The Pros and Cons of Precision Scheduled Railroading

Two cargo freight trains

According to the numbers compiled by the U.S. Bureau of Transportation, over 4 million tons of cargo is traveling the American rail system right now. This represents nearly 17% of all freight. The railroad industry is still a major player in freight, despite the newer modes of transportation that have developed since its advent. However, rail faces several challenges.

What is the biggest challenge rail shippers must overcome? Is it the cost of fuel? When you compare the price per ton to move cargo by rail, it’s the most fuel-efficient mode of transportation. Is it the cost of labor? A train with a crew of two may have the cargo carrying capacity of 250 cargo trucks. The biggest problem with rail transport is, in fact, tracking.

In recent years, rail shippers have invested billions of dollars into the development of positive train control systems designed to reduce accidents by keeping trains at appropriate speed limits. These systems depend on knowing exactly where trains are at all times.

Precision scheduled railroading, or PSR, aims to take this knowledge one step further. Rather than knowing where a train is, PSR systems will track exactly where individual train cars are.

Benefits of PSR

PSR systems can improve rail operations in two ways:

  • Fuel Efficiency: Trains that use PSR systems make fewer stops, which can dramatically increase fuel efficiency.
  • System Capacity: Railroad tracks sit empty most of the time. PSR promises to use capacity more intelligently and do more with the infrastructure that exists now instead of creating more infrastructure in the future.

Could PSR be the savior of the railroad industry? Some people don’t think so.

Drawbacks of PSR

While PSR promises billions of dollars in efficiency gains, its detractors dispute its ability to deliver on these promises. Here are some potential drawbacks:

  • It Only Addresses Today’s Problems: While PSR may solve many of the problems that rail shippers face today, it does little to address concerns for the future of the industry.
  • It Doesn’t Increase Capacity: Many people in the rail industry argue that shippers must increase capacity to keep up with increasing demand. Because PSR uses current capacity more efficiently, rather than increasing it, it may not be the ideal solution.

PSR is one of the many options that the railroad industry is considering to improve its future. Will this technology deliver on its promises to increase efficiency and reduce the costs of shipping? The future is uncertain, but investments to improve infrastructure are likely to pay dividends in safety and reliability.

The Growth of the Rail Freight Industry

rail freight train with blurred motion

Like many industries, the rail freight market has fluctuated throughout history. During the great recession in 2008, rail freight transportation had negative year-over-year growth for the first time. The growing need for crude oil, coal, and natural gas and the booming energy industry have improved rail freight’s profitability since then: In 2017, Class I freight volume in carloads increased by 4.5% year over year, and regional railroad volume grew by 4.9% according to the Railway Tie Association. Learn more about the biggest contributors to today’s rail freight market health and trends that may impact the industry in the future.

Contributors to Rail Freight Market Growth

Coal is the largest contributor to the growth of Class I freight volume, with a 20% growth year over year. Other positive rail segments include nonmetallic minerals (8% increase), metallic ores and minerals (4% increase), and intermodal shipments (2.3% increase). Regional roads also helped fuel growth, with coal, stone, sand, petroleum, and intermodal transportation all increasing. Some segments, like chemicals, forest products, and lumber, are still under-performing and will need to concentrate on growth initiatives to remain competitive and profitable.

Rail freight traffic is strongly linked to overall economic health. According to the Association of American Railroads, Class I railroads carried 37.9% of the total freight moved during 2016 and generated $12.9 billion in revenue. The rail freight industry is also a huge economic driver of high-paying job creation—in 2014, America’s major freight railroads supported 1.5 million jobs and $88 billion in wages (freight employees are among America’s highest compensated workers). The healthy U.S. economy is expected to generate more profits and jobs for the rail freight industry in the years ahead.

The Future of Rail Freight

The future success of the rail freight industry depends on its ability to adopt environmentally sustainable solutions and consolidate the supply chain through technology. Rail freight has been slow to incorporate digital advancements, but the industry is likely to place a greater emphasis on real-time predictive data, automation, cybersecurity, and other technology that will increase profit margins by streamlining operations and offering a better customer experience. The rail freight industry must also generate innovative solutions for minimizing emissions to keep up with regulatory pressures and the trend toward clean operations.

Global Shipping Services’ Solutions

Global Shipping Services is an experienced global freight forwarder knowledgeable in forming comprehensive transportation solutions. We can help you streamline your logistics process, minimize costs while complying with all regulations, meet tight deadlines, and ensure that your freight arrives at its destination without incident. Our expertise spans a variety of industries, including large freight contributors like the oil and gas and energy sectors—we’re confident we can provide reliable transportation services for your needs. Contact Global Shipping Services today to get an accurate, comprehensive freight shipping quote.