If you're a third-party logistics company, transportation broker or shipper and are looking to ship by intermodal for the first time, logistics company Vexure has a deal for you: great service for a premium price.

Through Vexure subsidiary TRT Carriers Inc., whose services are ideal for those looking to the transportation spot market, the goal isn't to sell cheap. It's to sell value. "We're a niche provider, we sell a premium service to our customers," said Vexure President and COO Tom Piatak. "Our goal is the ability to say 'yes' more often to our customers' freight." Executing that philosophy has translated into quantifiable results. TRT started out in 2002 with zero revenue; by the end of the year it had generated $10 million.

The business plan for TRT Carriers evolved over several years. Vexure's predecessor, Stonier Transportation, was known for 30 years as a trucking and nonasset-based freight forwarding company. But in 2000 it decided to throw its hat into the intermodal ring - with not-so-successful results.

Tampa, Fla.-based Quality Distribution is perhaps best known for its liquid bulk subsidiary Quality Carriers Inc. and is heavily into trucks. But that may change soon, as Quality Distribution CEO Thomas Finkbiner is looking seriously at intermodal.

"We're trying to expand the use of tank containers in our business," Finkbiner said. "In talking to our customers and looking at their needs, we think it makes sense to switch from truck to intermodal."

. . . More

Third-party logistics provider Transplace, which formed in 2000 by combining the logistics subsidiaries of six publicly held trucking companies, generated roughly $2 billion in freight business in 2002 - and $90 million of it was intermodal business. The reason: intermodal transportation, has provided consistency and reliability over the last two years, says Transplace Chairman, President and CEO Jun-Sheng Li.

"On-time performance has increased dramatically in the last couple of years, I'd say by about 10 percent, depending on the lane," Li said. "For many lanes, intermodal service is very close to truckload service. That's why we've been adding a lot of freight to intermodal."

. . . More

"We were trying to do the traditional intermodal thing, competing against the Hubs and the GSTs of the world," Piatak said. "But it was a losing proposition. So we decided to limit it: instead of offering our intermodal services all over the country, we would only offer it in premium lanes. And instead of basing rates on the traditional cost-plus model like most IMCs do, we started with a market-rate and moved down from there."

The new approach involved finding each railroad's most reliable service lanes - that is, service that looks like truck service - and offering intermodal to customers only in those lanes, Piatak explained. "In exchange for that, since they're providing good reliable service, we're going to sell it at the highest market rate possible. We're not going to come in like a traditional IMC and say, 'Hub's doing it for $600, so we have to do it for $590.' We don't want to play in that market. If a customer's moving via traditional intermodal today, we won't touch it," he said.

Coming from a railroad background - Piatak was formerly with CSX - played a part in Vexure's expansion into intermodal. But improved intermodal service across the board is what has allowed the company to thrive. "When the railroads were going through their merger problems in the mid and late 1990s, there were service issues, no doubt about it," Piatak said. "But it's 2003 and they've got service worked out. In select lanes, they're just as good as truck."

Before getting involved in selling premium intermodal spot-market capacity, Vexure (as Stonier Transportation), was limited to its trucking capacity, through its own equipment or through partners. "In the past, if a customer needed 12 loads moved from Los Angeles to Chicago, we might have to leave them hanging on five of those loads because we didn't have the capacity," Piatak said. "But now, because this is one of those lanes where the railroad we use is 98 percent on-time, which is as good as a truck, we say 'yes, we'll take all 12.' But we take them at a higher rate than traditional intermodal - there are no rate cuts. We tell customers it's going to be delivered on time and that's what they pay us to do."

Another perception hindering the intermodal proposition was the damage issue, traditionally thought of as a bigger problem for freight moving on rail. "There's a myth out there that motor carriers are better at damage prevention but it's not true," Piatak said. For TRT, the percentage of damage on approximately 10,000 intermodal shipments handled by the company in 2002 was less than that for the remaining 60,000 truck shipments handled. "So it's just understanding what commodities can move rail and what type of blocking and bracing is required on those loads. If you do it properly, there's absolutely no difference," he said.

In order to sell the proposition that intermodal can be as good as truck to customers, however, the company first had to sell the idea to its own employees. "It took a lot of education," Piatak said, noting that traffic managers had a predisposition to favor truck over rail, because "it's the path of least resistance. A traffic manager is going to think about truck first, even though it's more expensive. He doesn't have the headaches of origin and destination drayage, knowing the railroads' schedules, managing three pieces to a move versus one, and some of the uncertainties that have been more prevalent with rail versus truck. These guys are making 50 decisions a day. The last thing they want is to sit down and think through all this."

When the 20-employee TRT division was created, Piatak explained, "we told them they have to default to rail first - they have to be thinking rail. They have to make sure they give rail a 100 percent look first before it ends up going by truck. Now they have railroad schedules all over their desks, they're focused on each lane and can now make decisions almost as quick as if they were still focused on truck. It was a paradigm shift."

TRT, which for the past year has concentrated in the East on Norfolk Southern and CSX, is poised to expand service offerings in the West. The company recently signed contracts with both Burlington Northern Santa Fe Railway and Union Pacific Railroad.