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The Future of Rail Freight Transportation

In the world of freight transportation, ocean and air shipping play a significant role in the logistics industry, but there’s another mode that is often underestimated – rail.

Rail freight transportation has experienced downtime since the 1980s. The logistics world is changing, and it seems like rail is making a major comeback these days. New technology and innovations are disrupting every industry and all transportation modes.rail transportation

There are various changes and shifts in the logistics industry, that results in new demands and the need to deploy various transportation modes. Problems in the industry, such as the rising demand for capacity, gas emissions, and the aging generation of drivers are the main issues many logistics professionals face. Using rail transportation for your freight can probably solve some of these problems.


According to the Association of American Railroads, the rate of accidents on railroads decreased by 23% since 1980. There are more investments in rail infrastructure that are increasing the safety and efficiency of rail transportation. Rail offers a higher safety level because of less human involvement and the absence of highway congestion. Various technologies are being applied to improve safety, one of them being Positive Train Control (PTC) – an automated system that slows or stops the train in the case of possible accident or human error.


New technology innovations in rail transportation are at the peak of development. Automation, driver-less trains, big data, IoT and artificial intelligence are all new tools impacting rail transportation. For example, the automated system PTC is already used by 83.2% of the required Class I route miles nationwide and will be fully active by 2020. Many efforts drive towards eliminating human labor and human errors.

Greener Transportation

The most obvious advantage of rail over trucking is being less harmful to the environment. Rail can handle a much higher volume of freight and goes through a solid route than other transportation methods. Also, automation and faster transit times, in general, cause fewer carbon emissions into the environment.

Ultimately, rail can be a great logistics solution for your business. It is constantly developing into a better way to transport goods and is an eco-friendly and efficient solution among other transportation methods for your freight. 

Considering Rail Transportation

Have you ever shipped anything via railroads? Historically, rail transport hasn’t been the first choice for plenty of industries. However, more and more companies are switching from trucks to rail. Significant investments in the intermodal transportation in the recent decades made it more reliable, cost-effective and service-oriented.

Rail might not be the most efficient and economical option for short-hauls or last-minute moves which require the flexibility of a motor carrier. At the same time, it might be a great idea for pre-planned long-hauls, and moving from OTR to rail could benefit your supply chain in several ways.

Fuel Savings

Although the transit time might be slightly longer, shipping via rail can be 15-20% cheaper than OTR. The primary reason for it being the cost of fuel. According to research, rail is 3.5 times more fuel efficient than trucks. This result is based on the number of miles one ton of freight can travel on one gallon of fuel. Rail will quite often be a budget-saver on your long-hauls and cross-country runs.

Freight Visibility

Rail companies offer a much more sophisticated and advanced technology for tracking than most motor carriers. Intermodal companies have heavily invested in the GPS tracking and software which gives their customers complete visibility of their product in transit. Obtaining updates or getting the GPS tracking set up and working when shipping OTR might be quite a chore – most intermodal companies will give you this option by default.

Safer AlternativeiStock-536273155.jpg

Rail has much higher safety scores compared to motor carriers. Rail is generally less often involved in accidents or causes fatalities. The numbers for rail accidents and derailments are continuously dropping, making rail an even safer way to ship your freight. Additionally, trains are less likely to break down in transit which is a fairly common issue with trucks and results in recurring delays and missed RAD’s.

Go Green

Everyone knows it’s crucial to start thinking about the environment. Rail is the way to go if you are willing to lower emissions and reduce your company’s carbon footprint. It’s a much more environment-friendly alternative than trucks – it’s been calculated that rail is 6 times less carbon intensive. Rail doesn’t completely solve the problem and provide an absolutely 100% green solution for the transportation industry, but it still reduces the greenhouse gas emissions – even small steps make a difference.

Overall, intermodal carriers generally offer a more stable, reliable service and capacity. If your company often requires long-distance runs and is looking to cut down the high OTR costs, especially, when the volume goes up and OTR capacity tightens – researching rail options for your regular lanes might be worth your time.

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Are Railroads the Golden Standard of Real-Time Data?

Shippers and trucking companies alike could learn a few things from the ways rail companies, especially Union Pacific (UP), are implementing real-time, big data technology to overcome supply chain obstacles.

Union Pacific had several problems to address, and technology was the only solution.

UP’s Problems

Freight rail companies like UP face unique problems. There are 140,000 miles of railroad tracks across the U.S. that move 5 million tons of goods a day. Maintaining visibility into train and track conditions across this vast, high-traffic network is extremely difficult.

Adding to the challenge is the fact that most freight rail cars don’t have electric power. This means that RFID technology, which has been used by passenger trains since the early 90s, is not a viable means of visibility into train location.

The lack of electric power also means a lack of knowledge into train and track conditions. Heavy-duty trucks have the capability to utilize technology which can notify a carrier of truck malfunctions so that a crash or delay can be avoided as best as possible. Freight train cars do not have this capability.

The heart of the problem UP needed to fix was train derailments. When a train derails, it risks lives, causes delays and is costly. Derailments were hard to avoid due to low visibility and became a significant supply chain disruption for them and their customers.

UP’s Solutions

Given the rail car limitations UP faced, they deployed infrared sensors and small microphones at 20-mile intervals along frequently traveled lines. This technology provides real-time insight into equipment conditions. The data collected by track-side sensors is then sent to custom-built software that determines the best course of action should a problem arise.

Infrared sensors detect temperature levels on the track and in the wheels of the train. Microphones record and analyze acoustic signatures of wheels and bearings to detect possible malfunctions. Together, they provide a comprehensive view of wheel impact and overall train and track performance.

The custom algorithms accompanying their newest sensor technology turn this data into information. Within five minutes, a rail conductor can know if there’s a problem with their train and know whether to simply slow the train down to avoid a derailment or to stop the train altogether.

The Benefits

The result of UP’s technological investment is astounding. Union Pacific has reduced train derailments by 80%, reducing supply chain costs and increasing safety substantially. The company has decided to share it with the rest of the industry to reduce derailments everywhere.

This investment in technology has worked so well, UP has plans to implement more real-time data gathering techniques in the near future – likely moving on to video cameras for information on vibration, pressure and other safety measures.

Shippers and other carriers could learn a lot from this project. While freight rail companies may not be the most technologically savvy companies in the world, they are quickly and efficiently tackling some of their biggest obstacles with smart investments in technology.

Source: RTInsights

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State of Rail Transportation: Rising Costs but Still Viable Option for Shippers

Rail transportation has historically been cheaper and slower than over-the-road (OTR) transportation. It’s a valuable service for raw materials, freight that is not time-sensitive or freight that is expensive to haul. As OTR costs rise, many shippers look for new opportunities to reduce overall transportation spend, and despite the current rise in rail costs, intermodal is a practical alternative. 

Rail Transportation is Experiencing a Slump

Rail companies, since the fourth quarter of 2015, have seen revenues fall. In fact, Q4 revenues for the top 6 rail companies were down by one-fifth of what they were in 2014 and could drop by another 20% in 2016. On top of this, rail companies have planned less capital expenditure projects for 2016, due to lower expected revenues.

The last 10 years have been a golden age for rail companies – profits high, freight volume consistent and private companies spending as much on rail infrastructure as the U.S. government spent on fixing roads. The 6 biggest freight-rail firms’ revenue grew by 58% between 2004 and 2014.

But now, rail companies are facing a tougher economic environment due to the commodity price crash. The coal industry is hurting badly due to government regulations and the cost-effectiveness of natural gas for domestic power generators. The shale industry has all but stopped production due to the current oversupply of oil and gas. These commodities had made up a significant portion of rail freight.

Without these customers, freight-rail companies’ revenues have shrunk. In response, they must raise the price of transporting goods.

To be clear, rail companies are not hurting in the same way coal or shale companies are. Freight-rail companies have a net debt of 1.8x gross operating profit. Even though times seem tough for rail companies, it’s viewed as temporary, and the companies have enough resources to weather the storm.

Trains are slower than trucks. And, when they’re more expensive, shippers move rail/intermodal freight to OTR carriers. So how can rail transportation still be a viable option for shippers?

3PL Rail Capabilities

Third-party logistics (3PL) companies have access to tens of thousands of carries, which include Class 1 rail firms. Shrinking revenues, looser capacity and higher rates all point to the fact that rail companies need to haul more freight. A 3PLs large network of rail carriers allows them to make the bid process more competitive – which significantly drive down base rates.

3PLs have the capacity, proficiency and technology to make rail freight movements profitable with a high quality of service. 3PLs have many capabilities in the rail industry to save you time and money.

Notable rail capabilities that 3PLs possess: 

  • Ordering Cars
  • Tracking Car Supply
  • Monitoring Demurrage
  • Entering Shipping Instructions
  • Tracking Cars En Route to Destination
  • Identifying and Solving Disruptions Before they Become Disastrous
  • Quoting Rates
  • Auditing and Paying Freight Invoices
  • Coordinating Transloading
  • Measurement and Reporting of Freight Performance and Costs

When you’re partnering with a 3PL to move goods by intermodal or rail, they are able to provide you with detailed reports on performance and costs which are critical to efficient operations. Visibility into these processes is the first step to optimizing and streamlining transportation management. You can’t reduce costs until you know what’s costing too much. Data produced by a TMS supports your choice of carriers, mode and lane for each of your shipments.

Here is a quick overview of the most important points of visibility a TMS provides, specifically relating to rail transportation:

Rail Performance Rail Costs
Contract Carrier Compliance – percent acceptance Base Rates – benchmarked by industry standard
Load Times – time spent actually loading freight Premiums – broken down by reason codes
Lead Times – length of time to secure a shipment Customer Mix Change – long vs. short haul costs
Light Loads – number of not fully loaded trucks Fuel Spend – compared to industry average
Current Outbound Car Locations – real-time status updates on outbound freight progress Dedicated vs. Common Carrier Costs – difference in costs between dedicated and public carriers
Current Inbound Car Locations – real-time status updates on inbound freight progress Truck vs. Rail Premiums – measure by lane where applicable
Demurrage and Dwell Time Reports – summary of loading/unloading inefficiencies Detention Costs – costs accumulated from inefficient loading/unloading
Fleet Utilization – summary of efficiency of dedicated or public carriers Freight Cost Recovery – overall freight spend vs overall revenue


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