will upvote

please answer them correctly

Eastern is a leading exporter of chemicals, plastics, and fibers from its plant in Kingsport, TN. They ship 30,000 containers per year to worldwide export markets through the ports of Charleston, SC and Savannah, GA. Currently, Eastern currently ships 50% of their volume to the port via intermodal rail and 50% via truck drayage due to service level and delivery requirements. Over that past 3 years, Eastern realized it could source empty marine containers (for export sales) from their truck drayage suppliers by guaranteeing outbound loads from Kingsport, TN to the ports, rather than railing or trucking in empty marine containers from the ports. These truck drayage companies are delivering loaded imports to other companies, and then must take the empty containers after they are unloaded. If the empty imported container is closer to Easterns plant than it is to the port where it must be returned, there is an opportunity to reduce cost by running fewer empty miles. Eastern has increased the amount of truck drayage shipments from 10% of total volume to 50% over the past 3 years. This has been a great cost reduction initiative as the company only pays for 1-way freight since the empty containers are delivered to them free by the truck drayage carriers who are charging the importers for the return of empty containers to the ports. 1-way freight, or street turn, containers are cheaper than the round-trip rates that the railroad charges for intermodal containers because the railroad charges for both delivery of empty containers and return of full containers to the ports. Eastern has been intentionally been increasing its use of street turn containers due to the cost savings and shorter transit times. With the eminent opening of an interstate corridor for truck transportation (I-26 through Ashville, NC), Eastern would like to like to grow its use of trucking street turns signficiantly. The railroad has noticed the decreased volume and has decided to institute a 17,000 container per year minimum volume requirement, have unilaterally reduced the days of service from 5 days per week to 3 days per week, and have changed the service from TOFC (Trailer on flat car) to double stack COFC (Container on flat car). They additionally decided to increase their rates 20% and have threatened to end service to your plant if you do not sign a new 3-year contract. Question:

You are the Manager of International Logistics for Eastern. You have been steadily increasing your use of street turn containers to improve service and reduce your costs. Now that the railroad had laid down the law and is demanding increased rates and minimum volumes, what do you do?

You do not have confidence that your existing truck drayage carrier base has enough capacity to cover your needs if the railroad terminates service to your plant. What do you do? If the railroad terminates service, you dont have enough capacity to carry all of the containers via existing truck carriers. If you acquiesce to their demands, your costs go up and your service goes down.

What options can you conceive to mitigate the risk and improve the cost and service simultaneously?

What are the impact on inventory of street turns vs intermodal rail on economics, transit time, carbon footprint, safety?