New program to match 3PLs, brokers with trailers
A company has entered the market to provide smaller freight
brokers and third-party logistics companies (3PLs) with better and more affordable access to the country’s rail intermodal network. The service will also help truckers reduce the
number of surplus trailers that might otherwise sit empty or
be too costly to reposition to areas where loads are available.
The company, Minneapolis-based Capacity Connection
Inc., aims to match smaller intermediaries with motor carriers in an effort to improve equipment utilization and to
provide shippers and third parties with a viable intermodal
option. The service allows truckers to post online where
they have empty trailers that are needed in another location
or city. Logistics companies can view the locations on the
portal and choose the equipment and the subsequent rail
option that fits their customers’ needs.
For example, a 3PL with a load moving from Dallas to
Chicago might go to the Capacity Connection website to
find a trailer that’s sitting idle in Dallas and needs to get to
Chicago. Once a deal is struck, Capacity Connection manages the physical and financial aspects of the equipment-repositioning move. That includes providing the dray on
either end, paying the asset insurance premiums, and managing the rail portion of the move. Capacity Connection
has struck deals with railroads to provide linehaul services
on about 2,500 U.S. city-pairs.
All of these services are free to the motor carrier;
Capacity Connection gets paid by the logistics company
using the equipment. The equipment owners do not share
in the revenue generated by the intermediaries’ loads,
according to the company.
them pre-plan network operations based on future cus-
tomer requirements or sales opportunities.”
For trailer owners, the savings in free and fast repositioning
fall straight to the bottom line because the equipment is an
already paid for, or “sunk,” cost, according to Smith, who
steers the company along with long-time intermodal execu-
tive Tom Burke, who is founder and CEO. Smith, for his part,
was vice president, sales and marketing, at Kansas City
Southern, the Kansas City-based railroad, until October 2008.
Smith said the service would be a backstop for smaller
logistics companies that normally use trucking services but
might not always be able to find available capacity. It will
also supplement truckload carriers’ capacity allocation
strategies, especially as more of their trailer equipment
shifts to support regional moves of 300 to 500 miles, making intermodal a viable option for longer-haul shipments
that are often more cost-effective to put on the rail.
At one time, large so-called trailer pools dominated the
aggregation and deployment of equipment. However, most
of the bigger pools were disbanded over time, leaving an
aggregator gap that Capacity Connection also hopes to fill,
Smith said.
FILLING THE GAPS
Capacity Connection’s goal is to exploit two voids in the intermodal supply chain. Smaller logistics service providers have
traditionally lacked the volume to demand rail intermodal access at affordable rates. Meanwhile, there are
often large numbers of trailers sitting in locations
where backhauls are not available, a result of irregular
traffic patterns. Truckers can face costly repositioning
expenses to get their equipment where it needs to go.
Michael Smith, Capacity Connection’s president,
said the company’s mission is based on the age-old
principle that an asset in motion is more profitable
than an asset at rest.
“Having equipment where the opportunities exist
for trucking companies is critical, which is why they
pay large sums of money to reposition equipment,”
he said in an e-mail to DC VELOCITY. “With their relationship with us, [truckers] receive a number of benefits: reduced dwell time, free repositioning, asset
insurance coverage, and a marketing tool that helps
NEXT UP: CONTAINERS?
Smith said Capacity Connection is exploring the potential
of expanding the model into the container segment.
Containers have become the dominant equipment in
present-day domestic intermodal service because of their
relative ease of handling and their efficiencies in double-stack moves, where boxes can be stacked two high in a well
car, allowing for much more freight to be moved on a single car. Some companies, like giant Schneider National Inc.,
have converted their entire fleets from trailers to containers
to take advantage of those benefits. ;
ground breakers
Invata Intralogistics Inc. has completed a multiphase build-out of a distribution center in Panama City, Panama. The
facility is designed to handle medical devices, pharmaceuticals, and medical supplies for local distribution in Panama as
well as throughout the entire Latin America region. Invata
has also begun a multiphase build-out of a new 289,000-
square-foot fulfillment center in Burnsville, Minn., for
ShopJimmy.com’s North American operations. … a2b
Fulfillment, a third-party logistics service provider that specializes in consumer-direct order fulfillment and customer
service, has purchased the Eatonton, Ga., warehouse formerly operated by Orchard Brands’ Haband Division.
