Adapt or die: Railroads must embrace advanced technologies

Written by John Monarch, CEO, ShipChain
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Advancements in the logistics industry over the past ten years have been vast, especially in over-the-road shipping modes with shippers utilizing 3PLs at record levels for domestic transportation management. The move toward partnering with logistics service providers has allowed shippers to use the power of modern technology to increase visibility and track product movements throughout their supply chains with greater efficiency than ever before. Unfortunately, rail has not seen advancement at the same pace, leaving shippers with the perception that rail carriers are behind the times.

The growing importance of EDI, IoT (Internet of Things), GPS and AIDC technologies have the potential to revolutionize the rail industry. Additionally, blockchain, a relatively new technology, is poised to further change the way rail operates. Rail companies need to understand the applications of blockchain, the technology behind it, its benefits and its potential future uses when combined with other technologies.

Applications of Blockchain

Blockchain is an immutable ledger-based technology that allows users to share and validate data across a network via data stored on individual nodes. The amount of data generated is a lot to manage, and blockchain allows for its decentralization. In other words, data is shared, guaranteeing accuracy. This is possible as each user reinforces the validity of data, eliminating corruption and intentional changes.

The applications are being tested across every supply chain possible, and major retailers are already looking to blockchain as the go-to solution to reduce risks. Walmart now requires all produce suppliers to utilize blockchain to minimize the risk of foodborne illness. In truth, this doesn’t remove the threat, but it does eliminate the uncertainty. If illness does spread, it can be traced to the source immediately. As a result, recalls can be issued faster, thereby saving lives.

Meanwhile, blockchain-based technology is beginning to power a new breed of truckers. Platooning trucks are creating a supply chain capability that will rival rail in cost-effectiveness and safety. Of course, any discussion on applications is limited without understanding the technology powering the “Blockchain Revolution.”

Technology and Blockchain Working Together

Blockchain is simply a ledger. It’s the integration of blockchain into other technologies that makes it more valuable. Artificial intelligence (AI) and machine learning are giving computers the ability to self-optimize, account for millions of differences in transactions and arrive at new and previously invisible conclusions. As the process continues, computers and technology will continue to grow smarter, simulating the complex nature of human synapses. As a result, computers will be able to manage supply chain systems based on the data they can access, and blockchain builds the bridge.

In other words, blockchain ensures that data entered into such systems is accurate and reflects the real-world needs of the business. In rail, a single decision can make or break profitability. Using technology to automate data collection, analysis and application, as well as entry into the blockchain, will empower rail shippers with new and exciting benefits.

The Benefits of Blockchain for Rail

The benefits specific to rail closely mirror the traditional benefits of advancements in trucking supply chain technology. Railcar trip planning can be streamlined. Workers can perform more efficiently. The risk of derailments decreases. Visibility into goods transported increases. Even railcar maintenance can be tracked more efficiently, reducing the risk of downtime and lost opportunities. The same application is useful in maintaining tracks and identifying areas of faster-than-anticipated deterioration.

Meanwhile, sensors in railcars, containers and trailers that connect to the blockchain will provide more data about factors that may change suddenly, like the weather. This will have additional benefits for faster, optimal lane planning, automating pricing capability and even preventive maintenance. Furthermore, blockchain-based systems and advanced data tracking technologies will improve monitoring, reduce fraud and theft and ensure the proper storage and transport of goods.

Additional benefits will become evident as blockchain moves into the invoicing and accounting departments for rail companies. Smart contracts will finally be enforceable and automated, thereby eliminating the risk of human error and costs associated with managing contract terms and specifications. Moreover, blockchain can exist as private or public platforms.

While both offer the benefits as above, private platforms may limit the capability to integrate with other technologies. On the other hand, public platforms provide the premise for open architecture-based systems, integrating seamlessly with existing systems via RESTful APIs.

Rail Companies Must Adapt or Die

There is no telling how much technology will advance in the near- and longer-term future. Railroads, working with their customers and suppliers and contractors, must take heed and understand the value of new technology for optimal end-to-end visibility, reduced costs and improved service quality. Of course, we are still far from the “Robot Apocalypse,” but the impending impact of blockchain and advanced technologies is too profound to ignore.

John Monarch is Chief Executive Officer of ShipChain. This article is based on his presentation at Railway Age’s 2019 Next-Gen Freight Rail conference.

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