Freight From page 25...
which train service they would offer. This has a significant effect on customer service, where a customer placing an order does not quite know how that order is likely to be fulfilled. However, smart and effective demand planning can provide the needed information upfront to allow the rail operator to define a timetable schedule to offer to the marketplace. A huge issue for all rail operators is allocating wagons efficiently across their network. This assignment becomes complicated due to the need for minimising empty wagon movements across the network. Considering demand forecasts, service levels, storage costs, transportation costs and utilisation metrics, operators should look to optimise capacity to meet the forecasted demand, the planned timetable and service levels promised.
Profit optimisation Optimising profits is easier said than done in this industry of high capital costs and thin margins. Air cargo is similar in this regard and the rail freight industry can benefit from adopting the ‘revenue management’, technologies the air cargo carriers have developed to identify profitable pricing strategies
by factoring in market trends and competitive behaviour, including being able to provide optimal customised pricing for key customers. Delivering on service level agreements has to be seen as the bedrock for achieving operational excellence. Rather than relying on ad hoc or just-in-time information, with proper collaboration based on sound planning practices, the operations department can better plan for the activities for any given day. By creating sufficient lead times in planning activities, it should be possible to simulate what-if scenarios for likely service level disruptions and have back up plans ready rather than follow the current practice of reacting to events with little time to spare for any analysis. While de-regulation is a great
opportunity for rail freight operators to finally compete with other freight transport industries, it also means that they will be competed against. To capitalise on the new opportunities, the industry needs to begin implementing a more commercial business model than the operational one it uses now. By doing this, it can highlight to customers the advantages of using rail freight, such as cost efficiency and greater load capacity. Not only will this change benefit the current low market share rail freight has in the freight industry but it will also give the rail freight industry the reputation and profitability it deserves.
Anand Medepalli is vice president of freight transportation at JDA Software.
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AUGUST 2012 PAGE 31
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