Conflict, Power, and Evolution in the Intermodal Transportation Industry's Channel...

This article focuses on the intermodal industry and the conflicts, power, and evolution of channels of distribution in this industry. The purpose of the article is to analyze the intermodal channel from the perspective of the marketing channels literature, and to examine potential channel developments

that could lead to a stronger competitive position for the industry. In the context used here, "channels of distribution" means the network of institutions needed to produce and market a service to the customer, and not the more common transportation industry connotation of a route for physical movement. [1] It is also important to define the term "intermodal"; however, there is no one agreed-on definition. Jennings and Holcomb have suggested a very broad definition, while some earlier literature tended to focus on the use of just containerized transportation. [2] For the purposes of this article, the reader should assume a definition like that used by Gerhardt Muller in his book published by the Intermodal Ass ociation of North America. Muller's definition of intermodal is "the coordinated transport of goods in containers or trailers by a combination of truck and rail, with or without an ocean-going link." [3]

Intermodal has emerged as a key segment of the transportation industry, accounting for virtually all of the international shipments of manufactured goods and a growing percentage of longer distance U.S. shipments. Between 1980 and 1998 rail intermodal traffic grew from 3.1 million to 8.8 million units. [4] While intermodal growth turned negative in 1995 and was flat in 1996 due to severe rail service problems, increases in traffic returned to earlier levels by the end of 1996, and grew 7.7 percent between 1996 and 1998.

Intermodalism combines the accessibility of truck with the economic line-haul capabilities of railroads and ocean shipping. During the 1980s to mid-1990s the demand for domestic intermodal transportation services increased as damage decreased, as transit times shortened and became more consistent, and as deregulation of transportation in the U.S. and Canada allowed greater cooperation among the modes. Reliable service combined with economic line-haul transportation, changes in railroad work rules, and double stacking of containers have made intermodal transportation very competitive in freight corridors exceeding 500 miles.

While intermodal services have been marked by strong growth over much of the last twenty years, the industry experienced major service problems in 1995-1996, and continues to experience a number of problems that may prevent predicted future growth from occurring. During the 1995-1996 slump, the major problem related to inadequate rail line-haul service following several mergers. However, in the long term, many of the service problems relate to the structure of the intermodal industry and high levels of conflict in the channel. This conflict has prevented the coordination needed to maximize efficiency in areas such as information availability and equipment use.

Channel leadership and coordination has been a major problem for the intermodal industry, especially in the domestic market. [5] While ocean carriers have long taken a leadership role in the international intermodal channel, there has been no clear channel captain in the domestic sector. This is in part due to the railroads' early decision to spin off the marketing and coordination functions to intermodal marketing companies (IMCs) [6] and the IMC's rather limited channel power. Other factors limiting the development of clear channel leaders include the number of intermediaries currently used in the intermodal channel, the level of conflict between these intermediaries, and the emergence of potential new marketing intermediaries such as truckload (TL) carriers. In order for intermodal to succeed, channel leaders with more power may have to emerge. These channel leaders could then use their power to reduce conflict and provide incentives for channel cooperation.

CHANNELS AND THEIR FUNCTIONS IN THE INTERMODAL CONTEXT

Channels of distribution were defined earlier as "a system of relationships that exist among institutions." Channels can be direct, with no external intermediaries, or indirect, with the use of as many intermediaries as are necessary to create possession, time, and place utility. Complete value added chains that perform both marketing and operations functions also must efficiently create form utility, or production of the service being provided.

The marketing literature has generally described channels in terms of manufactured goods, with less attention paid to services channels such as the intermodal one. Services channels have been viewed as less complex than manufactured goods channels, with fewer intermediaries and the lack of physical inventories.[7] However, the intermodal channel is in fact quite complex, with a number of specialized intermediaries, and the need to create time and place utility, as well as production of the service itself. While inventory per se is not sold, the system's capacity is sold, and that capacity must be managed much as more traditional inventory would be managed. Intermodal capacity is in part constrained by the availability of containers, trailers, and chassis, a form of capacity or inventory, [8] and many of the problems in the intermodal channel relate to the management of that capacity. For instance, problems occur in assuring an adequate supply of containers, in proper positioning of the capacity, and in assur ing smooth handoffs of the capacity between channel participants.

Both manufactured goods and service channels must perform a variety of functions in order to create various forms of utility. In general, the marketing channel must distribute information and stimulate demand, overcome the discrepancies of quantity and assortment between producers and consumers, overcome spatial and temporal separations in the channel, determine how risks are to be borne, and provide for an exchange of services and remuneration. Specific marketing functions that must be performed include those related to buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information. [9]

Table 1 summarizes the channel functions that must be performed in the more complicated international intermodal setting. The first function, the provision of infrastructure, is undertaken by both the public and private sectors. Other aspects of infrastructure, in its broadest definition, include contractual and liability rules, and in the international setting, customs laws and the rules governing cabotage movements of containers in the domestic trades of other countries. Marketing and sales are also key functions that include the dissemination of information and stimulation of demand, and creation of a transaction exchange. As part of the intermodal marketing function, grading and standardization is accomplished through the development of alternative intermodal products at varying prices. As part of the marketing process, members of the channel must make a sale take place, determine how risks are to be borne and how assets are to be financed, and arrange for invoicing and collection of amounts owed -- a ri sk-taking function in its own right. The intermodal channel also must produce the intermodal service. This requires the design, operation, and coordination of the intermodal system, regardless of whether the system is operated by one entity or a number of separate entities. Specific functions that must be performed include those related to the operation of intermodal rail terminals and the transportation and storage of containers to assure that capacity is available when and where it will be needed.

Several factors lead to a high degree of complexity in the production of the intermodal service. First, because of the need for a variety of container, trailer, and chassis sizes, and a lack of container sharing pools across railroads, it can be extremely difficult to provide the right equipment at the right time and place. [10] The interchange of leased containers between ocean carriers, and between railroads and drayage firms, also adds to costs and complexity. [11] In addition, because there are no railroads with North American-wide service, competing rail companies must work to cooperate in interchanging trains during line-haul movements.

INTERMODAL INDSUTRY STRUCTURE, CHANNEL RATIONALE, AND INTERMEDIARIES

The domestic intermodal industry structure, at least from the vantage point of the current industry channel captains and coordinators, the IMCs, is quite challenging. Figure 1 examines the competitive forces present in the industry using the approach developed by Michael Porter. [12] A number of factors would suggest a high level of competitive intensity among the existing firms, including strong industry growth, many similar sized competitors, low fixed costs for the coordinating role, and low switching costs for owners of cargo. Barriers to entry for new IMCs are also fairly low, given the minimal capital costs necessary and the availability of low-cost information processing. One increasing barrier, however, is railroad demands for greater volumes before they will sign contracts with an intermediary. There are also several viable substitutes to the IMC available. On the one hand, truckload (TL) and/or less-than-truckload (LTL) carriers, or railroads themselves, could take over the coordinating channel lea dership role. On the other hand, these other modes could substitute their single mode service for intermodal movements. Finally, the power of suppliers to the industry is high, especially in the case of a consolidating railroad industry. Similarly, the customers buying intermodal services are often large, with considerable power. The net result is an industry structure where the nominal leaders have little power and a high potential for conflict. The channels that have evolved to serve this industry structure, and to perform the functions described above, may be direct, involving one vertically integrated firm, or multi-level, involving a number of intermediaries. Channels may be single transactions or may consist of more formal long-term relationships between a variety of intermediaries and the shipper. The intermodal channel appears to be evolving toward more formal relationships between increasingly specialized intermediaries. The formal relationships between these specialized intermediaries allow for the routinization of very complicated channel relationships and operations, such as those involving alternative service products and prices, information transmission, and satellite tracing of equipment. While the railroads initially operated fairly integrated intermodal channels, they soon found that there were benefits from spinning off certain functions such as marketing and drayage. Routinization and functional spin-off are in fact key concepts in the theory of channels. [13] Intermediaries enter the channel because of the benefits they can bring to the involved parties as a result of specialization and the division of labor. While the specialization increases the complexity of the channel, it allows a given channel to develop a differential advantage over competing channels.

A number of intermediaries have developed to perform the marketing and operational functions required in the intermodal channel. Some of them are very specialized, performing only one function, while others are more generalized. There is no one channel member that performs or is capable of performing all of the functions itself. There are, however, intermediaries who are able to coordinate the entire channel. The channel is constantly evolving, with various intermediaries expanding or contracting the number of functions they perform, and developing strategic alliances with one another, and with new types of intermediaries entering the channel.

Table 2 summarizes the intermediaries present in the intermodal channel and shows the functions often performed by each of them. One critical intermediary in the channel is government. Government provides much of the infrastructure that is required, determines the legal environment that intermodal must operate within, [14] and establishes taxes on intermodal operations. Key areas of regulation also relate to the weight of containers and trucks and the liability regime for damaged goods. [15] While new regulations are a key factor, it could be argued that intermodal would not have developed without government policies that led to deregulation of transportation economics. [16]

Of all the intermediaries shown in Table 2, the intermodal marketing company (IMC) has been the most important to the growth of the domestic industry. IMCs are the third party "shipper's agents" that the railroads have increasingly relied on to market intermodal transportation. [17] They usually do not own equipment but rather coordinate the use of another party's equipment. IMCs have been considering whether they should expand into more complete third-party full service providers. [18] While a number of industry observers have predicted that IMCs would morph into full third parties and cease to operate as a separate category of intermediary, it is not at all clear that this is happening. In fact, some third-party executives, such as The Hub Group, Inc. chairman Phil Yeager, have begun to question the degree to which they should become full service third-party providers, as opposed to focusing on core intermodal services. [19] At the same time, other IMCs have decided to narrow their focus to providing wholes ale intermodal services to other third parties such as truck brokers and full service third parties. [20] These "wholesale" IMCs, sometimes referred to as "coloaders," work only with intermediaries and will not work with shippers directly. The wholesale IMC is likely to become more common as railroads increase the dollar thresholds for obtaining contract rates and services from them.

While IMCs have taken a dominant leadership role in the domestic channel over recent years, it is not clear that they can maintain that position given the industry structure and competitive forces described earlier. As postulated in the discussion on substitutes as a competitive force, several other institutions have experimented with entering the channel, including major TL carriers such as J.B. Hunt, Inc. and Schneider National, Inc. These TL carriers have toyed with the idea of joining the intermodal channel rather than fighting it, and have considerable power related to customer loyalty, salesforces, and ownership of equipment. They also have sufficient volumes to balance loads in both directions--a key factor in intermodal success. LTL carriers have also taken a more active role in the intermodal channel, and have been freed by union agreements to carry as much as 28 percent of their volume on the rails. [21]

IMCs are concerned that the trucking companies may be able to secure lower rates from the railroads and steal away IMC customers. However, during the 1995-1996 period of service failures, all of the above carriers reduced their intermodal volumes on the railroads, leading already wary railroad "competitor partners" to question TL and LTL carriers' long-term loyalty. More recently, a number of truckload carriers have reconsidered their commitment to intermodal and few new carriers have followed the earlier lead of J.B. Hunt and Schneider. [22] In fact, J.B. Hunt moved to separate its intermodal operations from the truckload unit, leading to some speculation about Hunt's commitment to the intermodal business. [23] The long-term animosity between the rail and truck industries may continue to limit the potential for rail-truck alliances. [24]

Ocean carriers have led the international intermodal channel from the beginning. In fact, ocean carriers, and not the railroads, were responsible for the introduction of double stack rail container services in the U.S. Eastbound double stack services from Asia to the U.S. East also resulted in the need to reposition containers to the west coast, creating the first opportunity for domestic container services. Ocean carriers have controlled all aspects of the international intermodal channel, including the creation of specialized container cars, the provision of leased containers, and the creation of double stack unit trains they contracted the railroads to operate.

The railroad industry is also a key intermediary in the rail-truck intermodal channel, and while the industry has not played a major role in retail marketing of the service, it does play a critical role in providing line-haul and terminal facilities, and in providing rail cars, domestic containers, trailers, and chassis. However, the tremendous growth in intermodal has created pressures on the railroads' infrastructure and management systems. Serious bottlenecks have developed on both mainlines and at many railroad intermodal terminals. [25] Poor service following the mergers of Union Pacific and Southern Pacific, and following the breakup of Conrail, has been a major problem. [26] Congestion on existing lines is also a major problem. Containers and chassis are also sometimes lost and truckers cannot get in and out in a timely manner, creating problems for drayage firms. As a result, railroads are looking for ways to increase terminal performance. [27] One approach may involve sharing of facilities across ra ilroads through the creation of joint intermodal terminals that could be used by all railroads. [28] A 1994 study on economies of scale in intermodal transportation found that such an approach could increase capacity of existing terminals, and a 1998 study examined the public benefits of investment in an intermodal terminal in lowa.[29,30] In fact, such a shared intermodal terminal has been proposed in Detroit, Michigan and is being promoted by the Michigan Department of Transportation. [31]

Another major problem for the industry has been the utilization rate of containers and chassis. During 1993 and early 1994, equipment shortages developed even as much of the equipment sat idle. For instance, a 1995 Mercer Transportation Management study presented to IANA found that containers and trailers sat idle 70 percent of the year. [32] Railroads responded by reducing the amount of free time allowed and in some cases by raising the per diem rates as well. However, railroads have begun to conclude that the real problem relates to proprietary use of equipment by single channels and restrictions on use by other parties. As a result, several railroads have started freer running equipment pools for containers, although many are reluctant to make investments that would help other parties not participating financially. [33]

Drayage firms, or draymen, are the truck companies that haul the trailers and the containers between modes or between the origin/destination and the carrier terminal. They own tractors but not the trailers, containers, or chassis. Draymen are generally viewed as the weak link in the intermodal channel, and the entire drayage system is viewed as an opportunity for significant service improvements and cost reductions. [34] They are undercapitalized, and are usually local operators without a national presence, forcing the use of different draymen at the front and back end of an intermodal move. This has led some companies to attempt the creation of a national drayage organization. [33] While draymen do not have much power in the channel, they are concerned about a number of issues in intermodal transportation. The congestion at intermodal terminals directly affects them by tying up equipment and drivers unnecessarily. Equipment pools complicate the draymen's operations by restricting which equipment can be used where. For example, a shipper may have a shipment destined for a point over a certain railroad but the available equipment cannot be sent over that route. Draymen also are often charged per diem fees when they are not responsible and have no way of directly recovering costs from responsible parties. In short, the draymen's weakness leads others in the channel to abuse them in a way that harms the overall channel.

CONFLICT, POWER, AND COOPERATION IN THE INTERMODAL CHANNEL

While marketing scholars have suggested that cooperation is the dominant state of affairs in channels, the intermodal industry, and especially the domestic industry, has been subject to a good deal of conflict. Conflict is defined as "a situation in which one member of the channel perceives another member as engaging in behavior designed to injure, thwart, or gain resources at its expense." [36] There are several types of channel conflict defined in the literature, including horizontal, intertype, and vertical. [37] Horizontal conflict occurs between similar firms at the same level in the channel, intertype conflict occurs between different types of intermediaries at the same level, and vertical conflict occurs between intermediaries at different levels of the channel. The marketing literature also discusses several potential causes of conflict that can be useful in analyzing conflict in the intermodal channel. Causes of conflict can relate to incompatible goals (i.e., growth vs. stability as an objective), differing perceptions of reality and ideological differences, communication breakdowns, and differing perceptions of appropriate roles. [38] For instance, in the latter case, railroads may see truckload carriers as partners, but the truckload carriers may simply see the intermodal channel as a means of augmenting their capacity for the short term. In the final analysis, conflict is rooted in the dependence on fellow channel members that comes from specialization, and the high degree of specialization in the intermodal channel makes the industry very susceptible to conflict.

Conflict in the intermodal industry lends itself to analysis using the marketing channels literature. Table 3 summarizes the kinds of conflict that exist between intermediaries in the intermodal channel. While there are many horizontal conflicts, such as those between competing IMCs or ocean carriers, there is also a lot of intertype conflict, between different kinds of intermediaries at the same level in the channel. The current competition among TL, LTL, and IMCs for dominance as the marketer for intermodal services is emblematic of this type of conflict. The sources of this conflict are in goal incompatibility and role incongruence. Each has a goal of dominating the channel, and the roles of each are not yet clearly enough defined to prevent incursions by the other.

Table 3 also reveals a great deal of vertical conflict between intermediaries at different levels of the channel. In each case one channel member is dependent on the other because of the extensive specialization in performance of intermodal channel functions. For instance, IMCs have conflicts with railroads related to the cost of the rail line-haul service and the reliability of that service. Likewise, drayage companies have conflicts with IMCs relating to IMC costs and service demands, and are concerned about railroad yard rules and interchange arrangements. These vertical conflicts are due to goal incompatibility related to profitability at each channel level, different percep tions about realities in yard and drayage operations, and ideological differences between big and small organizations. This latter factor is especially true of the relationship between railroads and drayers.

Power in the channel can be both a cause of and solution to conflict. Channel power can be defined as "the ability of one channel member to alter the decisions of another." [39] Because of channel dependence resulting from specialization, all channel members have some power over others in the channel. However, the degree of power held by a given channel member depends on several factors, one of which is the source of the power. There are six sources of power defined in the marketing literature. [40] Coercive power comes from the ability to punish other channel members. Reward power is based on the ability to give other members something of value. Other power sources are expert--based on superior knowledge or skills; legitimate--based on others' belief that one party has the "right" to prescribe behavior; referent--based on one member's attraction or desire to be associated with another member; and information [41]--based on one member's ability to control and use factual information. Power levels are critica l to channel cooperation and leadership, and firms taking the greatest level of risk are most likely to have disproportionate power, or power over and above what would be expected given their proportionate share of total risk.

In the intermodal channel the various intermediaries have very different levels of power, and the sources of that power can be classified using the taxonomy described above. Table 4 identifies the kind of power that each intermediary has over other members of the intermodal channel. Government has extensive power, based on coercion and legitimacy, over other members of the channel. Shippers have both coercive and reward power based on their ability to grant or remove business from the channel. IMCs and ocean carriers both have extensive expert, coercive, information, and reward power that derives from their knowledge of intermodal operations, potential control over critical information, ability to balance loads in each direction, and control over routing of traffic through or away from various other intermediaries in the channel. However, a key difference between ocean carriers and IMCs rests in their differing levels of control over assets. Ocean carriers take far greater risks than IMCs by making large inv estments in ships, containers, and chassis. This risk, and the control it offers, results in far greater levels of coercive and reward power than is the case with IMCs, and offers them the opportunity for extensive leadership in the channel. IMCs have not taken those risks, do not have the same levels of power, and have not been able to dominate the domestic channel to the same extent.

Railroads also have extensive power, based on expert, coercive, and reward sources. Much of that power is based on their control of assets, including trackage, rolling stock, and leased containers; however, they have chosen not to exercise that power. Instead, they have chosen to spin off the key intermodal marketing and coordination functions, in part due to the need to focus on core commodity markets and line-haul operational management, and as a result of their excessive labor costs. This lack of control by the party with the most power, and the efforts at control by the IMCs with more limited power, have resulted in a high degree of conflict in the domestic channel. The result is that key strategic decisions are left to players with similar or equal power, with a resulting lack of efficient coordination.

CHANNEL LEADERSHIP AND POSSIBLE OUTCOMES IN THE INTERMODAL CHANNEL

Channel leadership requires that conflict and power in the channel be used for the benefit of the overall channel. While conflict can be dysfunctional, leading to dissipation of effort and resources, it can also be positive, serving as a change agent for improvements in the channel. [42] Power, too, can be either a source of conflict, or a tool to be used in exercising the channel leadership that is critical for cooperation. The degree of channel control or leadership that can be exercised is thought to be at the intersection of a payoff function for the party being subjected to control, and that party's tolerance for control. [43] Payoffs from leadership and control can come from reduced competition, better marketing programs and product innovation, incentives from the leader, and the provision of resources, equipment, or software that benefits the controlled intermediary.

In the intermodal channel there is extensive opportunity for channel leadership that could increase cooperation in the channel and benefit the overall channel relative to competing ones. Both railroads and truckload carriers, with their extensive control of assets and traffic volumes, have an opportunity to increase their leadership in the channel. IMCs have some potential to retain their current leadership role but may have to increase their risk and control of assets to do so. In order to increase leadership and resolve many of the conflicts and problems in the channel, it will be necessary for the payoff function to be increased for the channel as a whole, while not decreasing the tolerance function of those to be controlled. Such an outcome can be achieved only by increasing the intermodal channel's share of the total freight market and spreading the rewards among channel members. This will benefit all parties in the channel and increase each channel member's willingness to take direction.

Cooperation and long-term partnerships in the channel could lead to improved performance that would allow a bigger market share. Performance could be elevated by improving rail line-haul and yard services; allowing drayage firms the profits they need to develop into sophisticated national operators; increasing information sharing and communications in the channel; and more effectively using equipment through better pooling arrangements and more effective interchange agreements.

What developments might occur to help bring about increased leadership and improved performance for the channel vis-a-vis other competing channels? Table 5 summarizes some of the possibilities. First of all, there may be greater vertical integration across modes of transportation. Railroads could forward integrate into drayage in order to reduce conflict and increase cooperation between the modes. Other transportation modes could do likewise, although it is unlikely that drayage firms would have the power to do so. While this scenario would seem logical, and there have been several transportation industry efforts at modal integration, there also seem to be other trends causing carriers to focus on a single mode. Recent moves by CSX and APL to divest themselves of several modes may call into question the likelihood of this scenario. [44]

A second possible outcome involves the merging of the international and domestic intermodal channels. As each mode becomes more involved in global business, it is likely that the distinctions between international and domestic channels will disappear. This blurring of the channels is most likely to occur if and when ocean carriers decide to become integrated providers of transportation services domestically as well as internationally. While there have been some efforts to develop global intermodel organizations, or at least North American-wide services under single organizations, the efforts at true integration have been less than hoped for to date. Within North America there appear to be especially strong opportunities to increase intermodal volume across the U.S., Canada, and Mexico. One recent study found that intermodal would dramatically reduce costs and potentially improve service for a number of Canada to Mexico routings [45] Canadian National's merger with Illinois Central, and its marketing alliance with Kansas City Southern with connections to the Mexican rail system, and its efforts to promote intermodal service on this network, are one such example. [46] However, the possible emerging trend for ocean carriers to divest themselves of door-to-door services, and to focus on port-to-port moves in a deregulated ocean environment, does not portend well for any move by ocean carriers to integrate themselves more fully into the domestic intermodal business. [47] American President Lines' recent move to sell its core stack train services may be another indication of ocean carriers' focus on the water portion of their services.

A third scenario that could lead to more cooperation would involve railroads simply taking a stronger leadership position in managing the overall intermodal channel. A 1993 article on competitive issues in rail-truck intermodal service concluded that more complete control by railroads would lead to a more competitive offering. [48] This greater control may be brought about in part by a reduced need for interchanges between railroads as a result of the recent merger of most major Class I railroads and the future potential for an integrated east-west U.S. railroad. These integrated railroads will be in a much better position to control and monitor movement of containers over their single line systems. While railroads will have the ability to provide more control, they may be constrained from doing so by the offsetting need to specialize and manage customer service improvements in their core line-haul business, because of scarce capital investment resources, and because of a cost structure that makes administra tive coordination prohibitively expensive. Until these issues are resolved it is unlikely that they will play a bigger role.

At the same time, some railroads are showing increasing signs of a commitment to intermodal services. For instance, Canadian Pacific Railway has recently introduced its "Expressway" service between Montreal and Detroit with plans for expansion to Chicago. [49] While this service is not being marketed directly at end users, it does demonstrate a major rail leadership role in developing a new offering and orchestrating a marketing strategy. This service is aimed directly at trucking companies, with no marketing to end users, partly in an attempt to minimize potential conflict with the trucking community. [50] Another interesting scenario involves Amtrak increasing its role in the intermodal industry. [51] Amtrak is attempting to market intermodal directly at retail as part of its overall courier service/ freight marketing efforts, and is also providing intermodal line-haul services in a more indirect way by carrying United Parcel Service (UPS) intermodal trailers.

A fourth scenario involves the role of truckload and/or LTL carriers. They too have extensive power in the channel, based on their large sales staffs, customer base, competitive labor costs, pick-up and delivery systems, and ownership of container and trailer assets. By forging strong links with railroads, they may be able to bring sufficient leadership to bear to resolve conflicts and improve the channel's competitive position. However, trucking companies see their core business as trucking, and their reaction to the railroad's poor service performance in recent years, when they pulled back from intermodal operations, does not bode well for their current commitment. Railroads also may be reluctant to enter major relationships with a potential partner that has such a questionable level of commitment, and with whom they have such longstanding animosity. Nonetheless, in the long term, if the railroads resolve service problems, truckers could take an increasing leadership role.

A fifth possible scenario involves IMCs becoming more dominant players in the intermodal channel--possibly by parlaying increased asset positions in container and chassis fleets and/or management of information services into greater power over channel members. Such increased risk, through investments in equipment and information management systems, could lead to an enhanced ability to reduce conflict in the channel and to manage the channel more efficiently. [52] There is some indication that IMCs are following this course, especially in regard to greater involvement in information management for their clients. In the long term, such an approach will require bigger and stronger IMCs, and this is likely to be achieved by consolidation of the IMC industry down to a few large key players. At the same time, IMCs seem to be backing away from the concept of becoming full service third parties.

Another scenario involving railroads and IMCs is that railroads may eventually take over retail operations for a greater number of national accounts, leaving IMCs to serve the smaller shipper on a wholesale level, and/or to perform a shipment coordination role. One variation of the coordination theme already exists in the auto industry market for intermodal freight where large shippers such as Ford negotiate intermodal line-haul rates directly with railroads, but contract with IMCs to coordinate and manage the traffic flow. Multiple channels of distribution for different size customer segments have long been the norm in manufactured goods channels and may be the most likely evolutionary path for the domestic intermodal channel.

Finally, there is a strong possibility that increased coordination and control can be brought about without the need for any common ownership of various modes and intermodal channel members. Such an outcome can be brought about through shared use of "information," one of the six forms of channel power identified earlier. The shared use of information can help form a tight alliance of channel members that will improve channel performance and benefit end shipper customers. [53] However, in order for information systems to work across many independent channel member companies, sufficient power and leadership must be exerted to allow for development of information standards and other protocols. Over the last several years there has not appeared to be sufficient leadership to make technologies like EDI work as well as might be expected; however, internet technologies, with their open architectures, may be better suited for implementation with minimal levels of channel power being expended. It is likely that whoev er can control the information system will be in a strong position to lead the intermodal channel and cause other channel members to fall into line as part of a more effective intermodal future.

LIMITATIONS AND FUTURE RESEARCH

This article is intended to serve as a conceptual piece that draws from the marketing literature on channels of distribution. It is hoped that this cross-disciplinary approach to analysis of the intermodal transportation industry will stimulate thinking on ways for the industry to reduce conflict and increase cooperation in a way that will improve performance. However, the research is limited in that it does not empirically evaluate the theoretical constructs or possible evolutionary industry developments that are explored.

Possible future research topics suggested by this article include the role of information management as a means to consolidate power and increase coordination of the entire channel, and the degree to which risk levels affect the ability and desirability of a given channel member increasing its coordination of the channel. One approach would be to evaluate increases in performance that may or may not occur in individual company channels that incorporate an above average level of information coordination. A study of the Canadian Pacific "expressway" service, with its heavy use of information coordination, may present one such opportunity. A second research avenue involves comparison of the domestic and international intermodal channels. Differences in risk levels and control between these two segments provide an interesting quasi-laboratory setting for evaluating the impact of investment and risk on performance of the channel.

Another research question that emerges from this article relates to the future role of ocean carriers in owning intermodal container and chassis assets and overseeing the landside segment of door-to-door intermodal moves. There has been much speculation on the future of ocean carriers' role in landside movements, especially since APL's sale of its stack train operations, and a study of other ocean carriers' thoughts on their role in landside services would be very interesting. Other studies could examine the role of truckload carriers in leading the intermodal industry, and the role of railroads and IMCs themselves. In the case of trucking companies, an interesting study would involve interviews with a number of carriers to see if they plan on increasing or decreasing their role in retail marketing of intermodal. A final research idea relates to evaluating channel members' perceptions about the effectiveness of various channel cooperation tactics in effecting increased cooperation and performance.

Mr. Taylor is assistant professor of logistics and transportation and Mr. Jackson is associate professor of marketing and logistics, Wayne State University, School of Business Administration, Detroit, Michigan 48202.

ENDNOTES

(1.) D.J. Bowersox, B.B. Cooper, D.M. Lambert, and D.A. Taylor, Management in Marketing Channels (New York: McGraw-Hill Company, 1980), pp. 1-2; Barry Berman, Marketing Channels (New York: John Wiley & Sons, Inc., 1996), pp. 4-6.

(2.) B. Jennings and M.C. Holcomb, "Beyond Containerization: The Broader Concept of Intermodalism," Transportation Journal, 35, 3 (Spring 1996), pp. 5-13.

(3.) Gerhardt Muller, Intermodal Freight Transportation, 3rd Edition (Washington D.C.: Eno Foundation and the Intermodal Association of North America, 1995), pp. 63-64; D.P. Locklin, Economics of Transportation (Homewood, Ill.: Richard D. Irwin, Inc., 1972), pp. 844-845.

(4.) John Paul Quinn, "Intermodal's Back on Track," Logistics Management, (March 1999), pp. 51-55.

(5.) Staff, "Editorial: Improving Rail Service," The Journal of Commerce Home Page, (October 19, 1999), pp. 1-2.

(6.) James D. Martin, "Intermodal Transportation: Evolving Toward the 21st Century," Transportation and Distribution, (February 1996), pp. A-X.

(7.) L.W. Stern, Louis and A.I. El-Ansary, Marketing Channels (Englewood Cliffs, NJ: Prentice Hall, Inc., 1977), pp. 546-548.

(8.) R.D. Voorhees and J.I. Coppett, "Logistics for a Service Economy," Transportation Practitioners Journal, 56(1), 1989, pp. 289.

(9.) Thomas A. Staudt and Donald A. Taylor, A Managerial introduction to Marketing, 2nd Ed.(Englewood Cliffs, N.J.: Prentice Hall, Inc.), pp. 30-32.

(10.) Ken Cottrill, "Roadblocks to Intermodal," Traffic World ( May 4, 1998), pp. 64-65.

(11.) P.M. Tirschwell, "Effort Aims to Cut Cost of Box Transfers," The Journal of Commerce (June 6, 1996), p. 1A.

(12.) M. E. Porter, Competitive Advantage (New York: Free Press, 1985), pp.4-11.

(13.) B. Mallen, "Functional Spin-Off: A Key to Anticipating Change In Distribution Structure," Journal of Marketing, 39 (July 1973), pp. 18-25.

(14.) Y. Hayuth, "The Overweight Container Problem and International Intermodal Transportation," Transportation Journal, 34 (Winter 1994), pp. 18-27.

(15.) Robert Mottley and Philip Damas, "No Perfect Fit," American Shipper (April 1999), pp. 22-26; Ken Cottril, "In a Fix," Traffic World (February 8, 1999), pp. 31-32.

(16.) Same reference as note 3.

(17.) See D.V. Harper and P.T. Evers, "Competitive Issues in Intermodal Railroad-Truck Service," Transportation Journal, 33 (Spring 1993), pp. 31-45.

(18.) Ken Cottrill, "Intermodal Shipping at the Crossroads," Journal of Business Strategy (May-June 1997), pp. 30-35; W. DiBenedetto, "IMC's: Change Direction or Stay Course," The Journal of Commerce (August 30, 1996), p. 12B; Frank Malone, "The IMC Identity Crisis," Intermodal Shipping (January 1996), pp. 23-25.

(19.) Jim Thomas, "Intermodal Stands Strong," Logistics Management (April 1998), pp. 67-69.

(20.) Crossroads Intermodal, Inc., Atlanta, Georgia, interview on September 18, 1997.

(21.) T.B. Gooley, "LTL Truckers Add Intermodal to Menu," Traffic Management (April 1995), pp. 43-44.

(22.) "Daniel P. Bearth, "Few Motor Carriers Seem Interested," Transport Topics (September 15, 1999), pp. 1,8.

(23.) Staff, "J.B. Hunt Announces Creation of Separate Intermodal Segment," J.B. Hunt Home Page, (September 17, 1999), pp. 1-2.

(24.) J.D. Schulz, "ATA Intermodal Chief Pentimonti Asks, 'Can't We All Just Get Along?,"' Traffic World (May 13, 1996), pp. 26-27.

(25.) Lawrence H. Kaufman, "Conrail's New Owners Need the Traffic," Transport Topics (September 15, 1999, pp. 1, 10; B. Mongelluzzo, "Severe Traffic Ties Up Terminal: UP Diverting Cargo From Intermodal Yard," The Journal of Commerce (September 24, 1997), p. Al.

(26.) Lawrence H. Kaufman, "Rail Merger Failures Out in the Open," The Journal of Commerce Home Page, (September 21, 1999), pp. 1-2.

(27.) H.L. Richardson, "Remove Delays, Improve Drayage Efficiency," Transportation and Distribution (January 1994).

(28.) P.M. Tirschwell, "Alliances Present Challenges to Carriers: Terminal Sharing Is Hardest Area to Coordinate," The Journal of Commerce (March 26, 1996), p. 1C.

(29.) P.T. Evers, "The Occurrence of Statistical Economies of Scale in Intermodal Transportation," Transportation Journal, 34 (Spring 1994), pp. 51-63.

(30.) Theodore P. Stank and Anthony S. Roath, "Some Propositions on Intermodal Transportation and Logistics Facility Development," Transportation Journal, 37 (Spring 1998), pp. 13-23.

(31.) Teny Kosdrosky, "Rail Freight Center Talks Get Back on Track," Crain 's Detroit Business (August 30, 1999), p. 3.

(32.) Mercer Management, Inc., 1995 Intermodal Index, for the Intermodal Association of North America, 1995.

(33.) Ken Cottril, "Balancing Chassis," Traffic World (May 18, 1998), p. 30; C. Isidore, "Pooling Pact Stirs Hope for Unused Containers," The Journal of Commerce (March 27, 1996), p. lA.

(34.) Edward K. Morlok and Lazar N. Spasovic, "Redesigning Rail-Truck Intermodal Drayage Operations for Enhanced Service and Cost Performance," Journal of the Transportation Research Forum, 34, no. 1(1994), pp. 16-31.

(35.) Rip Watson, "National Drayage Company: Idea Whose Time Has Come?", The Journal of Commerce Home Page, (October 19, 1999), pp. 1-2.

(36.) Same reference as note 1, Bowersox et. al., pp. 73-74.

(37.) Donald J. Bowersox and M. Bixhy Cooper, Strategic Marketing Channel Management (New York: McGraw-Hill, Inc.), pp. 324-325.

(38.) L.W. Stern and J.L. Heskett, "Conflict Management in Interorganizational Relations: A Conceptual Framework," in Distribution Channels: Behavioral Dimensions, Louis W. Stern, ed. (Boston: Houghton Mifflin Company, 1969), pp. 285-297.

(39.) See F.J. Bejer, "The Role of the Common Carrier In The Channel of Distribution," in G. M. Davis, Transportation Regulation: A Pragmatic Assessment, (Danville, Ill.: The Interstate Printers and Publishers, Inc., 1976), pp. 20-29.

(40.) J.P. French and B. Raven, "Bases of Social Power," in Studies in Social Power, ed. Dorwin Cartwright, (Ann Arbor, Michigan: University of Michigan Press, 1959), pp.154-155.

(41.) Nermin Eyuboglu and Osman A. Atac, "Information Power: A Means for Increased Control in Channels of Distribution," Psychology and Marketing, 8 (Fall 1991), pp. 197-213.

(42.) B. Rosenbloom, "Conflict and Channel Efficiency: Some Conceptual Models for the Decision Maker," Journal of Marketing, 37 (July 1973), pp. 26-30.

(43.) L.P. Bucklin, "A Theory of Channel Control," Journal of Marketing, 37 (January 1973), pp. 9-47.

(44.) Bill Mongelluzzo, "Ocean Carriers Rethink Rail Links," The Journal of Commerce (October 20, 1998), p. 1A.

(45.) James H. Bookbinder and Neil S. Fox, "Intermodal Routing of Canada - Mexico Shipments Under NAFTA," Logistics and Transportation Review, 34, no. 4, (1998), pp. 289-303.

(46.) "CN-IC," Railway Age (March 1998), pp.33-36.

(47.) Rip Watson, "Intermodal Truckers Assess Deregulation Role," The Journal of Commerce (October 20, 1998), pp. 1A, 14A.

(48.) Donald V. Harper and Philip T. Evers, "Competitive Issues in Intermodal Railroad Truck Service," Transportation Journal, 32 (Spring 1993), pp. 31-45.

(49.) Staff, "Canadian Pacific Railway Chooses Detroit Terminal," The Journal of Commerce Internet Site (September 20, 1999), pp. 1-2.

(50.) Douglas J. Miller, presentation on iron Highway, Council of Logistics Management, Toronto, Canada, October 18, 1999, Session 02A.

(51.) Rip Watson, "Amtrak and Freight Rails Will Work Together," The Journal of Commerce (June 22, 1998), p. B7; "Amtrak Announces Five Major Business Partnerships," Amtrak Home Page (January 20, 1998), pp. 1-2.

(52.) Same reference as note 6.

(53.) " John Gallagher, "Crystal-balling It," Traffic World (August 30, 1999), p. 22.

Intermodal Functions

* Provision for public/private infrastructure

* Marketing and sales

* Equipment provision

* Empty delivered to shipper

* Container stuffed

* Documents prepared

* Drayage to rail terminal or port

* Linehaul transportation to port

* Origin country customs/export declarations

* Loading onto ships

* Ocean transport to destination port

* Unload from ships

* Destination country customs

* Drayage to rail terminal or destination

* Linehaul to destination terminal

* Drayage to destination from terminal

* Stripping

* Drayage of empty container

* Storage of empty container

* Repositioning of empty container

* Matching empty container to demand

* Operations coordination and contracting

* Management and maintenance of equipment pool

* Invoicing and collection

5. Channel Evolution Scenarios

* Vertical integration across modes

* Merging of international and domestic channel

* Railroad leadership of channel

* TL and/or LTL leadership of channel

* IMC consolidation and asset investment

* Channel leaders vary by industry/shipper size segments

* "Information integration" of the channel