BUSINESS DEEP DIVE:
Shortline Railroads
What is a shortline? A shortline railroad is generally defined as a Class III carrier, or a railroad with less than $34 million in annual revenue that hauls freight or passengers over a relatively short distance. Shortlines may link specific nearby industries, offer switching services for larger railroads or may operate tourist trains.
Railroad classes: Class I is a term applied to the largest nationwide railroads such as CSX or Norfolk Southern. Class II railroads refer to larger railroads with greater than $37 million in revenue and less than $433 million.
Statistics: The 603 Shortline railroads employ 20,000 people in the United States and own 30% of the railroad tracks in the country. At least a quarter of all freight moved in the U.S. crosses shortline tracks. Shortline operations are an essential part of the hub-and-spoke system of delivery for larger Class I railroads.
- 9% Local: moved completely on the shortline's rails
- 33% Originated: Moved partly on a shortline rail carrier and shipped to final destination by another mode of transportation
- 48% Terminated: Transferred from a Class I train to a shortline train for final delivery
- 8% Bridged: Moved from one Class I line to another across shortline rails
Source: American Shortline and Regional Railroad Association
New tech coming online: Shortline railroads are following the lead of the larger Class I railroads in adopting new technology. Because of the diverse operating conditions and revenues of the shortline companies, they are adopting new technology at different paces.
One test is the conversion from diesel fuel operation to liquid natural gas, which should reduce pollution and costs. Tests are underway at companies such as the Florida East Coast Railway.
New technology is also coming online to send realtime safety and track condition data. Improving safety and monitoring tends to also help the bottom line as it reduces delays and maintenance downtime.
Another key advancement is improved automation for inspection and maintenance functions that are currently conducted by people using antiquated equipment and record-keeping systems. Advanced feeds of customer loads, offering a live stream of data on location and schedule should be up and running at several railroads soon.
NEWS BITES: Is the Internet of Things here yet?
For years, the Internet of Things has promised to revolutionize the supply chain and shipping industries. Inexpensive low-power monitoring devices and track location and environmental conditions and transmit them to a central system. Some also contribute to tracking and monitoring quality control.
The cost barriers to entry for the systems are dropping every year, and they are nearly at the point where their use will become routine rather than considered an added feature. However, we are not quite at that point. One hurdle affecting its adoption in certain sectors is the security risks inherent with transmitting and receiving data.
The Underwriters Laboratory is currently deploying security standards that will allow Supply Chain leaders to adopt the internet of things everywhere.
NEWS BITES: Freight-matching services
Freight exchanges that allow shippers to match with appropriate backhaul loads after a delivery have been around for nearly 40 years. But the growth of the mobile internet has made freight matching easier and easier and made a dent in the estimated 23% of the time trucks spend driving “empty miles.”
Top providers include websites such as Freight Finder, Freight Center and Direct Freight.
New startups using cloud computing have come online in recent years, but now the ride-share company Uber is poised to enter the shipping business by leveraging its taxi-like mobile platform to serve trucking.
NEWS BITES: Data Analytics
Data Analytics is the latest buzzword in the Supply Chain industry.
Carefully designed gathering, storing and analyzing of both existing and new operational data can provide unparalleled insight into the business of the Supply Chain company. Advanced analytics offer the ability to employ optimization tools for routing and loading, demand forecasting, real-time tracking and re-routing, on-demand 3D printing and risk analysis.
The next iteration of the data sampling and analysis should produce unmatched insight into planning and operating the shipping and delivery of products from factory to doorstep in record time.
