As part of a special series in Railway Age’s March 2021 issue, 11 North American railroad CEOs address the daunting challenges the freight rail industry faces as the 21st century enters its third decade—from operations and technology to marketing and growth. Here, Peter Gilbertson, Chairman of Anacostia Rail Holdings, covers how systemic improvements in customer service are essential to revenue growth.
It is often said that customer service must be the responsibility of every employee. From a short line railroad perspective, customer service must be reimagined, encouraged throughout, and delivered responsibly with every transaction. Our franchise depends on it!
What is the context of U.S. freight railroading in U.S. logistics in 2021? Many basic facts are challenging. The industry is undergoing the secular loss of coal, a once highly profitable line of business operating in unit trains. More troubling, for years, non-intermodal business lines have generally failed to keep pace with U.S. GDP and industrial output indices, even though the industry is generally selling a product at a price lower than its competition.
Stated otherwise, we are losing market share at a troubling rate.
But this industry has some profound advantages. The rail network is generally in outstanding shape and now has a PTC system that can enhance safety and productivity. The industry has ample track, locomotive and car capacity (including about 400,000 stored railcars or 25% of the fleet) available for growth. Railroads have compelling environmental fundamentals that will become more important in the future.
— “Fundamentally, to design responsive customer service, we must understand our customers and their markets. It is not their job to understand us.” —
Systemic improvements in customer service are essential to revenue growth.
Customer service is a story of adding value to the customer’s business with information, communication, ease of doing business, flexibility, problem-solving, and reliable and safe execution.
Fundamentally, to design responsive customer service, we must understand our customers and their markets. It is not their job to understand us. There is real-time pressure. Railroading is changing quickly, with far fewer people and therefore fewer relationships as touchpoints and less institutional knowledge. The same is happening with our customers.
Railroads continue to be difficult to do business with. Concepts like demurrage, car-hire, interchange and use of private car fleets are learning challenges our competitors do not present. We are a network business that sometimes acts like it does not want to be. Customer service must include managing and simplifying these issues.
— “In these days of fast-changing operations, we must hold ourselves out as the primary advocate for managing our customers’ interline issues with our Class I partners.” —
We are in frequent contact with our customers. We try to meet the decision-makers, learn their needs, explain who we are, and explore ways to improve. In exchange for the cost of a lunch, the customers send their key people to educate our team, understand upcoming changes, ask questions and identify specific concerns. We have a need to educate a new generation of shippers how to use rail. It must be our responsibility to explain terminology, and make simple the processes for rate making, car ordering, etc. In these days of fast-changing operations, we must hold ourselves out as the primary advocate for managing our customers’ interline issues with our Class I partners.
That model works for supporting traffic growth. It is our responsibility as service providers to share the details about the benefits of good rail service. As a short line, this leverages the advantages of our operation. Our crews should know the loading dock workers quite well. Our sales team members don’t churn, so they have established relationships with traffic managers. We know whom to call and so do they when something goes wrong—and more important, to plan for something proactively that may be a
Customer service can be a strategic tool as well, allowing the railroad to plan with the customer. COVID-19 highlighted these issues. Many customers across the board were in a fog about what to expect from supply chains, as well as from their own operations. We needed to plan resources and service schedules. We needed to get closer to customers and to talk regularly and candidly.
Customers were not bothered: They realized we were trying to help, and they told us what they could.
Customers also need efficient and reliable exchanges of data and information, and the industry must do much more to modernize its technology platform. Small railroads cannot be black holes in the network scheme of visibility for shipments. New developments—which Anacostia supports—encourage a single network solution rather than balkanized efforts by individual Class I’s.
— “Today, every single customer should expect to know exactly where every shipment is on the railroad, at all times.” —
Today, every single customer should expect to know exactly where every shipment is on the railroad, at all times. The value of the lading—the customer promise to ship to their receiver—is incredibly important, but often overlooked on our end.
We need to understand that perspective and be willing to spend funds on innovations and resources to deploy the information. Example: proactive messaging when trip plans are in jeopardy due to weather and congestion. Our operations must be willing to offer flexibility on service to accommodate a recovery. That is what all of us as consumers expect in customer service when we buy something from Amazon.
Customer service also can be manifested in operating changes. How to double business with a customer with a two-car spot that cannot be physically expanded? Provide a switch twice a day. We do it in many places—and would love to offer it more.
The tools are out there and the expectations are great. We must be prepared to make customer service a top priority just like safety and financial metrics.
One last word, and this can be done at a local level: Design your service metrics by involving your customers in the dialogue. It is easy to score your own test—but much harder to evaluate your performance when the metrics are more complex. Yet, it’s meaningful because they can exactly match what the customer needs to use—rail.
Read more of Railway Age’s special CEO Perspectives series:
• Ian Jefferies, Association of American Railroads: Sustainable Economic and Legislative Policies
• Katie Farmer, BNSF: Leveraging Advanced Technologies
• Keith Creel, Canadian Pacific: Growing the Top Line
• JJ Ruest, CN: Improving Customer Supply Chain Visibility
• Jim Foote, CSX: Railroads as a Sustainable Business
• Pat Ottensmeyer, Kansas City Southern: Maximizing USMCA for Cross-Border Growth
• Jim Squires, Norfolk Southern: Building the Digital Railroad of the Future
• Lance Fritz, Union Pacific: Smart Capital Investment Strategies
• Dean Piacente, OmniTRAX: Building Better Communities Through Industrial Development
• Dan Smith, Watco: Integrated Transportation Services Fuel Growth