Byline: Scott Duncan, Senior Professional Services Analyst, Tideworks Technology
Whether you’ve been in rail operations for five or 25 years, you know this to be true: A terminal is defined by its efficiency.
A more efficient rail terminal means more rail services you can push through. Just ask Craig Compton, a business transformation consultant with more than 20 years of experience in high-growth technology:
“A rail terminal operates within three finite constraints: the amount of track available, the speed at which containers are moved on and off trains, and the physical land footprint,” says Craig. “When you’re highly efficient, you can drive higher revenue in two key ways: accommodating more trains and increasing the number of lifts.”
Another reality rail operators are all too familiar with?
Old ways of working, combined with the inherent risk of manual error creating big problems within a rail terminal.
Digitization has proven its ability to manage terminal complexity at scale, streamlining operations to create new efficiencies that help rail companies increase cargo throughput, reduce dwell times and labor costs, and boost revenue potential with higher asset utilization.
But effective, value-added digitization doesn’t have to feel like you’re “boiling the ocean.”
By taking incremental steps to digitize rail terminals, operators can gradually lay a foundation for more intensive strategic changes supporting the facility’s long-term success. From these cumulative changes, the impact on your bottom line can be profound.
The financial impact of an optimized rail terminal
Investments into terminal digitization can drive increased terminal profitability. Those benefits can be measured across the following categories:
Revenue capacity expansion
Improved terminal efficiency increases the total shipping capacity of that facility. Rail terminals managing intermodal freight can increase capacity for both their train and lift services. By increasing shipping volume, digitization also frees up storage capacity to generate revenue through agreed storage tariffs.
Rail terminals can also leverage new operations technologies to generate revenue through access fees charged to intermodal hauliers.
Allow staff to focus on high-priority actions
Terminal operating systems (TOS) can orchestrate integrated data solutions to optimize staffing for gates and exception management—allowing employees to focus on high-impact tasks.
The potential cost savings of this TOS approach is even greater when implemented across a network of terminals. Rail companies can establish a regional or national operating center to optimize geographical staffing across terminal locations, ensuring adequate staffing coverage while minimizing labor costs.
Productivity savings through efficient resource management
Automation and other forms of rail digitization can create productivity savings that drive cost savings. A traffic office clerk role, for example, can use digitized tools and processes to effectively manage housekeeping, train planning, and exception management through a single role, instead of dividing these tasks among two or more employees.
Margin expansion
Better customer service, combined with cost optimization and increased capacity, create an opportunity for terminal operators to deliver more value at a lower operating cost. Digitized lift operations, for example, can leverage improved data integration with your broader terminal operations to improve efficiency for each transaction—reducing your operating costs per lift while also providing more efficient, consistent service to your customers.
“As a result, you end up protecting your revenue while also lowering your cost per transaction,” says Compton. “That’s called margin expansion, and it’s something you can keep doing over and over again.”
Maximized revenue yield and improved cash flows
A highly efficient, controlled terminal environment improves consistency of service for each freight car and container, improving customer service and reducing billing inquiries. Operators can use this consistency to shorten the bill-to-collect cycle, reducing processing times and improving cash flow.
A ten-day time reduction in the time to bill of a $20 million turnover operation, for example, can deliver a one-off cash flow benefit of $500,000.
How digitized TOS sets up terminals for long-term success
While digitization in rail terminals can take many different forms, every investment you make should offer clear outcomes that support the long-term success and profitability of your facility.
By aligning these investments with the areas of impact you want to prioritize, terminal operators can ensure that their first efforts at digitization deliver tangible results for the facility—which will build momentum and support for continued digitization over time. Here are six approaches every operator should consider:
1. Efficient throughput of containers
By minimizing dwell time for freight, terminals can increase the total volume of shipments passing through the terminal via trains, trucks, and containers. TOS and other automated technologies deliver the infrastructure necessary to increase efficiency within the physical constraints of a rail terminal.
“The key measure of successful digitization is throughput,” says Compton. “You can run more trains through the terminal, and you can do it for cheaper. You can lift more containers, and you can charge more per lift.”
2. Efficient use of space
Efforts to improve terminal efficiency must always contend with the fixed limitations of their physical environment.
Given the finite amount of storage space and rail track available at a terminal, any effort to optimize space utilization should use differential GPS (DGPS), real-time rail planning software, and other operations technology to speed up terminal services and maximize throughput for truck and rail.
These technologies each play a role in maximizing your use of available terminal space, which increases your maximum shipping capacity without creating bottlenecks or other disruptions to your operations. More freight can be held within your terminal at any given time—and with improved throughput accelerating your processing of that freight, you can move more volume through your terminal on a day-to-day basis.
3. Optimal usage of equipment and human capital
The number of lifts available at your terminal restricts your capacity for intermodal shipping volume—unproductive lifts lower that performance ceiling.
“Sometimes you’ve got to dig a box out from under a stack, so you need to move a load,” says Compton. “Those are unproductive lifts. You can’t charge anyone for them. By getting rid of unproductive lifts, you can bring in more shipping services, and you can charge customers for those lifts.”
Yard planning software can help manage these assets, reducing the number of unproductive lifts through strategic container stacking, comprehensive freight traceability, and real-time monitoring of equipment availability. The efficiencies created by these technologies can also reduce a terminal’s minimum requirement for back-office staff to process terminal entries and exits, among many other tasks. Instead, human capital can be reallocated to support the proper operation of terminal machinery.
4. Robust data integration
“The more you integrate, the more you simplify the transaction, the less unnecessary interaction you have,” says Compton. “Data integration lowers the cost of the transaction for everyone.”
As TOS systems and other technologies are integrated into your terminal operations, a high level of data integration will mitigate exceptions, mistakes, and other forms of inaccurate or unproductive data processing.
Data integration eliminates redundancies and inefficiencies that can undermine operations. When instructions are issued to execute the movement of cargo in the yard, for example, data integration ensures that these instructions are passed through all appropriate technology platforms—with no duplication or unnecessary manual intervention.
5. Integration with customer-related tech
Terminal operations solutions should be capable of fully integrating with customer and third-party vendor software used to transfer and manage shipments moving in and out of your terminal. Full integration of these solutions will reduce remediation-type communications, enabling terminals to improve their own operational efficiencies while providing better communication and service to their customers.
An integrated approach to your customers’ technologies will lead to higher levels of customer satisfaction while lowering the cost of transactions and increasing cashflow conversion.
6. Visibility of data-driven productivity metrics
Connected, digitized terminals serve as a wellspring of insightful productivity data, delivering insights that can lay a foundation for continual operational improvements. Yard planning tools, for example, can use lift efficiency data to improve strategic stacking practices, while configurable “live lift” rules can automatically route incoming gate traffic to open trackside locations.
This visibility can even be rendered in real-time, equipping terminal operators with a “visual factory” where productivity can be actively monitored, managed, and optimized. Ultimately, the data generated by processing thousands of containers and countless other daily activities will inform the strategic decision-making of operators and other rail leaders.
Digitization to enhance your rail operations
Rail digitization isn’t an all-or-nothing endeavor. In our experience, operators investing in digitization plan strategic digitization projects that are manageable, impactful, and constructive to your company’s long-term goals.
Before making any decisions on which digitization projects to put first, we recommend assessing your current operations to ensure success in phases:
Audit your repeatable processes for inefficiencies
Every process, according to Compton, involves an element of repetition. Addressing the inefficiencies in these repetitions is one of the easiest to deliver business impact through rail digitization.
“If you’re doing the same thing thousands of times every day, there might be inefficiencies in that process,” says Compton. “You need to conduct an audit to identify those inefficient processes, and to calculate the resulting cost.”
Those costs could include excess operating expenses, wasted human capital, or reduced productivity resulting from unnecessary operational delays. In a non-digitized terminal, these costs can easily go undetected and unaddressed. By determining their business impact, you will be able to calculate the value of deploying a digitized solution.
Compare your audited data to benchmarks for more efficient digitized terminals
The performance data coming from digitized terminals can help you understand the cost of your existing inefficiencies—as well as the potential improvements you can achieve.
For example, a digitized terminal with the same amount of available space as your facility may be reporting far greater annual throughput than your operations. By comparing your terminal to benchmark data, you can begin to identify the operational differences that may be dragging down your own performance.
“You might realize a comparable terminal is employing fewer staff and fewer machines than you are but is still driving a higher throughput on a daily basis,” Compton says. “When you identify what’s different, it becomes easier to spot the aspects of your operations you want to change.”
Prioritize two to three inefficiencies you want to address first
Once you’ve compared your own terminal’s inefficiencies to the performance data of more productive terminals, you can identify the areas where digitization offers the best business impact. Compton encourages terminal operators to keep it simple.
“If you want to inspire your organization to embrace change, you’ve got to give them some good results early on,” Compton says. “You shouldn’t always go for the hardest thing to change, because it might take the longest time to see results. Start with something that drives simple, tangible results, and that will drive momentum for your future changes.”
Digitize at your own pace with Tideworks
Successful terminal digitization is a balancing act between achieving short-term wins while staying focused on the larger, long-term strategic vision. To do this, operators need the support of platforms and tools that can deliver immediate business impact while staying flexible to their long-term requirements and goals.
Tideworks’ Intermodal Pro (IPRO) solution was built with these unique rail challenges in mind. It offers flexible, real-time yard planning tools to help automate and optimize repetitive processes, along with advanced integration capabilities to seamlessly integrate new technologies as your digital ecosystem grows.No matter how you want to approach digitization in your terminal, Tideworks can help you put your strategic vision into action. See for yourself—schedule a demo today.