Volume volatility is a considerable challenge for intermodal terminals today. Vast swings in demand make it difficult for terminals to operate efficiently. The pandemic is largely to blame for the current surge we’ve seen over the last few months. After a significant dip starting in March 2020 and continuing through September, pent-up demand exploded through the end of the year. Terminals went from major overcapacity problems to struggling to keep up with demand reaching 120 percent of capacity or more.
There was no way to plan for it. No one knew exactly how much pent-up demand there was. They just knew that it was coming, like a tidal wave bearing down on the industry. And when it crashed, terminals found themselves desperate for extra capacity to keep pace with the crushing demand.
Volume volatility makes it exceedingly difficult to plan labor and yard allocations, particularly when every incoming container needs a chassis and a parking space. Because incoming and outgoing freight compete for the same resources, efficiency drops off dramatically when capacity is stretched too thin. Additionally, fluctuations in volume can increase congestion at the gate causing truck turn times and dwell time to rise. Congestion can also lead to bottlenecks in the yard and added delays. Most recently, terminals from coast to coast in the US have been dealing with chassis shortages since mid-2020, affecting operations within the terminal and contributing to delays.
That’s why a TOS like Intermodal PRO (IPRO) from Tideworks is so essential. It provides terminal operators the flexibility to switch between wheeled and grounded operations in real-time, to react efficiently to fluctuations in freight volume.
Volume Volatility isn’t Just a Pandemic Problem
The COVID-19 pandemic was one of the biggest crises the intermodal industry has faced in recent decades, but volume volatility is an ever-present concern.
In 2019, the US and China trade conflicts caused serious interruptions to supply chains and shipping volumes. Before that, terminals have faced major snowstorms in the North or hurricanes in the South. The industry faces volume volatility to some degree every year.
Consider this. In February 2020, at the beginning of the COVID-19 pandemic, carriers canceled 19.9 percent of head haul sailings on the Far East to North America, Far East to Europe, and Europe to North America routes. On these three most active container trades in the world this year, carriers have only canceled 1.7 percent of head haul sailings in February.
Yes, this is a sign of a return to “normalcy,” and we certainly won’t be dealing with momentous volume swings due to unprecedented viral outbreaks every year. Still, swings of even much smaller proportions can wreak havoc on global commerce. Due to the global shipping industry’s interconnectedness, a supply chain interruption halfway around the globe holds significant ramifications for local inland rail yards. Carriers are adept at accounting for planned disruptions like the Chinese New Year that halts Chinese exports annually, but what about unexpected events?
We’re starting to see the ramifications today.
Due largely to the unforeseen demand spike in late 2020, carriers cannot fully meet global demand for containerized goods. Said Simon Sundboell, CEO of eeSEA, in a statement made in Jan. 2021, “We see that carriers are snapping up any available charter tonnage. There is no idle capacity left, carriers are delaying scrapping, and the first new tonnage orders have even been placed.”
In turn, the influx of goods and unpredictable demand has overwhelmed terminals. At the beginning of February alone, the ports of Los Angeles and Long Beach had more than 30 container ships anchored awaiting berthing space with no relief in sight.
What is Volume Volatility?
So it’s clear that volume volatility is unavoidable. But what is it, and how can terminals be part of the solution?
There are nearly limitless factors that can lift demand or push demand down monthly, weekly, or daily. When something disrupts the normal flow of goods, freight volumes can dip and climb violently. This volatility challenges terminal operators’ abilities to plan future labor and capacity usage.
Operators rarely know how much marine freight is destined for inland destinations. They could utilize a solution like Tideworks Data Platform to gain full visibility into their operational data, but even so, their customer commitments require them to load onto a train any cargo that reaches the terminal by the cut-off, no matter the situation. This creates major headaches for terminal operators because efficiency becomes exceedingly difficult to maintain when capacity is strained.
To understand why let’s consider a simple example. Imagine a wheeled facility (one where all containers must be placed on a chassis and parked) with a thousand available parking spots. If all thousand spots are filled, where do you place additional incoming containers? Because incoming trains are usually striped before outgoing trains can be loaded, you need empty capacity to buffer the exchange.
In response to surging demand, some terminals have had to lease or buy additional land and develop it for yard storage. This is expensive and also not always possible, particularly for terminals located in urban areas.
A better solution is to switch from wheeled to grounded operations where containers can be placed without chassis and then stacked, dramatically increasing yard capacity. However, without a well-designed TOS to help keep track of containers and plan moves, grounded operations can quickly grind to a halt.
Managing Volume Volatility with IPRO
Both wheeled and grounded operations have their place and are beneficial to a terminal’s operation. The most efficient operations can pivot between both to scale their capacity in real-time to keep up with inevitable volume fluctuations. But this isn’t something that can be done on paper. You needed a fully-modern TOS like IPRO.
IPRO’s top-in-class Intermodal feature set makes it possible to recognize the efficiencies available within your operation. Stacking, wheeled, or a combination of both, IPRO is built to handle the operational challenges and maximize opportunities.
Teamed with Tideworks Traffic Control, you’ll gain complete control of your operation, prioritizing critical path moves, orchestrated with Tideworks move segmentation, crane optimization, and automation.
Tideworks’ Intermodal TOS makes it easy. Flexibility, power, and efficiency — that’s how Tideworks manages volume volatility.
