IntelliTrans News - TrafficWorld Article

Flying Boxcars: Could an 'air traffic control' system make railroad boxcars competitive again?
By John Gallagher

The railroad boxcar business has all the classic signs of a dying industry - nobody's investing in boxcars and every year more cars are retired than are added to fleets. Boxcar service is hated by customers and railroads aren't making any money on it.

But imagine a world in which boxcar fleets average 90 percent on-time delivery and achieve 15-18 turns a year. This is a vision that a group of stakeholders believe could become reality if they can get their partners and competitors to look at rail transportation in a different way. They say the results of a six-month pilot project that ended April 30 bear this out.The pilot, sponsored by the American Forest & Paper Association (whose members make up the bulk of boxcar shippers in the United States), plotted specific movements of shipments in the lanes of four railroads: CSX, Canadian National Railway, Kansas City Southern Railway and Guilford Transportation. Shippers involved in the test were Georgia Pacific Corp., International Paper Co., Weyerhauser Co. and Westvaco Corp. IntelliTrans LLC, a joint venture between GE Capital Rail Services and Atlanta-based IntelliTrans Inc., acted as a neutral third party that collected and analyzed car location information compiled during the project.

Comparing the results of a 'control' fleet with those fleets moving in lanes managed by IntelliTrans, it was concluded that increasing the visibility and flow of fleet management data between and among carriers and shippers could have a significant impact on turnaround times and on-time delivery. 'Not only did we see a 7 percent improvement in transit times,' said John Ficker, logistics development manager for Weyerhauser, 'but we were able to identify two significant problems on both the shipper and carrier side - dwell times at origin and dwell times at rail terminals in transit.'

The results of the pilot test showed sufficient promise to warrant a broader, 'phase two' of the project and participants currently are being solicited.
This isn't the first time shippers and railroads have banded together in an attempt to find a solution to what has become an alarming problem in the rail industry. 'If you were to track the downward decline in paper volumes that move in boxcars over the last 20 years, it would be huge,' Ficker said. 'We had mills that used to ship 90 percent by rail that are now shipping in the 60s, with some now even in the 30s.'

In 1992 the AF&PA, along with the American Association of Railroads, set up a boxcar task force that lasted five years. 'But at the end of the day, we made no improvement,' said Norm Langberg, director of logistics for Georgia Pacific. 'We were dealing with way too many subjects relating to the boxcar: cleanliness, mechanical status, fleet size, financing issues - things that were so broad that we didn't have the ability to really make any kind of impact. This current project is all about moving the cars faster and more efficiently. There are other issues but we're deliberately keeping them out.'

Average cycle times of boxcar fleets currently range 12-13 times per year, with on-time delivery averaging in the high 50 percent to low 60 percent. These numbers must improve substantially if boxcars are to compete with trucks in moving forest and paper products, shippers say. 'After working on this problem in some form for the last eight or ten years, one of the things we've concluded is that the current method of how we manage boxcars is fatally flawed,' Langberg said. 'Just working harder at it isn't going to make it any better, we've got to work different.'
That's where IntelliTrans came in with the concept of creating a web-based, neutral system to track and trace cars, identify problems and offer solutions. 'It's what we call the control-tower view,' says Rich Gerstein, founder and CEO of IntelliTrans. 'We're providing visibility of shipments across all carriers using a common platform where everybody can get online and see their shipments from both a summary level and a more detailed, analytical level. We make sure everybody's talking the same language, and everybody understands what we're measuring.'
IntelliTrans also 'intervened' on traffic - that is, it would step in when it saw a movement was delayed in a yard or in transit. 'We'd call the shipper or carrier and make sure of two things,' Gerstein said. 'That our customers were getting visibility as to the current status of their cars as well as work with the carrier to resolve the issue and make sure everybody was getting the same information at the same time.'

In essence, IntelliTrans had installed and operated a type of air traffic control system for rail cars. 'If United was the only flight coming into Reagan National, you wouldn't need to have an air traffic control system because United would own everything,' explained Gerstein. 'The problem is, you've got Delta, USAir and others coming in, and if there wasn't an air traffic control system, a lot of bad things would happen.'

'Here we've created an air traffic-control view of boxcar movement that's at a higher view than you can achieve with managing at an individual railroad or paper company. If you're going to manage a finite amount of cars as efficiently as possible and not 'double book' or 'crash in the air,' you can't do that from a Georgia Pacific's or a CSX's view on the world. It has to come from above, so to speak.'

The railroads initially felt threatened by the concept and some still do. '(Railroads) are a group of independent companies that do partner together but don't share data as well as they can, or they don't normally put information in front of (customers) so that they can count on things on a systematic basis,' said Ficker. But the reluctance to share data does not rest solely with the railroads. 'Railroads as well as paper and forest products companies are set up to be internally focused,' said Langberg. 'We only care about what our needs are at our particular locations. We're not set up to communicate beyond our own boundaries. We need to get past these boundaries and start realizing that we're all working off the same amount of rail assets - some (cars) happen to say Georgia Pacific, some say Weyerhauser, some say Burlington Northern. But (because boxcar fleets are pooled) we all use these cars at some time.'

Another potential stumbling block is the fact that the railroads already have invested millions of dollars in their own tracking and tracing system or in industry-wide efforts - such as AAR's SteelRoads - and therefore would be expected to be against collaborating on a new venture. 'The railroads have always looked at providing their own information,' noted Jim Howarth, vice president for manufactured products at CSX. 'But what customers want is rail information by mode - they don't want to go through the websites or the 800 numbers of five companies, they want one rail information provider.'

SteelRoads, in which the railroads already are involved, has made some headway to this end, he noted. 'But I can't predict how well accepted SteelRoads will be, or what the future is for IntelliTrans,' Howarth said. 'There is redundancy out there, but ultimately the customers will decide whether they want a third party to bundle the information or someone else. I do see a willingness by many railroads to participate and listen and hear what we're doing well, and where we need to improve, and then go out and publicly see it measured.'
In fact, backers of the AF&PA initiative hope that an outcome of phase two will be the formulation of basic ground rules and a method of institutionalizing the new process. One of the models the group is looking at is the movement of finished automobiles that relies on a pooled fleet of autorack rail cars. 'That type of business uses a combination of equipment pools and cooperation among the car companies and carriers that seem more closely aligned with where we think we need to go,' Langberg says. 'They have rules that are consistently applied across the auto manufacturers that we don't have today. We want the same: rules that all of us will have to adhere to, that will cross the boundaries of individual companies and railroads in order to make this whole thing work better. If you're a paper shipper and you want to keep your mill running by filling up cars that you don't have orders for, something like that will probably be a felony under these rules. It'll be a hard pill for all of us to swallow, not just the railroads.'

Giving phase two of the project an additional boost will be the commitment of consultants from GE Railcar, which will provide expertise from its Six Sigma program. The Six Sigma concept, which relates to total quality management, was developed by Motorola in the 1980s and adopted by other corporations, including GE. The central idea is measuring the number of 'defects' there are in a production or service process and then systematically eliminating them in order to get as close to 'zero defects' as possible. GE Railcar's participation in the project is understandable, given its status as the biggest lessor of boxcars in the industry. 'They have a lot at stake, in terms of leasing and seeing these problems get addressed, and making sure their investment is not obsolesced,' points out Charlie McHugh, director of North American logistics for International Paper. '(GE Railcar) is committing not only financial resources but people resources, and that's very encouraging.'

The AF&PA, along with the participants in the project, is confident that enough progress was made in the initial pilot that phase two, which will involve drilling down further into the causes of the inefficiencies of the country's boxcar fleet, will attract more railroads and shippers. 'One of the things that differentiates this effort from past ones is that we're trying desperately to take down the barrier between paper company and railroad when it comes to dealing with this problem,' said Langberg. 'We're all in this together, and what we're trying to do is get the industry to step up to the plate and take responsibility for helping make this better, rather than just blaming the railroads, as we've done in the past. We have to stop the blame game.'

Traffic World Magazine
Journal of Commerce Group
June 25, 2001
Section: RAIL Edition: TRAFFIC WORLD Page: 30

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