Strategies to Improve Freight Railroad Performance
|Client||a major freight railway company (CSX Transportation)|
|Authors/Consultants||Homer JB, Keane TE, Lukiantseva NO, Bell DW|
An SD model was developed to assist the company in strategic planning. Freight railroads in the US in the late 1990s had chronic problems with on-time service performance, which, in turn, generate costs and tie up capacity.
When capacity is already tight, train delays can lead to a vicious cycle, and in the worst case to prolonged gridlock, as occurred with Union Pacific in 1997
Railroad cars went missing, crossings were blocked, major terminals congested, and customers factories closed, leading to customer lawsuits. Increasing demand and shifts in demand among different lines of business (merchandise, coal, automobiles, train-to-truck intermodal) complicate the picture further.
The SD model helped the client understand how to avoid congestion problems and improve on-time performance over a three-year time horizon of increasing demand growth. It suggested that solutions of three types were required: (1) capital solutions to add track, terminals, and equipment; (2) demand management to make seasonal adjustments and better allocate limited car capacity; and (3) operating solutions that could involve increasing the number of cars per train, establishing more reliable schedules, creating more flexibility in pick-up and delivery times, and improving productivity.