Railcars are expensive assets to own or lease. Rail companies should invest with a clear ROI in all business decisions, yet a high percentage of railcars in North America are not fully utilized. Why does this occur, what is the cost to the shipper, and how can shippers reduce their total asset costs by optimizing railcar utilization?
Fleet Facts – 2021 Railcar Utilization
The average cycle time in North America in 2021 was 34.4 days, or rather, each railcar in the North American fleet made 10.6 full trips in the year, less than one revenue movement per month!
Causes of Long Cycle Times
Transportation, last-mile planning, and paperwork delays can result in shippers over-sizing the rail fleet to meet the projected sales for next year.
Bad orders and delays in transit – when railcars are set off a train over the road, for instance, for a deficient order, they can fall off the radar for train planning, resulting in days or weeks of delays.
- Dwell at destination waiting to be ordered in and unloaded – receivers sometimes use private railcars like additional storage, placing orders too far in advance. When the railcars arrive, the receiver is not ready to unload. An example of this is a car might only take ten days in transit across the continent, only to sit another ten days at a destination waiting to be emptied.
- Delays at interchange - can occur daily when each railroad has completed their part of the trip, yet the shipments are delayed in the “no man’s land” at the hand-off between railroads.
- Missing billing – sometimes railcars get released but don’t have active billing, or worse, they get shipped back to the wrong customer. This results in lengthy delays in finding the railcars (the shipper usually does not have access to trace these cars because they are not on the billing).
How a Railcar Tracking System Can Improve Railcar Cost
Provide ETA reports to receivers automatically to plan in advance for unloading.
Shippers should consider contractually agreed upon times to order in, unload, and release private railcars to incent faster cycle times.
A modern railcar tracking system can alert the logistics team when railcars aren’t moving according to plan.
ICL’s Rail Shipment Visibility Portal (RSVP) offers the following notifications:
- Bad orders
- Dwell time at any location
- Dwell time at a specific yard or interchange
- Number of days in transit
- Railcars in a private fleet that do not have an active waybill
The railcar management team can focus their time on analyzing data and optimizing the fleet by automating standard operational reports, such as pipeline reports.
Have discussions with railroads that help resolve problems. Analyze the entire loaded and empty trip, everyone’s railroad’s performance, and location-specific dwell trends so the freight team can have more productive discussions with the railroads on opportunities to improve.
Are you looking to optimize your rail fleet? ICL offers software and 3PL services to help shippers reduce the cost and complexity in shipping by rail, contact us to learn more.
Are you actively shopping for a rail fleet management solution? Read our “How to Select a Railcar Tracking System of Rail TMS” ebook”