Revenue Analytics attended the 2017 RailTrends conference, which was held in New York City, November 30th-December 1st. This premier conference brought together freight rail professionals to discuss rail unknowns and trending topics in the industry.
The landscape within and around the rail industry is shifting, and rail professionals need to rethink their core business strategies. But what’s causing this paradigm shift, and how do companies eliminate the unknowns, while confronting those changes to drive their businesses forward?
Below are a few key takeaways from this year’s conference.
1) Volatility in customer industries. Many in coal and oil are seeing rapid market swings in both volume and business mix. With supply and demand in flux, it is hard to truly drive the optimal result.
2) Regulatory challenges continue to cause uncertainty. Given the current climate, there was a focus on potential changes in trade policies, especially concerning NAFTA. The potential for import/export changes to grain and other cross-border commodities is a cause for concern among many industry leaders, and awareness of proposed changes is key to making the right decisions.
3) Competition with trucking is at a pivotal point. Many industry professionals believe Electronic Logging Devices (ELD) and driver shortages will shift demand to the rail industry because of the shortage of available capacity in trucking. However, the trucking industry has flexibility on its side, giving it a competitive advantage to help grab more of the growing demand for shorter hauls and faster transit times.
4) Technology and data is a critical enabler and differentiator. Advanced analytics and cloud technologies have matured and stabilized, evoking unique business capabilities to enable higher service levels, business optimization, and visibility to shipments. However, all industries including rail are struggling to filter through the marketing noise to quickly determine what works, and where to invest to drive business results. Many in the industry believe the next big challenge will be to address macro-level disjointed data across various rail networks.
5) Rail customers are being influenced by personal B2C experiences. There is a new expectation for on-demand, omnichannel interaction (i.e. Amazon-like service), which will simplify quoting and booking. The hyper-transparent economy has reached rail, with an expectation for readily available greater information throughout the supply chain. Many also noted a resurgence of value-added services, such as cold storage and warehousing facilities.
As the rail landscape evolves, how can you help prepare for any outcome within this shifting landscape? We recommend you focus on these key commercial and operational questions:
- Do you know what makes a customer truly valuable? Can you predict which customers are at risk of attrition? What should you do about it?
- How can the Network and Assets be leveraged to its fullest to maximize utilization and profits?
- How does our leadership team make strong, data-driven strategic, commercial and operational business decisions with ever-changing scenarios while understanding the key business outcomes or consequences for long, medium and short terms?
The answers to these questions lie in a three-step process. First, focus on customer behavior. Define and determine customer-specific pricing that leverages win/loss probability, and your customers’ willingness to pay, providing quotes that are relevant and maximize return. Next, focus on network optimization that forecasts demand, fulfills popular and profitable inventory, capitalizes on asset utilization, and maximizes spot and contract pricing to drive organic revenue growth. Finally, create a scenario modeler, or a simulation engine to generate optimal trade-offs for demand fluctuations, capacity allocation options, network optimization and empty equipment repositioning.
These steps only scratch the surface of the ways the rail industry can eliminate their unknowns and optimize their businesses. Contact us to learn more about how Revenue Analytics leverages data-driven, cutting-edge analytics that can help serve your company’s interests.
Many thanks to Brad Arsenault, Senior Strategy Consultant, for co-authoring this thought leadership piece with me.