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The freight transport industry is complex and intermodal as more than one mode may be used to
transport a good during its origin-destination journey. Goods are shipped under a single contract,
but transportation is performed by several different modes of transport. Land or "ground"
shipping can be by train or by truck.
Railroads: Since olden times, railroads have handled the largest number of ton-miles. Railways
dominated the intercity1 freight tonnage till World War II and in some cases of Europe, Asia and
Africa they even connected the countries. This early superiority enabled railways to transport
large shipments very economically.
Trucking: There are three types of carriers: parcel, full truckload (FTL), and less-than-truckload
(LTL). FTL carriers typically carry fully or partially-loaded containers from a shipper to a single
destination. LTL carriers collect freight from different shippers, consolidating the goods into
containers for line-haul to a terminal. The freight may be further sorted or consolidated at the
terminal for continued hauling. Shipment of freight directly from the shipper to the destination is
known as a door to door shipment. In comparison to railroads, motor carriers have relatively
small fixed investments in terminal facilities and operate on publicly maintained highways.
Motor carriers are best suited to handle small shipments moving short distances.
Water transport: The main advantage of water transportation is the capacity to move extremely
large shipments. Water transport employs 2 types of vessels, deep-water vessels, which are
generally designed for oceans and seas and diesel-towed barges, which generally operate on
rivers and canals, have considerably more flexibility. Water transport ranks between rail and
motor carrier in the fixed cost aspect. The main disadvantage of water transport is the limited
range of operation and speed. The capability to carry very high cargo at an extremely low
variable cost places this mode of transport in demand when low freight rates are desired and
speed of transit is a secondary consideration.
Air transport: Its major advantage being its speed, which is accompanied by high costs. A
coast-to-coast shipment via air requires only a few hours contrast to days taken by other means
of transportation.
In air and sea shipments, ground transportation is often still required to take the product from its
origin to the airport or seaport and then to its destination. Vans and trucks make deliveries to sea
ports and air ports where freight is moved in bulk. Thus, truck plus rail, truck plus water, and rail
plus water are common multimodal combinations. In case of multimodal transportation the
carrier does not possess all the means of transport in practice; the carriage is often performed by
sub-carriers.
The factors influencing a shipper's choice of transport mode are complex and highly
interdependent. They involve tradeoffs between the cost of transportation and overall transit time
and delivery reliability. Thus, the shipper is typically the receiver's "agent" in the process and it
is his wishes that are honored in the size of shipment and the choice of mode.
Ordering is a costly process. Smaller shipment sizes typically carry high unit cost of
transportation, and if the shipment size is smaller than a full vehicle load, the load must be
picked up at the origin by the freight carrier and consolidated before shipment, then
deconsolidated and delivered at the destination end. Most LTL carriers, parcel carriers and
airfreight systems perform consolidation/deconsolidation of smaller shipments into full vehicle
loads. These processes are also expensive, sometimes exceeding the cost of line haul
transportation.
The determinants of the choice of transport mode are: