Freight rail stakeholders ponder the industry’s future

A photograph of a train with railcars behind it.

U.S. freight railroads will benefit from incorporating advanced technology to improve safety and optimize operations, but how can other stakeholders, such as shippers and labor, take advantage of the rail industry’s increasing tech focus?

That was among the questions that panelists addressed Monday at the Transportation Research Board (TRB) conference in Washington.

Through technology, the railroads can upgrade their infrastructure to make it safer, and the railroads can operate more effectively on that infrastructure, said Mike O’Malley, president of the Railway Supply Institute.

But whether technology can help grow rail volumes “is the real question,” O’Malley said. “Can you meet shippers’ needs in a modern way, based on current expectations, and can you build your business?”

Technology was the focus of the panel on “The Future of North American Freight Rail Transportation.” The TRB promotes transportation research among traffic engineers, transportation planners, government agencies and private companies.

Members of the rail industry involved with TRB’s research efforts are trying to address how the industry can use technology to become more reliable and visible to stakeholders within the supply chain, according to Avery Grimes, TRB Rail Group chair. Technology has the ability to address issues such as car supply, which is becoming increasingly challenging issue for certain shippers, as well as competitive pricing and whether to continue to invest in more marginal assets.

Will the railroads share the fruits of their productivity initiatives with customers and with labor, or will they use technology to improve their bottom line, asked Grimes, who is also chief strategy officer for Patriot Rail, a short line operator.

What shippers want

Successfully collecting and analyzing data can help short line operators understand and meet customers’ needs better, which in turn could help operators win additional carload traffic, said Chuck Baker, president of the American Short Line and Regional Railroad Association.

“To get carloads back, the answer is better service” and having the ability to tell customers where their shipments are along the supply chain, Baker said.

Meanwhile, the rail industry must tackle what labor’s role will be as the industry integrates technology that could potentially displace workers.

“I do think it’s incumbent upon labor and management to face these issues straight up” and take out the fear of talking about it, Grimes said. “That sounds soft and fuzzy, but I think that’s where it starts.”

Data transparency and some insight as to what’s “under the hood” is one way the railroads can better communicate with shippers, many of whom are captive to one railroad, said Rob Benedict, senior director of petrochemicals for the American Fuel and Petrochemical Manufacturers (AFPM).

The AFPM is also seeking a less costly alternative to protesting rail rates before the Surface Transportation Board, a regulatory agency, and additional clarity on how the railroads apply demurrage and accessorial fees.

“We know the railroads reinvest their profits. What we’d like is an arbitrator that’s fair and balanced since the industry has so few players now,” Benedict said.

Growth areas for rail

One area the rail industry can focus on to gain more customer share is for short-haul movements of less than 500 miles.

For short lines, that might mean using transloading as a way to attract traffic and court shippers that might not otherwise be on a rail line, Grimes said.

Technology, meanwhile, can help by increasing through-haul visibility and enabling shippers to see a bill and potentially dispute charges, panelists said.

But the government must also clarify its role in defining how transportation should incorporate technology. For instance, government agencies can help rails’ stakeholders by creating a platform that allows stakeholders to see potential locations for additional business along a rail line.

Government agencies also need to address how to make the permitting process easier, especially in situations where there might be a more vocal local opposition. One way to address this is for states to develop multimodal freight plans.

Older terminals can have very old equipment and can be noisy, but newer terminals can be highly automated to produce much less noise, O’Malley said. This is an area where the railroads can work with their trucking partners, especially in heavily urbanized places, including ports, he said.

“But you’ve got to get these tough projects done” and permitted, O’Malley said.