The freight rail industry in North America finds itself at a crossroads. Where it chooses to go from here will define whether it can address a host of 21st-century challenges, and potentially impact future relationships in those critical areas where supply chain management meets rail freight services.
That’s the stark conclusion of a white paper entitled ‘Rail Optimisation: Carrier/Shipper/Investor Relationships”. Published by supply chain and operations consultancy Maine Pointe in association with Michigan State University (MSU), it warns that carriers, shippers and investors may face an uncertain future as the ‘Amazon effect’ continues to transform buyer purchasing behaviour and freight traffic patterns, as well as adding an increased level of complexity into the supply chain.
With the US Department of Transportation (DOT) predicting an 88% increase in total freight demand by 2035, rail stakeholders must eschew entrenched business models in favour of collaboration and embrace new digital technologies if they are to compete with intermodal container shipping.
“The future of the freight rail industry depends on the rail companies actively listening to shippers and other members of the transportation eco-system in order to come up with win-win scenarios – until they do that, there will be stalemate,” states Michael Notarangeli, executive vice-president and engagement partner at Maine Pointe.
“One of the many parallels between the freight rail and ocean shipping industries is that they both contain a vast eco-system of suppliers and other value-added service providers. However, there is not a lot of communication, transparency or collaboration aimed at providing unified solutions.
“The white paper examines what the future of rail needs to look like from a shipper, carrier and investor perspective in order to fill the freight gap, and asks the question, ‘How do we get to 88% total freight growth by 2035 if rail doesn’t participate?’ The answer is that it is not possible.”
The Amazon effect: road and rail responses to the freight revolution