‘Maybe So Sir, But Not Today’
Railway intermodal freight typically showed up in the middle of these supply chains. Rail was seldom the prime organizer or the major part of the long paths.
Intermodal rail is primarily viewed in North America as a wholesale mover of trains and container units, as a contracted service. The question now being asked often by regulators and public policy leaders is whether or not railway infrastructure is failing? Here are my technical observations as a strategic thinker.
The failure is not physical track infrastructure. There is something else more critical. It is instead, I believe, about digital information management and broad digital sharing of predictions. What can oversight reviews do to determine the real problems and isolate solutions?
There are multiple industry sector shortages of inventory on hand, both at manufacturing areas and consumer purchasing points. Admit it. We saw this developing as far back as June of 2020. It’s not flash news anymore. July 2021 headlines have been more about status reports.
Here is one that could have been plucked from multiple news outlets during the past weeks. I’m not trying to pick any particular publication. Rather, it’s a rather broad consensus suggesting, among other things, a railway freight sector failure. To paraphrase:
“[I]ndications are that the continuing surging rise in volumes of rail-moved containers will increase the strain on infrastructure … resulting in more delays … representing capacity bottlenecks.”
This sends a message to the public of a systemic rail network failure, or even worse a pending collapse. That judgment is a bit severe. The U.S. and Canadian railway network of tracks, bridges and tunnels actually is in pretty good physical shape. That conclusion is based on my experience in rail economics and engineering.
Granted, along the railway network there are cargo and train delays. A few notable congestion points on track and bridge areas are evident. However, most of the delays I and my network of railway colleagues have watched and investigated seem to be clustered around terminals, storage processes and mode-to-mode transfer operations. If true, that does not support a conclusion of overall rail track infrastructure failure.
The most serious problem for all global movement parties appears to be the lack of predictable movement. Let’s start with two descriptions, as reported by Brendan Murray on July 210 in the American Journal of Transportation (AJOT) newsletter, Maritime News. Here is the East Coast port view about container movement delays:
“We easily see this going through up to Chinese New Year, and there are a lot of indications now that it could go beyond that,” says Griff Lynch, Executive Director of the Georgia Ports Authority. He refers to the holiday in the quarter of the year that typically is preceded by a rush for ocean shipping leaving Chinese ports bound for the US and other markets. “We talk to our customers every day—they’re telling us they still have low inventory.”
That reflects pessimism as to length of recovery time. In contrast is this West Coast port view:
Port of Long Beach Executive Director Mario Cordero says that his port is entering a peak season of imports later this month as retailers restock for the late autumn and later on year-end holiday retail sales period. He says, “We see light at the end of the tunnel with regard to moving toward some normalcy by the end of the year.”
Among my experienced colleagues’ viewpoints is this market observation by intermodal expert Ron Sucik:
“Given inventory shortages at most retailers, it is interesting that turn times are so long, which might reflect poor cargo unloading and holding of containers at many warehouse distribution centers. In part that could be because of floor storage congestion, or maybe caused by labor shortages at those locations, thus making it difficult to turn boxes as fast as usual.”
Ron’s perspective does not reflect a railway network failure.
Now, let’s shift from physical structure delays (“bottlenecks” or “pinch-points”) to a different business disruption hypothesis. The delays and congestion might be the result of a lag in adopting information management digital solutions. Old-timers lime me have understood that there are significant cargo movement black holes, where shipments move for hundreds of miles literally out of sight and record status update for hours, sometimes days.
Various hardware and software solutions have been tested since the early 1990s to make events visible. Do that, and there is a chance to create an improved series of events predictions that will lead to improved next-chain-of-events dependable action steps to keep cargo moving. This is a simple prescription, but complex technical execution is required. Technology and communications are critical. That’s been missing.
But there is movement to improve event management. The latest is an update from the Port of Los Angeles, which is implementing, with Wabtec, a new digital intelligence service called Horizon that will allow cargo owners, terminal operators, railroads and truckers to predict the oncoming movement of imported containers, as much as six months in advance. Horizon, based on Wabtec’s Port Optimizer cloud-based software platform, helps multiple parties in long-distance supply chains to better-predict oncoming cargo volumes bound for member-user ports. Horizon’s predictive technology uses an algorithm to track and then predict cargo arrival. It works best when paired with live GPS tracking devices and near-real-term communication of movement changes. Port officials, vessel schedulers, stevedores, drayage truckers and railroads all get to share in the same container movement data set package.
This is good news. But unfortunately, Horizon will not be fully useable until early 2022
So, what are the missing action items? There is a great deal of “systems and communications integration” necessary to put into place for all of this predictiveness to then become fully functional from player to player along the logistics paths. And there are a few hurdles to overcome. Some parties, like carriers or shippers, jealously protect their movement records. Other parties just are not comfortable yet with cloud-based data security. Others do not want to commit the capital R&D to become proficient in such data chains.
That raises a suggested “herd immunity” question: How much of the cargo flow mass needs to be using advanced mode-to-mode and place-to-place database visibility in order for the entire downstream group of users to benefit? We don’t know just yet.
Many months have passed since Port Optimizer was released. The rollout is perhaps slower than first expected. As a result, at mid-year 2021, even a port like LA that was previously committed to the visibility and sharing has not yet reached critical user and volume prediction mass.
What else might cause an adoption delay? There might be other vendors who might offer a better solution. Thus, competition among other solution suppliers might make the full expansion of the LA-specific supply chain forecasting intelligence a longer business evolution process than expected. Initial adoption of new technology often hits bumps in the road. We should be aware that there will be technical problems as to how to best link up with software and communications. The participants must connect freight railroad databases to the TMS inventory systems of intermodal customers, ports and warehouses along geographic supply chain routes. Frankly, this is going to take some time. Apparently, the adoption process is not yet fully integrated for the 2020-2021 supply chain problems we are all experiencing right now.
Lesson learned? There is a lot more integration work to be done to make this digital productivity work to its full potential. If the algorithms and databases and GPS systems are integrated, then the results should be that the railroads and drayage truckers and port stevedores will collectively have transparent day-by-day projections ahead of time as to where to position necessary empty platform railcars, crews and even locomotive power. But as Tom Cruise’s Top Gun 2: Maverick character says to his commanding officer, “Maybe so sir, but not today.”
Once this digital infrastructure gets more fully adopted, then the intel packages can be used for advanced setup of chassis and containers in terminals, and even for storage parking management applications. Connectivity with a robust data infrastructure creates multiple-use data feeds. That’s the kind of infrastructure that spells out “improvement opportunity.” regardless of one’s position along links and nodes.
Here is what I believe the President’s recent Executive Order message likely means for the roles of the various government bodies that overlook intermodal freight transport, and what during the rest of 2021 might be good investigative roles for the Surface Transportation Board and U.S. Maritime Administration intermodal delays review: While a regulatory process should shed light on the complexity, the regulators themselves are not likely to offer the Information Technology or hardware solutions from their oversight perches. Most will not have experience with digital management tool kits. For them, it will more likely be a learning experience during these next few months. They could start with these long-standing questions:
- Which Class I railroad saw the subscription value of linking up with “port optimization” as part of its PSR business model rail-centric service last year?
- Did any Class I’s see a potential direct productivity benefit for railroad cargo handoffs between modes and terminals as well as potential for rail customer satisfaction and market share growth?
- What does it take for the railroads to commercially buy-in to this digital network enabler (capability)?
These agencies should use the investigative time to explore the above as business re-engineering problems.
In closing; I do not believe that the North American freight intermodal network is now congested or collapsing from a lack of main line capacity. This intermodal summer of 2021 traffic disruption is not a failure of rail track, bridge and tunnel physical infrastructure. It is not a failure of signals and communications among trains or railway to railway interchange. It is not a mechanical failure of the platform cars that haul international containers. It is not a failure of the transloading practice at the ports of the international cargo from ISO small containers to much-larger-cubic capacity North American domestic 53-foot-long containers.
Information management capacity issues are more likely the real infrastructure problem—and the solution. As well, there is evidence that congestion and lack of sufficient on-hand forward retail trade inventory (plus some critical OEM parts for today’s multi-party manufacturers reflects stumbles and fumbles along a series of chain links. This hypothesis suggests a classic “weakest chain” analogy about identifying failures.
Generalist (non-trade publication) journalists and frustrated buyers might like a rapid fix and a simple answer. But JIT (just-in-time) multiple paths and multiple long-distance sourcing that has evolved for the most part successfully over the past two generations of time (about three decades) as a lower cost economic input/output commerce model turns out to be susceptible to failure when significant disruption occurs along the series of links and nodes. If security and absolute delivery certainty is what customers require, then a more expensive point-to-point minimum paths, minimum terminals and minimal handoffs is perhaps the more efficient logistics path to follow.
There has to be a supply chain rebalancing that starts with better analytic coordination and movement tracking between the logisticians at the origins and the logisticians located at the final delivery points. They will not necessarily be railroad operations or transportation managers.
Every event (like a terminal entry) and every path is measured as a “friction.” Friction in a network can be defined as asset delay or energy cost to be overcome along the route. Delays of intermodal trains at Chicago, Memphis, Harrisburg and at the ports of Savannah, LA, NYNJ and Seattle (to name only a few) are “symptoms of chain congestion.” It does not necessarily signal physical failure of track structure.
The next train into Memphis or Joliet can’t arrive until the train before it has been emptied and removed to a loading track. That prior train can’t be unloaded without yard drayage and crane operators and open container parking slots. Beyond that is a required pool of available, on-hand chassis, since containers lack wheelsets.
Loaded boxes not picked up by receivers also clog the arrival terminal. Boxes dispatched locally to receivers that are not returned with their chassis just delay everyone else waiting to come into that terminal. With better GPS and database-matching smart software, delayed or unclaimed boxes could be isolated and stored elsewhere remotely, and charged excessive detention times for clogging the network.
There are solutions. Collectively, everyone in these intricate chains has known that digital investment could become the essential tool kit for smoothing network disruption. It has been discussed for nearly two decades, butut shuffled off to the background. Dividends paid out and stock buybacks seen as a better investment than capitalizing this technology. Collectively, my older generation may have thrown the current generation into this quicksand setting by deferring changes we intellectually recognized. We have seen the enemy. He was us.
What does the current generation do about it now? From this emerging infrastructure and delay debate, we need solutions. We need buy-in, followed by rapid multiparty execution. There will be corporate winners, and some losers.
My message for the regulatory folks: Recognize the complexity and the choices rather than seek blame. Recognize the role of digital infrastructure. Enable, with your review, the innovators to execute.
As always, contrary opinions are welcomed. That engagement is how we all learn.
Independent railway economist and Railway Age Contributing Editor Jim Blaze has been in the railroad industry for more than 40 years. Trained in logistics, he served seven years with the Illinois DOT as a Chicago long-range freight planner and almost two years with the USRA technical staff in Washington, D.C. Jim then spent 21 years with Conrail in cross-functional strategic roles from branch line economics to mergers, IT, logistics, and corporate change. He followed this with 20 years of international consulting at rail engineering firm Zeta-Tech Associated. Jim is a Magna Cum Laude Graduate of St Anselm’s College with a master’s degree from the University of Chicago. Married with six children, he lives outside of Philadelphia. “This column reflects my continued passion for the future of railroading as a competitive industry,” says Jim. “Only by occasionally challenging our institutions can we probe for better quality and performance. My opinions are my own, independent of Railway Age. As always, contrary business opinions are welcome.”