To keep up with the rapidly shifting world of logistics, understanding the varied nuances of different shipping methods is tantamount to optimizing supply chain efficiency. Multimodal shipping is one of the most prominent and versatile logistical tools available to businesses for its cost-effectiveness and reliable blending of transportation methods.
This blog will trace multimodal shipping back to its routes to demystify exactly what it is, explain its benefits, and compare it to other popular shipping methods. If you run an e-commerce or shipping-reliant business, understanding these essentials can help you optimize your shipping practices by delivering goods as efficiently and cost-effectively as possible.
The Essence of Multimodal Shipping
Multimodal shipping is exactly as it sounds: a way of transporting goods that combines multiple transportation methods into one journey. In our modern supply chain, that means combining any two or more contemporary shipping methods, including:
- Air
- Rail
- Sea
- Land
Multimodal shipping combines these various methods under a single contract to simplify complex logistics procedures and streamline the delivery process. So, if you overnight a package via FedEx and they first ship it by plane and then truck, you’re already using multimodal shipping to fulfill your orders.
What separates multimodal shipping from other methods is the use of a single bill of lading. While other shipping strategies may use multiple forms of transportation, each leg of the journey is billed as a separate delivery. With multimodal shipping, everything from pickup to final handoff is considered part of a single process—simplifying accounting procedures, logistics, and paperwork for every delivery.
Multimodal vs. Intermodal Shipping: Understanding the Difference
Intermodal shipping, similarly to multimodal shipping, uses two or more forms of transportation to deliver a package from its sender to its final destination. When logistical experts and providers talk about intermodal shipping, however, they are almost exclusively discussing the movement of large freight containers, rather than individual packages.
Since freight containers are designed to seamlessly transfer between ships, trains, and trucks, intermodal shipping can be a savvy way to deliver a large load relatively quickly. Intermodal loads are, however, contracted under a different courier and bill of lading for each leg of the journey so, paperwork-wise, they’re not as simple as multimodal shipping.
Likewise, intermodal shipping eliminates air from the logistical equation, meaning packages won’t get to their destinations as quickly as possible. Similarly, while most countries follow the International Organization for Standards (ISO) dimensions for freight and rail networks, problems may arise in places that use their own proprietary train or shipment infrastructure.
The Strategic Advantages of Multimodal Shipping
When it comes to overall reliability and speed, other methods simply can’t compete with multimodal shipping. Multimodal shipping is most often praised by logistical experts for its:
- Cost-effectiveness – With a single courier responsible from pickup to final delivery, there are no secondary middlemen to slice off a piece of the pie and push up delivery rates. Similarly, with logistics companies free to utilize their own delivery partnerships and networks, they can secure the best deals on various modes of transportation.
- Efficiency – A single bill of lading means more efficient bookkeeping all around—one account payable, one receipt to track, and one contract to reference for customs clearance, taxation, and beyond.
- Simplified communication – When multiple couriers handle a single load, mistakes are more likely. If an item is misplaced or damaged during a handoff, both companies may be quick to blame the other with little recourse for you, the client. Furthermore, if you need to get an update on your package or determine its location, you’ll only need a singular contact or tracking number.
Implementing Multimodal Shipping in Your Supply Chain
Many of us may already be using multimodal transportation without even realizing it. Oftentimes, companies may hand off their packages without giving a second thought to how they arrive at their destination, leaving the complex networks of land, rail, sea, and sky up to their logistical partner.
If you’re particularly interested in implementing multimodal shipping for your deliveries, however, there are some steps you can take to make sure each package sees some combination of different transportation methods:
- Explore logistics partners – Accessing rail networks, shipping through busy ports, and sending freight by air are all costly, complex processes. Smaller couriers likely won’t have the logistical infrastructure to support multimodal shipping, so you may be relegated to bigger players such as UPS and FedEx.
- Determine your needs – Consider how multimodal transportation fits into your business model. Will it save you money, make your deliveries faster, or improve your carbon footprint? If not, perhaps it’s better to stick to singular methods of transporting goods.
- Use contemporary software to simplify the job – Innovative tools such as Transportation Management Systems (TSMs) can help you determine the best route for your shipments. TSMs can help you compare shipping times and costs to see if investing in multimodal shipping is the right move for your business.
- Analyze and evaluate – Once again, modern technology can make gauging the efficacy of your new shipping techniques far easier. After implementing multimodal shipping, look back on your recent performance using analytical shipping software for a better sense of your ongoing costs and how many packages are being delivered on time.
Case Studies: Multimodal Shipping in Action
Rakuten is a leading e-commerce company that, within many Asian countries, has the same top-of-mind awareness as Amazon. Originally established in Japan during the late 1990s, local ground delivery options were more than sufficient to serve the small number of early adopters willing to buy online at the time. As Rakuten and its ambitions grew, however, the company knew it would need to establish better logistics networks to expand beyond its island home.
Thus, to meet its growing base, Rakuten established Rakuten Super Logistics (which is now partnered with and called ShipNetwork). Using their extensive grid of land, rail, sea, and air connections, Rakuten now delivers to over thirty countries, instead of just their home base.
Future Trends in Multimodal Shipping
Like most aspects of society, multimodal shipping is adapting to the rise of automation and Artificial Intelligence (AI) in novel and interesting ways. Companies such as Rakuten, for instance, are getting in on the ground (or sky) floor of drone delivery and have already completed successful trial runs of test systems.
Furthermore, ongoing system integration and digitization may reduce our shipping needs as a whole as customers and businesses can more easily find products in close proximity to their final destinations. Recently, researchers have even been using blockchain technology to centralize and simplify tracking containers across multimodal and intermodal shipping routes.
There’s no telling exactly where improving technology will take multimodal shipping. But, based on advancements in established transportation methods—such as electric trains and cars—the future is likely more efficient and sustainable.
Navigating Challenges in Multimodal Shipping
Despite all the upsides, there are some potential drawbacks to multimodal shipping. Singular logistics partners may not have the whole globe covered and, thus, may not be able to fulfill your needs for a specific delivery.
Similarly, they may not necessarily have established relationships in specific countries or regions, which could lead to issues with customs clearance and importation, especially if they’re unfamiliar with domestic regulations and tariffs.
In such scenarios, trusted local partners can be important to smooth things over at the border and ensure your package makes its way to its final destination.
Multimodal Shipping and Lojistic
Multimodal shipping is completed through one courier on a single bill of lading, but will use some combination of air, land, sea, and rail to reach its recipient. Thus, multimodal shipping requires minimal paperwork, is cost-effective, and is often more sustainable than other methods. However, managing the logistics and costs associated with all of your shipping can be complex, given the variety of factors involved in each transport mode.
Lojistic’s parcel and freight audit solutions play a crucial role in simplifying this complexity.
Here's how:
- Cost Reduction: By analyzing shipping invoices and identifying billing errors or opportunities for rate negotiations, Lojistic ensures that businesses are not overpaying for their shipments. This audit can uncover hidden fees, incorrect weight classifications, or services that were charged but not delivered.
- Access to Freight Marketplace: Lojistic offers competitive rates via its freight marketplace. This allows businesses to compare options and choose the most cost-effective and efficient shipping methods for their needs.
- Exclusive Group Discounts: Through Lojistic, businesses gain access to exclusive group discounts on shipping rates. These discounts can significantly lower your shipping costs.
Multimodal shipping is the present and future of the supply chain. Team up with Lojistic to make the most of the various transportation methods our world has to offer.
Sources:
- Archetti C, Peirano L, Speranza MG. Optimization in Multimodal Freight Transportation Problems: A survey. European Journal of Operational Research. September 24, 2021. Accessed February 21, 2024. https://www.sciencedirect.com/science/article/pii/S0377221721006263.
- Kenton W. Intermodal freight: What it means, how it works, Pros and Cons. Investopedia. Accessed February 21, 2024. https://www.investopedia.com/terms/i/intermodal-freight.asp.
- Efficiency and sustainability in multimodal supply chains. Accessed February 21, 2024. https://www.econstor.eu/bitstream/10419/194069/1/itf-dp-2018-06.pdf.
- Our history. Rakuten Group, Inc. February 16, 2024. Accessed February 21, 2024. https://global.rakuten.com/corp/about/history.html.
- ShipNetwork. Rakuten Super Logistics is now ShipNetwork under new ownership. PR Newswire: press release distribution, targeting, monitoring and marketing. August 1, 2022. Accessed February 21, 2024. https://www.prnewswire.com/news-releases/rakuten-super-logistics-is-now-shipnetwork-under-new-ownership-301597367.html.
- JP Rakuten Logistics conducts trial drone delivery in mountainous region of Hakuba Village, Nagano. Rakuten Group, Inc. February 20, 2024. Accessed February 21, 2024. https://global.rakuten.com/corp/news/press/2021/0930_02.html.
- Salah K, Jayaraman R. (PDF) blockchain-based traceability for shipping containers in ... Accessed February 21, 2024. https://www.researchgate.net/publication/366534681_Blockchain-based_Traceability_for_Shipping_Containers_in_Unimodal_and_Multimodal_Logistics.
Author
Matt Bohn
Matt Bohn
Director of Parcel Rate Services
Prior to his role at Lojistic, Matt held significant positions in the industry, including his tenure as Senior Pricing Advisor at FedEx. Matt analyzed pricing programs and wrote pricing contracts for some of FedEx’s largest e-commerce and retail shippers. He also managed projects for the FedEx Global Pricing Approval Systems and Strategic Account Executive Inputs.
Matt earned a BS in Computer Engineering and an MBA in Finance from the Joseph M. Katz School of Business at the University of Pittsburgh.