Intermodal Contracts – a primer

This article is about domestic intermodal transportation accomplished by trailers on a flat car or the transportation of intermodal containers. Intermodal transportation has really blossomed since the Staggers Act began deregulating this type of transportation in the 1980′s. Intermodal transportation is now a very important method for the movement of goods by Shippers and Carriers. A few truckload companies recognized the potential for intermodal transportation in the wake of de-regulation. JB Hunt, which was historically known as a truckload carrier prior to their entry into the intermodal business, is now a leader in intermodal transportation.

So – what does intermodal transportation mean? In a general sense, it means the movement of containerized freight by different modes of transportation. Containers may be transported on railcars by railroads, through the ocean by ocean vessels, and across the roadways via road tractors. Intermodal transportation is a complicated business as it involves the use of portable chassis, the involvement of interchange agreements between the container owners, drayage companies and the railroads.

To add another dimension to this mode of transport, there are IMC’s (intermodal marketing companies), which act as intermdiaries that put the parts of the puzzle together for shippers. These companies offer door to door services, door to ramp services, and everything in between. Therefore, the contracting for these services can be very complicated. Some issues that arise involve the use of interchange agreements such as the UIIA (Uniform Intermodal Interchange Agreement), whereby equipment providers can set forth requirements for motor carriers pulling their containers. When the motor carriers sign on as a motor carrier under the UIIA, then they agree to the terms set forth by the equipment providers participating in the Uniform Agreement.

For Motor Carriers that own rail containers, they either need to become an equipment provider under the UIIA, so that drayage companies participating in the UIIA as a motor carrier can legally pull the motor carrier owned containers, or in the alternative they will need to have interchanges with each of the motor carriers that move their containers. If proper interchanges aren’t in place, there can be lapses in insurance coverage for the goods being transported.

Another challenge with intermodal carriage is that the rail carriers have very involved tariffs and circulars, which most motor carriers will be required to sign in order to do business with the railroads and obtain space on the rail. The challenge for motor carriers getting into the intemodal business is to incorporate the terms that they agree to with the railroads in the contracts with their shipper customers. If the motor carriers fail to incorporate such terms, then they will likely assume all liability for loss and damage, and liability for improperly blocked and braced containers. This is no small issue as leaning containers and derailments can be very expensive and dangerous.

As you can see, the required contracts and terms for intermodal transportation are quite involved and require a high level of knowledge and experience in order to protect the interests of both shippers, IMC’s and Carriers. Without the proper transportation agreements, shippers, carriers, and IMC’s will become involved in complicated battles to determine liabilities and the application of insurance coverages for shipments.