Intermodal: a high speed conveyor belt

Railway Age, August, 2004

"If you can't make it work with stub-end pencils, you aren't going to make it work with technology."

For many years, intermodal represented the dilemma of modern railroading: explosive growth that proved you could divert traffic off the highways, but not necessarily with the levels of revenue and profitability that justified the never-ending investment needed to continue winning that traffic. That's the dilemma CN resolved with its Intermodal Excellence (IMX) plan.

"Our first pass at this was balancing trains, crews, locomotives, cars, and cube, smoothing it over seven days," says Paul Waite, vice president-IMX. "The key has been working with customers to build on the strengths of our Scheduled Railroad Service. You start with a base plan with fixed train and car requirements. You schedule and reserve all aspects of the shipment cycle, from empty order to final delivery. And you then move from a scheduled railway to a reserved railway with yield management."

One of the biggest problems was the seasonal and daily imbalance in demand, which led to inconsistent, unreliable service. In 2002, prior to IMX, the average daily demand peaked each week on Thursdays and Fridays. At the same time, demand died on Saturdays and Sundays. Under IMX, the operating plan has been redesigned, and terminal gate and slot reservation systems have been created to smooth and balance volumes. Pricing has been used to influence demand and fill capacity. The goal is to smooth demand to about 14% daily. Flattening the peaks and valleys eliminates the capacity crunch at the end of the week.

Using the reservation systems, CN sequences traffic through terminals to match volumes with capacity, transforming terminals from warehouses to cross-dock operations. Traffic moves through the gate and directly to the train with no intermediate lifts. No longer are there traffic jams at the gates due to truckers making their deliveries and pickups unpredictably. Container storage and multiple lifts to dig out buried containers are decreasing. Terminal costs are dropping, and trucker turnaround time is in the 30-minute range.

While the service is built around CN's Service Reliability System (SRS) IT platform, Waite points out the whole plan was not technologically driven. He says it has long been Hunter Harrison's contention that "if you can't make it work with stub-end pencils, you aren't going to make it work with technology. It's the process that must come first. Yes, we had to be running trains on time and on schedule, and much of that is due to SRS. But matching capacity, volumes, and assets has all been done with pencils and spreadsheets. Now that we've got the model, we can determine what we require in terms of technology." By coupling IMX with CN's market reach, Waite sees numerous new opportunities to be seized by what he describes as "a high speed conveyor belt approach to intermodal."