Railroads - a status check
The railroads are the canary in the recession coal mine. The canary is starting to breathe a little easier as per volumes announced by the Association of American Railroads. Let's take stock.
2010 Carload Volume growth over 2009 was at 7.3% of 14.8 Million. 2010 Intermodal Volume growth was 14.2% of 11.3 Million containers/trailers. 132,284 railcars were placed back in service with 183,987 remaining in storage and 8,000 employees were added to a total of 155,042 at the end of 2010. Expansion projects in the US largely focused on Intermodal with new double stack clearances on CSX and Norfolk Southern, along with expanded and new terminals on BNSF and Union Pacific. The railroads are emphasizing service improvements, improved productivity, continuous improvement of fuel efficiency, and reducing their operating ratios.
Balancing Service Delivery and Operating Costs has always been an art form with some science, math, computers, and good intentions thrown in for good measure. This is how it was up until 1990. Then new computing power could support the flow of information required to communicate to customers and rail employees what the service delivery promise that was sold by shipment, information delivered to give clues, status, and support information to keep trains, terminals, crews, and financial information together to show performance and evaluate what to do in the future for CapEx and adjustment of schedules. In 2006 these systems and people handled more business than ever but not with improving service results. The great recession of 2008 changed all of that and railroad managers attacked the problem by emphasizing service and increasing productivity.
With business coming back and some capacity expansion in place, the next 24 months will be a test of the new goals of the industry. Railroad Service Strategy will get its biggest test ever as planning looks at "WHAT IF" situations, simulations test plans, and the railroads utilize their vast libraries of data to set course for the future. The thing that is different in this planning cycle is the computing power in speed and accuracy is available to provide results to be trusted and utilized. The slicing and dicing of data for a great presentation may look impressive but it must be used to guide the new service strategy. A plan must be developed and supported by historical and daily data to move from "WHAT IF?" to "WHAT NOW?" The "WHAT NOW?" will provide information, instructions, volume flows, and help, to dispatchers, terminals, managers, and employees on a real time basis. This "WHAT NOW" will be based on balancing service, network flow, costs to plan and execute what is going to happen in say the next 4 hours so assignments and instructions can be issued for action.
Why is this important to the Railroad Industry? A generational change in personnel is going to happen and new people are going to be moving into jobs requiring decisions and actions. Capacity will be reduced as traffic volume grows with the recovering economy adding more pressure to be productive and control costs. As more intermodal traffic comes, service demands increase because you are moving more time sensitive traffic. As the US population grows demand will grow for consumer goods, electrical generation, automobiles, and building materials which the railroads are the best alternative for hauling the weight and bulk at economic prices and lowest carbon footprint.
For the railroads the question is-Are you ready to determine the answers to WHAT IF? And WHAT NOW?
