FreightWaves is providing a forum – Market Voices – for a number of market experts.
Jim Blaze is a railroad career economist with an engineering background and a strategic analysis outlook. Jim’s career spans 21 years with Consolidated Rail Corporation (CONRAIL), 17 years with the rail engineering firm Zeta Tech Associates, 7 years with the State of Illinois Department of Transportation in Chicago urban goods movement research, and two years studying what to do with the seven bankrupt and unrecognizable Northeast railroads at the federal agency USRA. Now primarily a teacher and writer, Jim likes to focus on contrarian aspects of the railroad industry.
Precision scheduled railroading (PSR) promised scheduled rail freight operations resulting in more than a financial gain for a railroad and its investors.
The business theory is that operating efficiencies reduce costs and that improved rail discipline improves shipper service. Where is the evidence of shipper gains? Is customer service actually improving under PSR? Is the service delivered to freight customers actually improving?
The statistical results are mixed.
The number of railway cars operated by PSR rail companies have been dropping. That suggests faster “turns” between loading and the next loading. However, it could also mean that seldom-used rail cars are being “stored” or scrapped.
PSR rail managers point to increased velocity of railcars through their rail yards. However, not every PSR railroad is experiencing faster yard-to-yard train movements.
Railcar final sidetrack destination delivery seems to be improving. That is, the estimated time of arrival (ETA) is improving. Railcar arrival day and time at final destinations seem to be improving. From pretty terrible ETAs in the 60 to 70 percent on-time as expected range, there have been PSR-related improvements announced. But so far, nothing any of the PSR railroads has done comes close to what trucking companies do – “same day as promised and same hour as promised” in the 95 percent range.
What might PSR deliver, as a metric of change?
Descriptive improvement adjectives are nice in speeches and press releases. But at any of the upcoming quarterly analyst briefings of the Class 1 railroads, it would be good to see evidence of freight delivery service improvements.
There are at least four or more ways to produce such PSR service improvement metrics.
One methodology is to track freight cars equipped with automatic equipment identification (AEI) and measure the change in loaded cycles per year before and after PSR. Alternatively, following another timeline change if a railroad has not adopted PSR (like BNSF).
There are also “big data” files kept by Railinc. The company provides the railroad industry with information and information technology services. Railinc is the industry’s largest and most accurate source for real-time interline rail data.
However, there is a sticky issue of who has the right to analyze the data that Railinc has. Why? Because individual rail companies claim that their private “AEI tag readers” are the collectors of that data. Without approval to use the data from the railroads, qualified Railinc analysts may violate railroads’ privacy.
Railinc technical staff could process the data that identifies “before and after” railcar loading and unloading, as well as the next loading logistics sequence.
On the basis of strategic lanes or commodity groups, a sample of freight cars should pinpoint change/improvement rather precisely (no pun intended).
If PSR has a shipper benefit, we should expect to see a 10 percent to 20 percent improvement in railcar cycle time if railroads are able to effect better schedule-keeping and more accurate ETAs are executed.
If an organization like Railinc cannot yet make the statistical calculations for institutional or privacy reasons, are there other methods? Yes.
More than 75 percent of the North American rail fleet is privately owned or leased. One hundred percent of the tank cars are shipper- or receiver-“controlled.”
Theoretically, shippers or receivers could gather statistical evidence about their private fleet cycle time changes. There is a presumption that the tag-read data associated with their commodity inventory in motion is their market intelligence. Therefore, shippers should be able to calculate their PSR benefits.
Are they doing that? Are they willing to share that intelligence?
As a third approach, railcar leasing firms should be able to calculate their changes in fleet-specific loaded and empty miles. If railcar load productivity is increasing, the need for more leased cars should be decreasing. Of course, some lessors might not want to disclose that for obvious business reasons.
A fourth analytic process involves the Surface Transportation Board (STB). The STB could make independent calculations. It could institute a proceeding to examine patterns from the enriched version of the annual rail waybill sample.
Finally, short line railroad partners should be able to calculate the “before and after” changes in PSR interline actual event times compared with nominal ETA interchange times.
In the increasingly digital era soon to be enhanced with terabytes of positive train control (PTC) Global Positioning System “reads,” there will be warehouses of data that could specify PSR-generated customer benefits.
Think about that. The possible PSR railcar cycle and customer service benefits should be a treasure chest of marketing good news. Why let a third-party logistics or data analysis firm write that market report? If it’s great news, the railroad marketing executives should be broadcasting the message.
Which of the six PSR railroad will be the first to show us the metrics? Will one of them use the quarterly investor presentations that start this week do that?