Alaska’s Multimodal and Vertically Integrated Transporters
How the transportation industry has evolved to offer combined, complex shipping options
Transportation and logistics providers are constantly balancing a customer’s need for a timely and cost-effective shipping solution, while also considering the different modes of transport available to move items from origin to destination. This is particularly true in the case of those providers offering multimodal solutions in Alaska, where geographic factors regularly influence the planning process.
Reflecting on the transportation industry’s evolution to offer combined, complex shipping options, Saltchuk’s Senior Vice President and Managing Director in Alaska Dave Karp offers one perspective.
“You could look at multimodal as using different modes of transportation to move cargo,” Karp says. “But you could also look at multimodal in terms of the companies we have here in Alaska, which offer more vertical integration.”
Though headquartered in Washington, the Saltchuk family includes several Alaska-based transportation companies that cover nearly every shipping avenue in the industry: TOTE and Cook Inlet Tug & Barge cater to its marine needs; Northern Air Cargo its aviation; with Carlile initially focused on land-based operations, then expanding to include a logistics piece in its business model.
“Carlile’s logistics team can get anything anywhere,” he says. “They’re a group of people who are focused on movement of freight, not just trucking of freight. Obviously, if there’s a trucking component, they’ll try to use their own assets.” But Karp is quick to point out that even though Carlile occasionally enjoys the benefits associated with vertical integration, there isn’t a company mandate in place that requires Carlile Logistics to draw on its family of transport companies. “We’re like a Swiss Army Knife in a lot of ways; you can use the whole thing and do everything or just use certain blades to get certain things done.”
Karp also notes that companies don’t necessarily need to own the various ships, planes, and trucks doing the heavy lifting.
“A lot of logistic providers are non-asset based—they’re called NVOCCs [non-vessel operating common carriers]—they don’t own ships, they don’t own trucks, they just facilitate the movement of goods on other people’s things. They’re the owner’s representative of the cargo.
“Some think of it like a travel agent of cargo; they find out what the origin is, the destination, the O&D pair, they map the trip out for that cargo, and they use whatever mode of transportation is most cost effective or most expedient depending on what they [customers] are looking for.”
This is, as Karp frames it, an industry obsessed with serving the customer—by whatever means possible.
It Starts with Communication
Consider the path that a shipment of pharmaceuticals might take, departing Los Angeles and destined for a remote community in Bush Alaska. While it may seem that the simplest solution would be to place the medications in a box, slap a “fragile” sticker on the side, and load it into the back of a C-130—the answer on how to best move freight to and from Alaska isn’t always immediately clear.
A number of factors such as time, price, and the size of the items in question need to be taken into consideration. And one of Alaska’s largest multimodal transport and logistics providers believes that it all starts with an honest, open dialogue between the customer and the provider tasked with moving the product.
“The customer is always challenging us to do things better,” says Alex McKallor, Lynden’s executive VP and COO. “We recognize in the long run we’re better off by providing the better solution for the customer—even if it doesn’t involve what we do.”
Initially, McKallor explains, the company broke into the Alaska market through trucking with the establishment of the Alcan highway in the ‘50s, adding marine capabilities in the ‘80s and then air capabilities in the ‘90s. And having amassed its own extensive family of companies, Lynden’s multimodal transport and logistic efforts have grown to serve small and large communities throughout every region of the state.
Lynden’s hovercraft are used to deliver supplies to villages along the Kuskokwim River in Western Alaska and to transport cargo and personnel on the North Slope.
Once Lynden determines one of its various services is a good fit for the customer, the company can then start piecing together different options, leveraging a variety of shipping methods and sometimes drawing on its own family of company assets. In addition to barge, truck, and air options, some of the more unique factors in Lynden’s logistics equation is specialized equipment like PistenBully snowcats and Hovercrafts that help the company traverse some of the state’s more difficult terrain.
“PistenBullys are essentially like a snowcat at a ski area that allow us to drag truckloads of freight over the snow,” he explains. “It’s a great alternative to more expensive options such as flying.”
And if there was ever a multimodal mascot, it would probably be Lynden’s Hovercrafts which are able to navigate land, water, ice, and sand—carrying up to 12,500 pounds of freight in the process.
Lately, McKallor says, the company’s driving force has been to figure out how to best make all its various transportation mediums work seamlessly, especially for the customer.
“It’s something we have a lot of experience with,” he continues, “and what’s interesting is that each of these modes have some physical and regulatory requirements that make it particularly challenging… so you have to have all the right things lined up the right way or you’re not gonna get there.”
Carlile’s VP of Freight Operations John Armstrong agrees that communication is key. “The customer doesn’t see those moving parts; what they see from us is a very consistent approach and a very consistent status update and communication infrastructure.”
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Philosophy Drives Strategy
With so many moving parts and pieces, being able to track and synchronize a company’s processes across different transportation platforms is the customer expectation and the industry standard.
Armstrong believes technology has come a long way in facilitating these functions.
“I’ve been doing this for thirty-five years; I’ve seen it all the way from the fax machine to where we’re at now and I’m just amazed at how easy it is to transact with a wide variety of customers,” Armstrong says, noting that advances in electronic data interchanges and automated reporting are two of the biggest improvements in managing multimodal cargo.
Armstrong attributes much of Carlile’s success in this area to its shift toward using “off-the-shelf” technology.
“We adapted a strategy and philosophy a couple years ago that we would use, as much as possible, off-the-shelf technology,” he says, pointing to challenges associated with customizable technology as the reason for the shift. “As our systems are upgraded, we get the very best version every single time. And it opens up more and more opportunities for us to improve our business model because we’ve got these new upgrades and new tools that are being added to the systems we use.”
Alternatively, nearly all of Lynden’s core operating systems are internally developed and shared across the family of companies.
“We’ve had a long history of developing our own systems,” McKallor says. “So we have a fairly substantial IT department and have developed these systems over the years to essentially provide for our customers a single view no matter what mode they’re moving on or where they are.
“We’ve developed tools internally that have essentially taken a diagnostic view across all different modes. So you can see freight coming in by airplane, coming in on the barge, freight moving on the hovercraft—and as a service manager, you can see all those moving parts together in one view.”
Lynden’s PistenBully snowcats transport equipment and supplies through extreme conditions and challenging terrain.
Technology’s role in ensuring a smooth shipping process can’t be downplayed, but Armstrong points to a deeper company structure in place that allows Carlile to effectively manage its multimodal operations.
“We sort of have three pillars at Carlile: our safety culture is the best I’ve ever seen. It’s what we pride ourselves in. Second is being 100 percent ethical. And third is a commitment to our continuous improvement culture.
“What we’ve been able to do is really focus on establishing very solid core practices throughout the organization. That enables us to basically apply core practices and processes to any type of freight. Freight essentially moves the same way every time. It’s based on the cargo factors, the timing, the environment… but essentially the freight moves exactly the same every single time. So if you have a good solid base of core practices and processes, then it’s very easy to adapt those good core processes to new challenges.”
Armstrong illustrates this ideology’s effectiveness by pointing to Carlile’s response to the coronavirus pandemic, describing the transporter’s ability to adjust to new conditions as “instantaneous.”
“We were able to very quickly and flexibly establish new processes surrounding the guidelines we were being given from the CDC and also around our customers’ requirements,” he continues. “A lot of customers couldn’t take freight or they didn’t have the personnel in place to take freight. So we had the ability to quickly adjust our modal operation for that, and that’s really easy to do when you follow the same core practices.”
Ingredients for Success
This theme of continuous improvement is echoed throughout the transportation industry. “I think companies are going to continue to try to find ways to bring as much efficiency into the process,” says Saltchuk’s Karp. “There are a couple new things being kicked around out there—companies marketing airships, drones are a big part of the future conversations. But I think those things are pretty far off on the horizon.”
Even as new modes of transport and technology become available in the future, Karp believes companies should continue to strive for providing value-added services. And having spent the early years of his career in the tourism and hospitality industry, it’s no wonder what Karp, and other top executives, value most.
“As I’ve said before, you gotta be customer-centric. You gotta be focused on the relationship with the customers and be empathetic to their needs. It doesn’t matter what tools you have to use, whether it’s an airplane or a boat or a train or a truck—you’re the one that’s making things happen. And to have a good understanding of what the needs of a customer are will always, I would contend, be the key ingredient.
“We live in a world where, with technology and the ability to use third-party vendors, you can make anything happen. But how you plan it, how you execute it, how you follow up, how you troubleshoot and problem solve—those are the things that ultimately add value to the customer.”
This year the Alaska Railroad is celebrating 100 years of transportation people and cargo around Alaska. While the railroad is one of the states oldest transporters, it certainly isn’t the only one, and in this issue of Alaska Business we also check in on the Marine Highway, Span Alaska, and the White Pass & Yukon Route. For those interested in Southeast, our focus on that region provides updates on Kensington Mine, Tongass FCU, the troll fishery, and Juneau’s growing landfill.