September 2005 | Case Studies | I.T. Toolkit

Car 54, Where Are You?

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A web-based railcar monitoring service helps American Gypsum keep freight on track.

For years, railroads have been tracking rail cars and using that data to keep shippers informed about their freight. Some shippers visit individual railroad web sites to track the progress of their cars. Others use services that collect raw data from the railroads and transmit it to a computer in the shipper's office, where software turns the data into reports. Still others use a service to format the data for them and pass those reports along, or alert them if a shipment gets into trouble.

American Gypsum, a major producer of gypsum wallboard, used to rely on the third option. But it wasn't working.

"We used a third-party service to track our shipments and give us advice," says Wayne Johnson, director of logistics at American Gypsum, a division of Eagle Materials in Dallas. "But that service kept us informed manually, using spreadsheets, phone calls, and a few e-mails."

Most communication took place by phone. Once a month, the service faxed Johnson a spreadsheet with information on car movements. "The spreadsheet wasn't useful, and wasn't up to date," he says. "Nor did we have the staff to control it."

Making Tracks to the Web

About 18 months ago, American Gypsum switched to a web-based service provided by Railcar Management Inc. (RMI), Atlanta. The company's rail coordinator now receives daily e-mail reports on its rail cars.

American Gypsum operates four wallboard plants—two in New Mexico, one in Colorado, and one in Oklahoma. It uses trucks to haul gypsum into these plants and move finished product to big box stores such as Home Depot and Lowe's, but it uses rail to ship wallboard to large lumber yards and distributors throughout the United States. The company also uses rail to ship scrap paper to a company-owned paper mill in Lawton, Okla.

Rail accounts for between 30 and 32 percent of American Gypsum's $100- million annual transportation budget. The company owns 255 railcars and also uses cars that belong to the Burlington Northern Santa Fe and Union Pacific railroads.

"We ship between 7,000 and 7,500 rail cars a year," Johnson says. The company also owns a shortline railroad, the Hollis & Eastern (H&E) in Duke, Okla.

When officials at American Gypsum started looking for a new way to monitor their rail cars, they considered two other systems besides RMI's ShipperConnect Freight Management Services (FMS). One big factor in RMI's favor was that the H&E was already using some of RMI's rail solutions.

"We looked at other systems, but jumped on the advantages we could get by using RMI for both the plants and the railroad," Johnson says.

Proactive Reporting

RMI has been providing software applications and business services to regional and shortline railroads in North America since 1979. In the late 1990s, RMI started using the data it collected from those customers to create its Freight Management Services for shippers.

"We collect car location messages throughout the day from the railroads as rail cars travel throughout North America," says Paul Pascutti, RMI's vice president of marketing. "We then provide proactive reporting to identify potential exceptions, such as cars that are delayed, out of route, or behind schedule."

Many location messages come from radio frequency identification (RFID) tags affixed to rail cars. RFID readers installed along the rail lines capture a unique identification number from each car as it passes, and transmit that data to the railroad's transportation management system.

Data entered by railroad employees or provided by shippers—for example, when a shipper notifies the railroad that it has a loaded car ready for pickup—also generates car location messages.

Once a shipper authorizes its railroads to release proprietary information about its freight, RMI starts collecting that data and using it to spot possible problems.

"We can track where a car is right now, as well as provide historical information on transit times and potential areas where there might be delays," Pascutti says. "The shipper can address those issues with the railroad, perhaps to improve overall cycle time."

To identify problems, RMI's system compares current car location data with historical data that shows how long it usually takes to travel between a given origin and destination.

"Once a car starts falling behind, we provide that on our reports," Pascutti says. "We have ETA (estimated time of arrival) reports that show if a car is on, behind, or even ahead of schedule."

Shippers receive their reports via e-mail, some first thing in the morning, others several times a day. Rather than showing the status of every car, reports focus on exceptions, such as cars that are behind schedule and those that are being pulled off the line for repairs.

Customers can ask for specialized reports—one that focuses only on empty cars headed toward plants for loading, for example, or one that shows only the activity related to a specific plant. Users also can log on to the web site at any time to make ad hoc queries.

For American Gypsum, RMI intercedes with the railroads when problems occur. "We authorize RMI to be our contact with the railroads," Johnson says. "When a car is delayed for more than 24 hours, RMI can call the railroad and ask what's going on. If a car gets derailed, RMI gets it back on the rail, or contacts us so we can file a claim."

Along with tracking railcars, ShipperConnect allows a shipper to automatically create an electronic bill of lading (BOL) for each car prepared for pickup, transmitting that document to the railroad in standard EDI format.

Two Weeks to Go

RMI charges a monthly fee for ShipperConnect FMS based on transaction volume. Once a shipper contracts for the service, it takes about two weeks to get up and running. During that time, the shipper provides letters authorizing RMI to collect its car location data, and RMI works with the railroads to set up the necessary connections.

The shipper also provides RMI with ID numbers for the cars in its private fleet, so RMI can build a "fleet master," Pascutti says. In addition, the shipper gives RMI information on any special fleet groupings—such as sub-fleets dedicated to specific plants—and lets RMI know if it uses railroad-owned cars at certain origins and destinations.

Automated BOLs

American Gypsum is currently working with RMI to automate its BOLs even further. When the project is complete, American Gypsum's order entry system will feed data about customer orders to ShipperConnect. FMS will use that information to create BOLs for the railroads, telling them what products American Gypsum is loading on the rail cars.

"Once an order has been entered into our internal system, our goal is to have that information fed through RMI without ever manually entering it again," Johnson says. "When the shipment date arrives, and the order is completed, loaded, and ready to go, it will automatically be 'billed' to the railroad."

ShipperConnect helps American Gypsum provide better customer service. "With better information on rail cars, we can proactively contact our customers to let them know when a shipment will be delivered, or if it will be delayed," Johnson says.

Besides advising customers about problems, American Gypsum can take corrective action. "We supply trucks if a shipment will be delayed too long," he notes.

"Before using the RMI system, we reacted to information instead of proactively acting on it," Johnson says. "Customers were calling and asking about their shipments. Now we tell them ahead of time if a shipment is delayed."

At the Carriers' Mercy

Although the service also helps American Gypsum use its rail cars more efficiently, the company is mostly at the mercy of its carriers on that score.

"With proactive monitoring, we can move the delayed cars a little faster," Johnson says. "But speeding railroad transit time is almost impossible."

In the back office, though, the system has improved the productivity of the employee who monitors rail freight. "He used to spend most of the day monitoring freight," Johnson says. "Now it takes up only a little of his time."

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