipper is the company that is responsible for initiating a shipment and who may also decide on the total freight cost. MTPs are the companies that can offer multimodal transport operations within the framework of national and international trade and transport practices in the sector. Freight forwarders play an important role in sea routes, acting as agents of shippers who are less popular to reach customers.The freight transport network consists of three essentially components including pre-haulage, main-haulage, and end-haulage.While pre-haulage and end-haulage are usually provided by road transport for short distances, the main haulage is carried out by using other types of transport such as rail, sea, and inland water for longer distances.

In the transport chain, cooperation can be established between carriers, shippers, and all MTPs. Different forms of collaboration, both vertical and horizontal are important for the competitiveness of companies. The system where the operators and shippers work together is considered as the most suitable combination of these collaborations; however, it is also the most difficult system to establish and maintain despite being the most effective. The cost components of this system should be identified and the distribution of income should be arranged carefully since it is necessary to consider revenue and cost allocations, risks and involvement of each operator. These horizontal collaborations reduce costs and increase productivity. On the other hand, time to share information and mutual self-sacrifice are required to establish and maintain mutual trust and transparency among collaborative stakeholders.

In order to be competitive in the transport sector, service providers should be more flexible favoring multimodal choices such as combination of road, sea, rail, and air. At this point, the transport service provided should be preferable by shippers and also multimodal transport providers (MTP) should arrange their services environmentally friendly. In multimodal freight transportation, uncertainties and randomness always take place throughout the freight flow process. This complexity increases the importance of reliability, smart disruption management, and sustainability of the operation while determining the decision criteria. Since the multimodal network is complex and dynamic, determining dynamic characteristics and modeling modal split are useful to forecast overall freight flow and to decide accordingly on the unknowns of future time periods.

Planning Multimodal Freight Transportation

The operational planning basically consists of deciding on which freight to accept or reject for routing and planning the overall route to transport selected vessel, train, and trucks. Freight mode choice is one of the most problematic issues while preferring the multimodal transportation. The main drivers of the decision-making process are cost, transit time, reliability, and frequency of the service. In addition to these, constraints related to the capacity of modes and nodes, pickup and delivery times should also be incorporated into the model and the associated data should be collected and gathered for taking the necessary actions.

The selection of the non-dominated and applicable routes to construct multiple Pareto solutions pool is achieved via various mathematical models. The subsequent phase is determining the best route according to user’s preferences among the optimal alternatives. Each mode of transportation has its own characteristics, limitations, similarities and differences, advantages and disadvantages. Planning each of them separately requires different techniques, but planning them together within a systemic framework coherently needs more complex techniques and models. The solution techniques for operational planning are mainly classified under the following five categories: direct solution methods using linear programming; stochastic solution methods using dynamic programming; heuristics; decision analysis models for mode choice, and other methods such as survey and simulations.

In general, minimizing cost and transport time are the two main objectives that service providers and researchers have looked after. In addition to these, awareness towards environment, willingness to pay, and service quality are the additional objectives and constraints to satisfy. Multi-objectivity requires using a combination of several methods. The crucial point is to choose appropriate model type after the examination of the acquired information about the system. Deterministic models give fairly enough discrete values in order to use in planning but they do not cover the reality completely; so, some dynamic properties and randomness in the data requires stochastic models. As a transportation network, multimodal transportation carries external negativity associated with environmental and societal issues.

The capacity management during routing and scheduling is crucial success factor for the sustainability of the multimodal transport, especially in sea-rail legs. The capacity of freight vessels and trains should be utilized at least at a rate of over 70% per trip in order to maintain profitability. At this point, revenue management and pricing strategies may help decision makers, principally MTPs; increase their profit by augmenting the capacity utilization rate. The main goal of revenue management is to find the maximum freight traveling along each possible leg in order to maximize the revenue by minimization of costs, allocation of slots, and dynamic pricing.

Conclusion

Although the multimodal transport sector is a transportation business driven by diverse equipment and vehicles that require large investments and whose continuity of revenue is largely uncertain due to the changes in the market demand, the advantages of multimodal transportation are still increasing day by day. Along with the studies carried out and efficient planning of operations, multimodal transport has become more preferred option in logistics.

Moreover, it is rewarding as it reduces the emission of harmful gases, eases the traffic congestion, and prevents unnecessary waste of money and time. In this paper, we discussed crucial factor to consider for multimodal transportation and important actors in the freight transport chain. We also highlighted the requirements of modal shift and the objectives of operational planning. Solution techniques are classified and exemplified for further practices. With the light of the information provided, the next step may address the development of the necessary solution methods according to the available data.


References

Aysun Mutlu. (2017). “Planning Multimodal Freight Transport Operation:
A Literature Review.” Retrieved from: http://research.sabanciuniv.edu/32682/1/2017_ISL_MutluKayikci%C3%87atay.pdf, accessed 8/9/2019.

Rui Pinto. (2016). “What Is Multimodal Transport?”. Retrieved from: http://www.multicargo.pt/blog-en/what-is-multimodal-transport, accessed 06/09/2019.

Sivalingam Munisamy, DLSM. (2018). “The Eight P’s for Effective Delivery of an Integrated Logistics Operations”. Retrieved from https://sipmm.edu.sg/8-p-effective-delivery-integrated-logistics-operations, accessed 10/09/2019.

Terance Tan Zhiren, DLM. (2017). “Intermodal Freight Transportation for Effective Supply Chain Management”. Retrieved from SIPMM: https://sipmm.edu.sg/intermodal-freight-transportation-for-effective-supply-chain-management, accessed 10/09/2019.

About the Author Leong Teck Lee has substantive years of experience in logistics management, specifically in international freight and delivery operations. Teck Lee is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). He completed the Diploma in Logistics and Supply Management (DLSM) on September 2019 at SIPMM Institute.

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