Multimodal represents one of the most important ways, if not the most significant development in the supply chain’s history, to increase efficiency and lower costs. And more companies are turning to multimodal shipping management as an alternative to sticking with a single-mode. Part of that reason comes from the fact that global trade trends will inevitably require a change of mode. And statistics indicate shippers are rapidly flocking to multimodal. BusinessWire reported, “With the increasing global economic integration, the sustainable development of the world economy and society needs the support of an efficient freight transportation system. By relying on two or more modes of transportation, multimodal transport can substantially improve transport efficiency and reduce transportation costs for the complete process integration organization transportation service. According to statistics, multimodal transport can improve transportation efficiency by 30%, reduce cargo damage by 10%, reduce transportation costs by 20%, reduce highway congestion by more than 50%, and promote energy savings and emissions reduction by more than one third.” With interest in peak season growing, it’s essential to realize the issues and ways to overcome multimodal shipping management’s top challenges.
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Multimodal Shipping Management Increases Touchpoints That May Increase Damage Risk
As with all transportation movements, multimodal shipping management comes with the issue of handling. Too many touchpoints can lead to an increased risk of damage to the freight. However, the benefits of multimodal shipping are simply too great to ignore.
Multimodal Means More Paperwork
Multimodal and intermodal shipping are two terms that are often used interchangeably. Yet they are vastly different. In multimodal shipping management, a single carrier retains the liability for freight. In intermodal, another carrier is involved in the mix. In terms of paperwork, multimodal can be as simple as a single invoice from a carrier. Simultaneously, carriers may invoice for each leg of transportation, reflecting that mode’s cost. That’s where things get a little sticky. If the documentation does not align properly or is not matched together, it will cause settlement problems and become a cashflow nightmare for companies. Fortunately, advanced supply chain systems are turning the process of invoicing and settlement, particularly in multimodal shipping management, into an automated process.
Multimodal Invoicing Can Be Also Add to the Trouble of Auditing
Even if the invoice is paid, it begs the question, “was it accurately billed?” To answer that question, shippers need an auditing system that can function in real-time, not just in retrospect. According to Global Trade Magazine, outsourcing auditing can reduce invoicing costs by up to 80% and ensure companies only pay for services provided. Again, that advantage carries over beyond multimodal and benefits all forms of transportation and logistics management. Therefore, multimodal invoicing becomes synonymous with supply chain auditing efficiency and automation.
Multimodal Transportation Requires More Communication and Collaboration
The supply chain is rife with holes in communications and trouble maintaining collaboration in freight. Without the right information at hand, companies will inevitably make mistakes, including missed deliveries and errors. And cooperation is not just a “let the carrier handle it” need. According to Talking Logistics, “Most shippers, however, rely on freight forwarders and logistics service providers to plan and execute their ocean and air shipments, and oftentimes the inland moves too. Simply put, global multimodal transportation is not a “Do-It-Yourself” operation for most shippers — it requires effective communication, collaboration, and coordination with freight forwarders and 3PLs.”
Multimodal Supply Chains Can Suffer During Times of Disruption
Failures within communications and collaboration will result in significant hurdles for multimodal shipping management. During times of disruption, like the record-matching hurricane season of 2020, those failures become even more prominent and likely to cause additional shipping delays. As explained by Supply Chain Quarterly, “Today’s companies are wrestling with how to respond to ever-increasing political, environmental, and economic challenges, such as Brexit, natural disasters, and geopolitical instability in the Middle East, to name but a few. The impact of these events is widespread, rattling even industry titans. For example, Toyota has long been known for its supply chain efficiency, but the automaker was unprepared for the April 2016 earthquake’s aftereffects in southern Japan. At the time, its supply chain strategy included single-sourcing numerous components from Japanese suppliers and carrying minimal inventories in its supply chain. However, this strategy became a disadvantage when parts shortages forced Toyota to shut down production lines following the earthquake.”
With that in mind, it’s crucial not to overlook multimodal shipping as it provides a way to source more product, capacity, and capabilities than traditional, limited supply chains. Since it relies on multiple modes by the literal definition, it can more easily flex to meet the challenges of disruption. Thus, that challenge becomes a self-optimizing and supply chain-benefiting improvement.Listen to “A Look at the Freight Technology Landscape & How Tech Builds Trust” on Spreaker.
Implement a Multimodal Shipping Management Strategy to Increase Supply Chain Competitive Advantage
Time is money for customers and businesses. And a multimodal shipping management strategy will inherently help companies move more freight, including managing parcel as the final mile of e-commerce. However, multimodal does come with a few challenges. And companies with the right TMS and collaboration, like using the Cerasis Rater and working with GlobalTranz, can overcome them easily.