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The Future of Rail Freight: ‘Rail freight will not stop growing, even during a global pandemic’

Posted: 21 August 2020 | | No comments yet

Jorge González, Head of DB Cargo Competence Center Logistics and CIO for Transfesa Logistics, discusses the importance of digitalisation within the rail freight industry and how collaboration is key in the next instalment of Global Railway Review’s ‘The Future of Rail Freight’ series.

The Future of Rail Freight: ‘Rail freight will not stop growing, even during a global pandemic’

What more can rail freight do in its contribution to the decarbonisation of the industry?

Rail freight is a key agent in the decarbonisation of our European industry, perhaps even more today than ever before. Decentralised production, together with the increased distribution of goods everywhere in the continent (and in the globe), have led to the biggest expected ratios of growth in freight transport in our known history. Before the COVID-19 pandemic, we were expecting a growth of over 30 per cent in the next 10 years. With the current unbalance between road and rail, this will take us far away from our aim to reduce CO2 emissions and will severely damage our environment.

Rail freight is a key agent in the decarbonisation of our European industry, perhaps even more today than ever before.

Will this change? Surely, if we are able to manage and mitigate the effect of COVID-19 crisis altogether, and in full consciousness of our personal responsibility. Just as we need to help with our work and consumption to ‘keep the wheel rolling’, we also need to find ways to compensate for the hazardous effect on our environment.

Using one train to move freight reduces, on average, 25 to 30 trucks from long-distance journeys on the roads. It’s not just the CO2 emissions of the trucks themselves, but also the impact on road infrastructure maintenance and the increase of emissions due to traffic impact.

However, using rail freight may additionally contribute to a greener transportation industry by working as a powerful engine in the digitalisation of the global industry. Synergies due to the massive movement of goods may support the required investments in automatic order management systems, electronic confirmations, mathematical optimisers of transport resources, machine learning for more reliable transport ETAs, electronic PoDs and electronic billing and self-billing. The increased digitalisation of processes will enforce higher waste reductions in efficiency, time and effort, as well as result in zero paper usage and reduce the misuse of excel spreadsheets. This could be never achieved by small companies who are owners of a few trucks.

To what extent do you think the rail freight industry needs to make quantum leaps in technology to improve activities?

As aforementioned, rail freight needs to become a digitalisation engine for the whole transportation industry. Many actors and agents would be automatically involved in the digitalisation process if rail freight seriously committed to investing in process modernisation.

In my 23 years of professional life in the transportation industry, I have been so lucky to work for the biggest road, contract logistics and rail transport operators, DHL (Deutsche Post group) and DB Cargo-Transfesa (Deutsche Bahn group). Thanks to both great and huge multi-national companies, I had the opportunity to work with some of biggest shippers, manufacturers, port and rail infrastructure managers across Europe. This allows me to have a global view on the different evolution steps you can find when searching for improvements in both worlds.

Unfortunately, rail freight remains, in many cases, stuck to old processes and, so far, digitalisation efforts are too small to become transformational in our industry.

Unfortunately, rail freight remains, in many cases, stuck to old processes and, so far, digitalisation efforts are too small to become transformational in our industry. Heroic actions but with a limited scope are being undertaken by the most innovative and challenging actors in rail freight – like DB Cargo Transfesa is trying to do through a selection of big rail technology development projects – but it is difficult to find real support from customers and the public sector for these initiatives. Improvements in the digitalisation of activities for rail freight needs the commitment of the whole rail community to a new dream of working in a European open digital ecosystem.

I can state that obtaining financial support for real transformational projects is a dissuasive and hard task which can take years and it will find obstacles everywhere, from both outside and inside the organisations. It is possible to get it approved, but it is much harder and slower than in other industries. This needs to be changed.

What must the rail freight industry concentrate on in order to claim more of the supply chain and become more competitive?

Rail freight needs to concentrate on redefining and smoothing processes, some of which originated centuries ago and are well known to work.

Firstly, opening borders and integration among the different European infrastructure managers might be difficult, but it is one of the key elements to make rail freight corridors as easy to run as an airplane flying between Madrid and Frankfurt and back again in the afternoon. The automatic exchange of train information, risk advice along running paths, mathematical optimisers to efficiently allocate the right rail infrastructure resources in order to prevent bottlenecks and delays, digitalisation and automation of critical tasks, automatic identification of assets on the rail tracks and shunting yards – this is just the beginning of the story.

Secondly, the industry should commit to supporting rail operators to modernise their ‘order – to – cash’ processes, in a well-defined and strategic view to satisfy their customer orders and needs in most efficient ways. At Transfesa Logistics, we call it our ‘Zero Exzel’ strategy, with a message to encourage our teams to remove spreadsheets from all those tasks in rail transportation where you could better use a central application and database to share online information. Online information exchange is the key element for reliable international rail freight, eliminating redundant paper and manual works and making smooth collaboration among international branches in other countries, customers, other rail operator and suppliers, terminals, ports, shipping lines, public infrastructure managers, insurance companies and customs possible when needed.

Rail freight needs to concentrate on redefining and smoothing processes, some of which originated centuries ago and are well known to work.

These key elements are the basis for building a satisfying customer experience for shippers when working with rail freight: Easy digital ordering, reliable international transport through stable and resilient optimised rail corridors connecting European countries.

But, due to the accumulated delay of modernisation in rail freight, this is not enough now, from my point of view. Now, in 2020, an accurate traceability and detailed information regarding delivery is also needed for every single good transported.

Asset management, reparations and safety processes remain very much untouched since last century. Modernisation, mobility apps for ground staff, auto-ID and rapid detection or preventive maintenance are some of the ‘do-not-forget’ open tasks for rail freight.

Consequently, rail freight also needs to speed up to recover time and invest in the utilisation of some of the latest technologies for rail processes, much more than just a GPS solution. To my understanding, there are some key technologies for a happy future in rail freight: Blockchain for a smart collaboration in trust-less and complex supply chains, advanced IoT, RFID, mathematical optimisers running over terabytes of rail’s historic transport structured information, feeding artificial intelligence and machine learning algorithms and artificial vision.

In DB Cargo – Transfesa, we are running SORTLOT (in Spanish, this acronym stands for Advanced Management System for a Complex Rail Logistics Network with Traceability), a three-year project to generate a prototype platform using all these technologies. We are leading a technological consortium to invest more than seven million euros in building such a prototype, with industry-specific, strong, technological members like GOAL Systems, InnoCV Solutions, Esferize, Eurogestion, the Telecommunication Engineering School from Polytechnic University of Madrid and Telefonica. The project has achieved partial financial support by the CDTI organisation from the Spanish government.

The idea is to develop a prototype of an open ecosystem, where all different mentioned actors and agents in rail freight will be able to interoperate and exchange information, always with the target to make rail freight much more competitive and attractive for customers.

Imagine just how this digital transformation might improve efficiency, quality and generate savings through the complex supply chains in the automotive sector: Accurate traceability of every single transport event for inbound materials, as well as fully digitalised processes for the transportation of finished cars, as well as preparation and delivery to dealers or final customers. It’s transformative work, but extremely exciting for all of us who love rail freight and are convinced of how good it is for the future of our European society.

What do you think will be the lasting effects of the COVID-19 crisis on the rail freight industry?

Rail freight will not stop growing, even during a global pandemic like the one we are still living today. Rail freight has shown how essential it is for the comfort of our society. The COVID-19 crisis made the whole of society understand that running trains more efficiently and keeping supply chains on duty through domestic and international corridors, is essential to our economy and our lifestyle, especially when people cannot easily move from one place to another.

Rail freight will not stop growing, even during a global pandemic like the one we are still living today.

Most of the actors in the rail sector have professionally continued with their essential tasks, some of them requiring physical presence but many of them being performed remotely, working from home and reducing to a minimum any physical interaction. The rail freight industry has demonstrated strong adaptation skills and adopted videoconferencing and home office-enabling technologies with a great success. Its robustness, resilience and stability have been almost immune to the crisis.

Unfortunately, volumes and traffic have been reduced significantly during the crisis, but, should the trains have been required, the rail freight industry has learned how to perform in a minimum physical touch environment.

This is what the pandemic has shown, and this will stay. Flexibility, resilience and commitment within the society of so many professionals and companies in the rail industry has been amazing. However, I am sure that most of our rail freight companies have identified improvements and possible process digitalisation opportunities that, for sure, are currently being discussed and addressed.

What key themes and trends will be important for Transfesa Logistics to focus on to help support the future of the rail freight sector?

Transfesa Logistics has always been very committed to rail freight innovation, both applying rail techniques and the latest digitalisation technology.

In our Rail Logistics Innovation and Digitalisation Competence Centre in Madrid, with more than 100 IT professionals experienced in rail freight, we are executing around 45 internal and external digitalisation projects during the 2020 – 2021 period, searching for continuous improvements and increased excellence in door-to-door rail logistics operations. We want to focus on this continuous development, producing 23 releases per year of our main IT products, applications and interfaces, using agile development methodology that we have been using since 2011.

Transfesa Logistics has always been very committed to rail freight innovation, both applying rail techniques and the latest digitalisation technology.

Transfesa customers know about the robustness and flexibility of Transfesa’s order-to-cash rail and logistics systems – called Anubis, and now vNext Rail and vNext Logistics – which are capable of providing complete integration and traceability through complex international supply chains, including rail, road, production plants, intermodal terminals, warehouses, car compounds, ports and sea transports.

In order to collaborate on the digitalisation of the sector, Transfesa Logistics now offers the market these strong IT solutions in the cloud to improve efficiency and collaboration through the rail freight market.

On the other hand, I already mentioned before our flag project in research and development, SORTLOT. This is a ‘digital traction project’, where we will research the advanced utilisation of blockchain, artificial intelligence and smart IoT to produce an open digital ecosystem for the rail freight market. Many solutions and products will come to make our business more efficient.

In summary, we believe that collaboration, sharing and open-minded technology development, with the appropriate and well-measured investment efforts, is the way to increase the modal shift and bring up a higher modal share to rail. This will be the right way for the future that we all want for rail freight.

Jorge González has been the Head of the European IT Competence Centre Logistics (CCL) for DB Cargo Group since 2013, and is also the Corporate CIO for the Transfesa Group and a member of Transfesa Executive Board.

He has strong experience in the management of international teams working across different countries, companies and cultures, as well as in the application of the newest technologies to business process digitalisation across the supply chain business, including transformation, change management and resource optimisation.

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