Chemical Rail Transport: The Benefit of Reliability

1
Chemical Rail Transport The Benefit of
Reliability Closs et al. (2003)

• Introduction
• Transit time and reliability important in rail
  (Rail mergers may be deteriorating these service
  factors).
• Chemical industry utilizes rail substantially,
  more than other industries.
• Companies in chemical industry tends to own rail
  cars (75,000 equipment with annual maintenance
  of 5,000).
• Yet, the companies do not pay much attention to
  fleet management issues.
• The industry is rather poor for managing rail car
  inventory, and chemical inventory, so that there
  is room for improvement (e.g., rail car cycle
  time, reliability).
• Use data of more than 62,000 rail cars to analyze
  chemical rail transport characteristics and
  problems.

2

• Study Objective
• Identify factors that impact rail transit time
  and reliability.
• Assess impact of rail transit time and
  reliability on customer (consignee) inventory
  requirements.
• Give implications for shippers and carriers to
  improve transit time and reliability.
• Focus on Stages 2 and 4 (see Figure 1).
• Data Analyses
• Analysis 1 Factors affecting rail transit time
  and reliability (see Tables 1-6)
• Analysis 2 Effect of transit time and
  reliability on inventory (see Tables 7-8).

3

• Implications from Analysis 1
• Possible factors examined (1) rail car type
  (hopper and tanker), (2) lane, (3) number of
  carriers, (4) distance.
• Transit time longer for hopper cars than for
  tankers.
• CV is higher for hopper cars than for tankers.
• Transit time is longer if multiple carriers are
  used.
• Distance affects transit time, but primarily due
  to fixed time for pickup and drop-off.
• Fixed-time effect not equal between hoppers and
  tankers.
• More room for improvement for hopper cars than
  for tankers.
• 10-16 of variation in transit time explained by
  distance.
• Approx. 550 miles per day on in motion (both for
  hopper cars and tankers).
• Table 6 indicates that the impact of multiple
  carriers on transit time changes as distance
  increase (opposite effect for hopper cars and
  tankers).

4

• Implications from Analysis 2
• Several scenarios are tested see Tables 7-8.
• Implication (1) reliability reduction has
  stronger impact on inventory than transit time
  reduction.
• Implication (2) Reduction of rail car assets can
  be attained by improving reliability, and
  possibly transit time.

5

• Conclusions
• Rail car impact (transit time longer for hopper
  cars than for tankers)
• Lane effect
• Impact of number of carriers used in shipment.
• Safety stock implications of transit time and
  reliability.
• Transit time and reliability improved ? rail cars
  can be reduced ? less congestion ? improved
  transit time.
• Shippers should review the process of
  loading/unloading to reduce transit time
  variability by car type.

6

• Discussion questions
• 1. Transit time for rail is longer than truck
  because of fixed dwell time at origin or
  destination. Is this statement true? If this
  fixed time can be eliminated, the transit time of
  rail is faster than or equal to trucks. It this
  true? Why?
• 2. How dose reducing rail car inventory help
  railroads, and shippers?
• 3. Why do chemical firms mostly own railcars?
  Does leasing or renting from railroads help
  reduce inventory?
• 4. Why transit time variability have more impact
  on inventory than the time itself?
• 5. If you are the railroad, how do you address
  this issue (reducing transit time variability)?
  What about from the shippers perspective?