Moving Rail Into The Digital Revolution

Moving Rail Into The Digital Revolution

By Martin Lew, CEO of Commtrex
As published in "The Coal Transporter," Issue 1, 2019

The development of railroads was arguably one of the most important technological innovations of the Industrial Revolution. Through the formation of the U.S. rail network, this mode of transportation brought profound economic, social, cultural, and political changes to a country entering the next phase of growth. By 1880, the U.S. had 17,800 freight locomotives carrying 23,600 tons of freight, and 22,200 passenger locomotives. In 1916, there were a record 254,000 miles of railroads traversing the country. During this time, the U.S. railroad industry was the nation’s second largest employer, and effects on rapid industrial growth included the creation of the modern system of management.

Fast forward to 2019 – without railroads, the world would be a different place. As an economy, we have come to depend on rail to connect population hubs and move freight across the 50 contiguous states. Each day the US freight system transports 48 million tons of commodities and goods that are vital to the US economy, from energy sources such as coal and oil to everyday products like food, motor vehicles, and electric appliances. Although the importance of efficiency and profitability has remained the same for more than a century, the focus has shifted. While constructing railroads and developing physical infrastructure was the primary objective in the past, building data modules and developing innovative digital technology systems is the future.

It is highly evident that the transportation industry in the US, just like every other industry, is either being disrupted or enabled by technology. Innovative technologies are improving operational efficiencies in freight transportation across every mode. Technological advances, such as self-driving trucks, are becoming more than just an experiment. They soon will be a prevalent part of the trucking landscape. For rail to continue to remain competitive, railroads, asset owners, service providers, and he entire rail ecosystem needs to become easier for shippers to navigate. The US Department of Transportation (DOT) estimates that there will be an 88% increase in rail freight demand by 2035. In order to meet that demand, the rail industry will need to aggressively focus on improving operational efficiencies. Otherwise, they could see their competitive edge decrease over a material share of their baseload traffic.

There are many ways the rail industry can be competitive and stay in lockstep with trucking technology. The industry should be investing more capital and resources into understanding how technologies such as Blockchain, Internet of Things (IoT), and Big Data can remove inefficiencies in fleet management and freight movement within the rail network. Technologies such as Blockchain will eventually end paperbased communications and eliminate error-ridden processes, such as recording shipping manifests and waybilling multiple car shipments. Advanced predictive systems could help reduce fleet maintenance costs while also fully optimizing the management of the rail assets. The data that is collected by railroads and shippers are immensely underutilized and needs to be leveraged to create greater insight into improving applications, behavior, and decision making. We are still in the early stages of understanding the true application of how big data can be utilized, but companies like Commtrex are well on the way to making activity-based data analytics accessible to rail professionals. Many companies have already begun to reap the benefits of Commtrex’s online rail marketplaces and data analytics. They have found that this type of technology can effectively bridge the gap between raw data and meaningful insights in the interests of providing tangible results.

The next generation of shippers will not look at data as merely one of their tools to help make better decisions, but they will rely on it to extract insights, identify trends, improve productivity, decrease maintenance costs, and gain competitive advantages for the products they are shipping. The future success of the rail industry will highly depend on significant investments into not only constructing/upgrading the physical rail network, but also embracing the integration of a digital infrastructure that will help provide real-time intelligence for shippers, railroads, lessors, and service providers. The continued development of technology in the rail industry will prove to be one of the most critical competitive strategies for continued growth in the current Digital Revolution.

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Commtrex is the #1 online marketplace facilitating business between Rail Shippers, Storage Providers, Asset Owners, Railroads, and Service Providers. Commtrex has the rail industry’s first exchange-based pricing index for rail storage and leasing rates.


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