The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
Which of the big seven U.S. railroads could make 2021 the year of railroad advanced cargo visibility — thus introducing a real game changer for railroad cargo shippers?
Something more than just a cheap, small, smart communicating sensor indicating whether the rail car doors are closed.
Shippers need something more robust. And rail shippers want it now, not in 10 to 12 years.
Rail customers want to have usable logistics intelligence in an open-architecture API integrator software application — a service that delivers carload freight location and condition information into a meaningful, easy-to-understand status report message. They do not care about the device used.
As identified in previous columns, experts like Oliver Wyman show that each mode of freight transport has a small black dot area to directly help their customers’ supply chain with visibility.
Freight customers want that data fed right into the shippers’ digital supply chain data bases.
Unfortunately, providing that kind of cargo location and status messaging real time is still a head scratcher for railroads.
Here is why that is a problem: The truckers are already doing this for customers.
Published logistics reports calculate that improved visibility might reduce shippers’ total supply chain costs by 7% to 10%.
The bottom line is that rail could leap forward with this kind of on-time management of shipper goods if it were bolder and faster at innovating.
Bluntly stated, North American railroads should accelerate their visibility reporting within the next two to four years. And 2021 provides that platform for railways to start that kind of positive disruption.
Will rail freight “up their game”?
Inventory in motion across a highway or a rail network has a daily capital worth. The cost of goods stored or not being sold can be monetized.
We railroaders do know about valuing train delay cost as a budget penalty to rail operations. But that is about the per-diem value of the car or the locomotives.
That kind of train movement transparency is a core skill at trying to reduce costs as a so-called precision scheduled railroad (PSR) business.
It is time to do this for the rail customer.
During 2021 we could see the deployment of new hardware plus linked data analytics software that improves rail freight transparency at the customer’s pocket.
Such a robust rollout of car movement transparency applications could indeed give freight rail the opportunity for a breakthrough service change.
Quite a few challenges
Who is going to be the lead dog for rail logistics advancement?
Some believe that the recently announced Rail Pulse technology will be the pioneer.
But a closer inspection of the competing technologies suggests that some technology and software vendors are further advanced than are others.
There is a significant difference in how competing rail visibility suppliers have advanced their R&D, their beta-tested hardware, and their software output with customers.
Market maturity and real-world testing will differentiate who will rapidly market the winning applications.
Some Rail Pulse news reports suggest that a significant share market rollout might take close to a decade.
Why so long?
Is this a rail sector handicap? After all, the railroad positive train control (PTC) deployment took more than a decade to execute. Except for several like BNSF that were clearly faster adopters.
Meanwhile, there are companies paid by shippers for improved cargo movement awareness (intelligence in the military world) because the railroad cargo transparency process is relatively slow.
As an example, Michigan-based RSI Logistics has been helping rail freight shippers since 1984. RSI customers developed a process to capture the money delay value of their clients’ railway cargo.
One of their specialties is monitoring delayed trains. They are helping rail customers identify and then offset the loaded and empty cars that are often held short of destination for longer than six consecutive hours. They monetize those delays.
Their business case for existing is that they help rail customers identify possibly millions of dollars a year in rail delay costs.
That kind of monetization more than covers the visibility monitoring costs.
Why didn’t the railroad carriers do this themselves for their customers?
Most shippers want a continuously updated ETA as events are unfolding throughout the moving supply chain. The final receiver wants those geographic events continuously fed into its TMS manufacturing systems.
Enhanced visibility is an essential deliverable from any rail carrier advertising that its trains are performing precisely to schedule.
That is why 2021 should be the year to step up and start capturing more of the money value of rail cargo flow.
Here are the critical 2021 questions as to whom to bet upon as the rail visibility leader.
- Which vendors have the supplier advantage with a package that has been commercially tested with shippers? Important because you do not want to be the beta test.
- Who today offers analytics as reports and real-time exceptions after the raw movement data has been captured by sensors?
- Who could ramp up to critical mass use across the North American rail routes in the next say three years’ time?
You the shipper. You have a stake in the answers. What is your opinion?
References for additional competitive visibility intelligence on vendors
Rail Pulse is a joint venture announced in late 2020 for providing a new car condition and car location monitoring service that will become a real-time rail freight service.
Published remarks by John Schmitter, president and founder, KEP LLC, regarding rail logistics and emerging companies like RailState. RailState is different in that it provides granular visibility about specific railway routes as to volumes, performance and condition.
RSI Logistics
Railcar Tracking Co. offers a web-based system.
Geoforce and Lat-Long are two other third-party track-and-trace rail freight application providers.
Nexxiot (Switzerland) operates from Texas with hardware and proprietary API applications that have been business-tested with its European rail customers.
RailSight provides a suite of car track-and-trace applications associated with the basic Railinc services.
Note: This is not a complete list of third-party rail logistics service providers.
For the economics, read “The Business Value of Supply Chain Visibility and Monitoring.”