October 2003 | Commentary | IT Matters

Is it Time to Return to the Rails?

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Shipping by rail can be unsettling for those unfamiliar with the nuances of interacting with the railroads. In fact, some companies avoid even considering rail as a viable transportation option because of the fear of the unknown, or based on negative experiences with the railroads from years past.

Railroads are commonly accused of being slow to provide new rates, difficult to communicate with, and unreliable as service providers.

The railroad industry is keenly aware of this negative perception. The railroads have made tremendous strides in the last five years to make it easier to ship via rail by utilizing technology, especially the Internet. Here are some examples:

Customer-friendly initial contact. The first question many shippers ask when considering rail as a transportation alternative is: "How do I contact the railroad to get started?" All the major Class I railroads, and many regional and shortline railroads, now provide customer-friendly web interfaces to guide prospective and existing shippers through the process of initiating a rail shipment.

Some railroads offer online "logistics consulting" to help shippers determine the best alternative for moving their shipments.

Originating a shipment online. Virtually every aspect of tendering a load on a railroad has been automated on railroad web sites. Everything from ordering the railcars, scheduling service, and issuing the bill of lading can be accomplished through a web interface. Some railroad web sites also include instructions on proper loading procedures for various railcar types.

Even day-to-day service requests, such as ordering cars into the plant and releasing cars back to the railroad, can now be accomplished via the Internet with some railroads.

Origin-to-destination visibility. Once the railcar is moving, it is tracked continuously in the railroad's transportation management system. Today's railcars are equipped with RFID tags, and all car sightings are reported frequently—usually within one hour.

As long as a user is an authorized party on the waybill, the railroad web site typically provides origin-to-destination monitoring, including ETAs. If delays occur, this information is updated and the current status and revised ETA are displayed on the web site or automatically sent to the shipper via e-mail. While the car is in route, shippers can also request diversions and re-consignments via the Internet.

Electronic freight settlements. Rail shippers have many options for settling charges with the railroads, including freight bills, special handling charges, and demurrage. Many shippers are set up to receive their freight bills from the railroads electronically using a standard Electronic Data Interchange (EDI) format.

Shippers also have the option of rating and "self-paying" their own freight bills, and can provide payment information to the railroads via EDI. Even if a shipper continues to receive freight bills in a paper format, copies of all invoices, including freight bills and demurrage invoices, can generally be viewed on the railroad's web site.

Interline service management and beyond. The railroads have adopted a set of standards for electronically exchanging schedules and trip plans for interline shipments. This initiative, known as Interline Service Management (ISM), will enable railroads to provide more accurate ETAs to shippers and consignees.

The railroads are also exploring ways to add computing power to the locomotive, and to provide crews with tools for communicating real-time operational data wirelessly back to the host transportation system.

Rail shipping has truly become digitized, and the resulting improvements have caused many shippers to return to the rails. The railroads continue to look for opportunities to automate customer service functions, and shippers will increasingly be able to move goods via rail in the type of seamless manner that they are accustomed to with truck and other modes.

Shippers interested in learning more can visit the Association of American Railroads' web site at www.aar.org.

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