Track to the Future

The U.S. railroad’s success has always been contingent on its ability to assemble and integrate all of its operating parts—from fuel and equipment to track and terminals.

From the beginning, the sheer effort of aligning and harnessing the resources and technology necessary to build the railroad in the mid-19th century became the very fabric of American culture and industry, helping Americans define their pioneering spirit while serving as a practical solution to existing transportation obstacles: unreliable transport, rampant bottlenecks, excess demand for capacity, and nonexistent infrastructure.

“If Americans wished to seize the potential inherent in the railroad innovation, they would have to acquire a broad array of new skills and they would need to devise new methods of marshalling the economic resources necessary to support the railroad enterprise,” writes Georgia Institute of Technology professor, Steven Usselman, in his book Regulating Railroad Innovation.

This culture of invention penetrated other areas of industry as well, forcing American enterprises to not only embrace a new transportation mode but also a holistic vision of supply and demand.

Empirically, the railroad reduced freight transportation costs while greatly enhancing the speed with which product—and information—could be disseminated across vast distances. It opened up trade within the United States, and gave businesses new parameters in which to schedule deliveries, distribute product, and measure efficiency. This ultimately brought greater accountability to a burgeoning U.S. supply chain.

Ironically, this accountability is what today’s railroads are striving to recapture. To do so, carriers are turning to technology, the very innovation that rendered them “outmoded” for the better part of the last century.

The railroad’s meteoric growth following The Civil War, and the robber baron culture that embraced it, inevitably became its own greatest obstacle. The same innovative spirit that the railroad stimulated in the 1800s paved the road for the automobile and a new and more efficient means of transporting freight in the 20th century. The aggressive growth of visionary railroads gave way to a stifling monopoly of corpulent cartels that evolved too fast, became stagnant, and failed.

Contemporary shippers face similar logistics challenges as their 19th-century forebears, and they are again turning to the railroad to help circumvent capacity-constrained choke points at ports and in urban areas.

While the railroad’s cultural impact was long ago eclipsed by automobiles and airplanes, its role in the U.S. supply chain is evolving. Innovations in web-based communication technologies, global positioning systems, and equipment are enabling rail freight service providers to offer shippers reliable real-time shipment data, and help them manage shipments by exception.

Just as 19th-century pioneers brought the idea of a “rail-road” to reality, high-tech carriers are helping bring the 21st-century freight railroad back to relativity.

For Bowater Incorporated, a Greenville, S.C., manufacturer that produces a broad range of ground wood-based printing papers for leading publishers, commercial printers, and advertisers, as well as pulp for tissue and toweling companies, its partnership with Norfolk Southern has been crucial to its growth and success. Bowater currently ships 52 percent of its product via truck, while rail and intermodal account for the remaining difference.

“We continue to focus on using the lowest-cost transportation mode. Given the density of our products, rail certainly has a load factor advantage that we leverage as much as possible,” says Dave Brotherton, director of transportation, Bowater. “But other dynamics come into play—such as product sourcing shifts, short delivery requirements, and inventory reductions—which make it more difficult to use rail.”

In the past, service variability, customer service, and equipment supply were shippers’ biggest concerns about the railroad. Being able to locate equipment and shipments in transit, relay this real-time information to shippers and other supply chain partners, and then use the information to more effectively manage shipments and equipment is a key differentiator in driving better service and reliability.

Over the past five years in particular, solutions providers, intermediaries, and carriers have made a concerted effort to bring traditional rail shippers up to speed with technology integration and greater visibility in the railroad supply chain.

For Renewable Products Marketing (RPM), a Minnesota-based shipping and distribution cooperative that manages transportation for 12 ethanol plants in the Midwest, lack of visibility was always an obstacle to turning around cars as quickly as possible. As demand for natural fuels and ethanol additives continued to grow, reducing shipment costs also became a priority for RPM.

Say Goodbye to Faxes

Two years ago, RPM turned to RailCar Management’s (RMI) ShipperConnect solution to automate its operations processes. Tapping into RMI’s web-based interface has allowed RPM to automate shipment notifications and alerts, more accurately schedule shipments, and track cars in its system.

“In the past, we had to communicate shipment information individually via fax to and from plants, terminals, and customers,” says Jason Wojahn, logistics manager, RPM. “With ShipperConnect, I am the administrator. As soon as a plant releases a car, the system automatically notifies all parties with e-mail alerts that include BOL, certificate of analysis, and return car information.”

ShipperConnect provides shippers and equipment owners real-time access to rail shipment data, as well as monthly reports that analyze transit performance by origin, destination, and carrier.

Over the past two years, RPM has grown its fleet of tank cars from 350 to 850, and is looking to bring 250 more on board in the near future. While RPM sends some local shipments via truck to customer facilities, it is pushing more volume onto the railroad because of increasing demand for ethanol and a dearth of available trucks and drivers.

With more tank cars in the network, it is critical for RPM to have complete real-time visibility of movements, and of the railroad network at large. To accomplish this, RMI’s technology provides shippers with information generated by its carrier partners.

“A lot of data on the RailConnect TMS side is delivered to shippers through ShipperConnect,” says Paul Pascutti, vice president, RMI. “With more timely visibility of their shipments, RPM can communicate effectively with the railroad about which railcars they want switched in, and where they want them spotted. The data flows through to the shipper.”

This visibility enables shippers such as RPM to circumvent congested areas and schedule shipments along more reliable routes.

“With RMI’s software I can see the congested areas,” says Wojahn. “If a customer wants to move a shipment via a certain route, I can go into the system and see whether it is plausible. If not, I can tell that customer why the route is problematic; then we can determine a reroute that is more reliable.”

Bowater has similarly leveraged Norfolk Southern’s IT capabilities to capture real-time visibility of shipments in transit and share that information with its supply chain partners. The railroad’s Modalgistics business group has worked with Bowater to create an end-to-end shipment visibility tool call ModalView that allows it to proactively manage exception shipments and give customers online access to their inbound supply chain.

“Visibility allows for more collaboration and gives everyone the ability to monitor, measure, and manage from the same shipment data. The biggest benefit of visibility is that it affords us the opportunity to ship more products by rail because we can now manage transit times and transit variability in an affective and efficient manner,” Brotherton concludes.

Exception-based Management

Because railroads operate on a fixed network of tracks, ample opportunities exist to use technology as a passive means of tracking equipment and assets during moves. The railroad industry has experimented with early-stage equipment identification and tracking technologies for the past two decades; it hasn’t been until recently, however, that customer demand and implementation costs have crossed a common threshold.

RMI, for example, is currently working with the Port Terminal Railroad Association in Houston (PTRA) to help implement automatic equipment identification (AEI) technology on its tracks. The port railroad has 25 readers in place that automatically capture information when cars pass by.

Implementing AEI technology in high-volume and high-visibility situations where a lot of receiving and originating customers operate is particularly advantageous.

“High-profile customers such as Amaco, Shell, and BP Solvate operate at the PTRA and they demand information about what’s going on with product in the rail pipeline,” says Pascutti. In addition to expediting data sharing—which improves efficiency and car movement—AEI technology enforces security compliance.

“At the PTRA, security is foremost. The PTRA wants to be proactive and stay in front of the curve rather than have the Department of Homeland Security enforce processes they are not prepared for,” Pascutti adds.

RMI has complemented its data-mining technology by developing its M-Crew solution, which offers shippers and railroads a portable device that taps into an enterprise’s main database, providing near-time railroad information out in the field.

The solutions provider is currently implementing this system with an agricultural shipper that wants better visibility of all rail shipments coming into its plant during harvest season. The company has a rail operation within its facility as well as another shortline operation serving that plant.

“We’re in the process of outfitting them with the M-Crew system, as well as AEI readers that will give them real-time visibility during peak harvest time,” says Pascutti.

BNSF Railway, by comparison, has been using RFID technology in its terminals for the past eight years to help locate equipment. Its railcars are equipped with transponders and the railroad has 540 AEI readers across its network that provide real-time event data.

“We have also invested a lot of money in GPS technologies for more accurate location and movement information,” says Don Harrison, BNSF general director, eBusiness for the Fort Worth, Texas-based carrier. “We have GPS units on our cranes, for example, so when we stack intermodal units, we know exactly where they are. The devices guide and automatically record where boxes are set.”

The next five years will be pivotal, as shippers and railroads continue migrating toward exception-based management, predicts Harrison.

“As we improve and provide more timely and reliable transportation, we expect our customers will gain confidence and accept that our primary responsibility will simply be notifying them of exceptions,” he says.

While real-time visibility provides shippers information that enables them to make actionable decisions and manage exceptions, carriers are looking at how they can integrate technology and equipment to make the tracks safer and more efficient.

Norfolk Southern is taking exception-based management one step further with its Unified Traffic Control System (UTCS), an advanced train dispatching system developed to unify and standardize dispatching systems, coordinate and optimize train movements, and provide rapid disaster recovery capability.

One component of this project is the Optimized Train Control (OTC), a system that Norfolk Southern has been developing in concert with Lockheed Martin and GE’s Rail Business group.

The Digital Railroad

OTC combines data communications, global positioning systems, and onboard computers tied to trains’ braking systems that automatically enforce speed and operating limits to prevent collisions and other train accidents, provide improved visibility of network conditions, and promote more efficient operations.

“Train control currently is the function of two factors—a dispatching office and an in-field control system—oftentimes a signal system,” says John Samuels, senior vice president, operations planning and support, Norfolk Southern. “We’re going to link the digital dispatching office with a digital control system on the locomotive, essentially creating a digital railroad.”

Presently, railroads such as Norfolk Southern rely on voice transmissions between locomotive train crews and the dispatching office. In the future, OTC will have a programmed compliance system onboard the locomotive.

When an authority is transmitted to the train, the OTC system will oversee enforcing the authority, which in effect creates an innate compliance scheme. It looks at all authorities a locomotive crew has to move, and makes sure it complies with those rules.

“Currently, we depend on locomotive crews to control railroad safety by complying with signals and speed limits, understanding railroad operating procedures, and controlling trains,” Samuels says. “OTC will have a major impact on safety. Combined with the UTCS in our offices, we will have sophisticated algorithms to optimize train transit and minimize delays and interference.”

In addition to making sure trains are properly piloted, minimizing any unusual occurrences in transit—including mechanical and signal failures—is key. In concordance with its UTCS project, Norfolk Southern is working to distribute detector systems on railroad right-of-ways to observe the stress state of railroad equipment and track.

BNSF has similarly invested in railroad detection systems to monitor axles, wheels, and drayage equipment. The railroad industry at large is implementing a suite of detectors across North America that check trains’ operating condition dynamically as cars transit the railroad.

Part of this rollout is the wheel impact detector, a device that monitors engine and railcar wheels for surface anomalies that might stress track.

“If a wheel develops a flat spot—due to braking characteristics or other factors—that wheel will pound the track. In rare occurrences these wheels can hit welds along the tracks and cause fractures,” says Samuels.

These detectors also enable railroads to identify cars that are imbalanced or improperly loaded. Such anomalies at high speeds could cause derailment.

Moving forward, the goal is to have detector technology on all types of equipment, enabling carriers to set criteria for nominal and excessive loads, look at dynamic running characteristics of railcars on a train, then integrate this data and discover problems before they occur.

This type of real-time data also helps railroads optimize the repair cycle for defective equipment.

“If you know immediately that a piece of equipment is defective or not operating properly, you can take the component out of the system, fix it, and with advanced notice, correct that situation,” adds Samuels.

Rail Down the Road

Since the Staggers Act and deregulation, a progressive push has occurred within the railroad and intermodal industries to break down physical and ideological walls between enterprises and modes that previously hindered collaboration and information sharing.

Ironically, since railroads have become more competitive with over-the-road carriers, collaboration between both modes has increased. Shippers, in turn, are gradually realizing the efficacy of matching the timeliness and flexibility of trucking with the long-haul advantages of the railroad.

This altruism has given railroads greater leverage in selling their products and services to new and existing customers because they are evolving into true logistics solutions providers.

Bowater, by example, is leveraging Norfolk Southern’s transportation management technology to automate shipment tendering and carrier selection. This enables it to automate manual processes within the transportation group and more effectively manage routing guide compliance—regardless of mode.

“Both of these benefits have allowed us to reduce unnecessary trucking, which helps control transportation cost. In addition to technology, Modalgistics has worked with us to model and optimize our distribution network, permitting us to identify the best modes of transportation, the best sourcing strategy, and the best use of our assets,” says Brotherton.

Norfolk Southern is helping shippers such as Bowater reduce cost while improving the ease of doing business with the railroads, creating a level of trust and expectation that railroads have not always enjoyed with their customers.

“Modalgistics has been working with us for the past five years and we have seen continual benefit from the relationship,” says Brotherton.

The two companies are working to create a single platform that allows Bowater to view and manage its outbound shipments regardless of mode and carrier. This functionality will include: modal selection, load consolidation, shipment routing, carrier selection, shipment visibility, proactive service monitoring, and performance measurement.

“Through our relationship with Norfolk Southern we expect to have the most competitive supply chain in our industry,” concludes Brotherton.

Intermediaries such as RMI have similarly helped railroads and shippers effect change by providing them with the tools to more efficiently interface with each other. Its solutions have made the risk of investment and the cost of implementation easier to deal with for small, capital-constrained enterprises.

“Our ultimate objective is to help carriers cut costs and improve customer service so they can give their customers better visibility,” explains Pascutti. “In turn, it encourages and empowers these shippers to move more product by rail. This also has a direct impact on fleet performance. One of the limiting factors of how much a customer ships by rail is simply the availability of the fleet and how fast they can turn their cars.”

As global shippers grapple with the challenges of moving freight quickly and cost-effectively, railroads are not only turning cars but heads as well. Capacity and labor issues, especially in congested areas, will continue to warrant innovative solutions and collaboration from carriers and shippers across all modes.

For the railroad, in particular, its ability to integrate all its assets—track, terminals, and equipment—with innovative technology has helped maximize capacity and improve product flow.

In effect, the railroad of the 21st century has come full circle, operating as part of a highly integrated, multi-modal supply chain.