According to the U.S. Department of Transportation, by 2035, total freight demand is predicted to increase by 88%, increased road congestion. However, significant carrier and shipper imbalances throughout the North American transportation network are already complicated by unpredictable economic growth, a shortage of drivers, new environmental restrictions and reduced capacity across the truck and rail network.
In a rapidly changing world, it has become essential for carriers, shippers and investors to gain a deeper understanding of value drivers and find new ways to deliver a positive impact for all stakeholders. They must seek out new technologies and business models to prepare for the future.
In response to this issue, the Broad College of Business’s Center for Railway Research and Education announced its collaboration and support of a key industry white paper, “Rail Optimization: Carrier/Shipper/Investor Relationships,” in association with global supply chain and operations consulting firm Maine Pointe. The Center for Railway Research and Education blends research with management aspects across the railway ecosystem, covering infrastructure, rolling stock, finance, talent and motive power, especially alternative, “green” fuel sources.
The white paper was released at the Railway Interchange 2019 conference, held Sept. 22–25 in Minneapolis, Minnesota, and includes vital information on the future of relationships in the critical areas where supply chain management meets rail freight services.
“Freight tonnage will grow by 40% by 2045, and rail will have to play a significant role in creating this extra capacity,” said Nick Little, Director of Railway Education at the Center for Railway Research and Education. “Yet, over the past several years, the relationship between shipper and carrier has become increasingly dysfunctional. We created this white paper, together with Maine Pointe, to identify drivers of more successful relationships between railroads, shippers, customers and suppliers.”
Little explained that without open, trusting, collaborative relationships, rail freight transportation will miss the opportunity to adopt new technologies because their business models will be unable to adapt quickly enough to compete with other transportation modes.
Confirming the need for collaboration
The paper includes a case study of how Maine Pointe resolved a client’s challenges, which mirrored many of the issues identified in the research. Maine Pointe implemented a new way of approaching the marketplace with a redesigned distribution network built on collaborative relationships.
As a result, carriers saw 80% growth in volumes and a 22% margin enhancement, the shipper improved product transit times from 7–12 days to less than 24 hours and the company grew from $1.8 billion to $4 billion within two years.
“Findings from our research point to a need for greater collaboration and a win-win partnership that benefits all stakeholders and drives cost savings and growth,” said Michael Notarangeli, EVP Engagement Partner at Maine Pointe.
Maine Pointe Chief Marketing Officer Simon Knowles also shared that the research conducted with Michigan State University “has yielded a productive viewpoint that could address many of the challenges faced today by shippers and carriers.”
The white paper has been referenced in several news stories from sources including FreightWaves, Global Railway Review, DC Velocity and Railway Age. It is available for download on the Center for Railway Research and Education webpage and on Maine Pointe’s website.