Welcome to a New Year:
Rail Industry Predictions and Market Changes to Look out for Now that 2018 is Here
The American transportation industry is nothing if not adaptable. Throughout the years, rail trains and those who are at the helm—literally and figuratively—have continued to power through both industry surges and the moments when the economy has taken a very distinct nose dive south, which always can affect business as usual. Change, as they say, is the only ever continued constant.
For 2018, rail technology will continue to help innovate the market, weather will still be an unpredictable factor, promises for sustainability initiatives will be a focus, and the economy should help bolster the continuation of railroad and rail industry endeavors. There may not be a “boom” in the railroad industry to be on the lookout for, but there are certainly a list of positives that can keep those, who have been adaptable during market changes these past years, with a smile on their face.
The Use of Predictive Analytics
One certain change coming to the rail industry within the American transportation industry sphere is the use of predictive analytics. Predictive analytics make use of previous data and information to make predictions—more informed predictions—about events in the future. Like history can help shape the present, using this wealth of data (that is both vast and wide, at this point) in regards to predictive analytics can make substantial headway in regards to safety and inspection processes; rail care, locomotive, and rail maintenance cycles; fuel and labor cost management; traffic, scheduling (i.e. bad stops) and rail network management; and finally, environmental and health management actions. Making use of this data—and implementing strategies based on these numbers—will help inform the industry on current and growing trends.
An Economy Which Continues to Grow Stronger and Stronger
Positive economic trends in 2017 are expected to carry over into this new year.
The U.S. GDP is expected to increase by 2.4% in 2018, which is higher than the 2.1% growth of 2017. For reference, recalling the year 2016, the GDP growth during that year was 1.6%. (https://www.kiplinger.com/article/business/T019-C000-S010-gdp-growth-rate-and-forecast.html).
As consumer spending and confidence continues to grow, both the economy and the rail industry will share in the success from this renewed forward momentum.
Transitioning From Road to Rail
As the trucking market grows tighter and tighter, many trucking companies are transitioning over to long-haul freight options. Many shippers are finding positives inherent within what the railroad industry can offer.
Industrial products, like sand, will also continue to be in high demand. President and CEO Carl Ice of BNSF Railway Co. suggests that as the economy continues to gain momentum, industrial development and the industrial products (like sand) needed for these kinds of developments will also be in high demand, too. They go hand-in-hand. Ice said, “The movement of sand has grown this year and last and we expect it to continue to be a solid commodity on our railroad.”
Weather on the Horizon
Weather will always affect the profitability and outcomes of the business entangled and utilized within the rail industry (namely scheduling), but many of these factors are difficult to predict. In regards to coal and grain, these two products are dependent on weather-related realties, but needless to say, these two products will most certainly play into the overall outcome of the rail industry as a whole. Market uncertainties in these sectors are always possibilities, and will be nothing new for seasoned rail industry employees. Unpredictable storms, the likes of which have been seen in these past few years, can also affect train schedules and the day-to-day reality of delivery.
Grain volumes fluctuate depending on any number of uncontrollable factors. Take for instance, the United States growers’ production of grain, the demand for the product domestically and through the various exports this industry supports. Business in this regard can also be dependent on the strength of the global marketplace and shortages of grain both here domestically and abroad.
Energy and chemical markets are also embracing rail markets. Keeping collaborative supply chain options and approaches will help benefit customers, consumers, and rail companies alike.
Food will also be an important element and component in growing rail trends. President and CEO Lance Fritz of Union Pacific Railroad notes that an exciting part of their business is the use of the Cold Connect platform, which offers seamless multi-modal logistics for food and other refrigerated products from coast to coast. As temperatures are able to be monitored and controlled, fresh fruits and vegetables are able to be transported. Food quality and food mobility can be dramatically enhanced.
Curiosity Continues to Fuel Top Thinkers
Top rail industry CEOs certainly all have one thing in common. In addition for hoping for a successful and fruitful year in 2018, one certain thing has them all curious. Each one of them has their eyes pasted on headlines and the uncertainty surrounding the North American Free Trade Agreement (NAFTA) and the renegotiations. This 23-year-old agreement has resulted in a $425 billion increase in trade between the United States and Mexico, but has, at this point, an uncertain future.
Technologic Measures Beef Up Business
Technology and innovation continue to make their way into the rail industry sector. For those who choose to embrace these newer ways of doing business in favor of more traditional and possibly outdated models, the technologic advances can make a difference. These changes affect consumer behavior, supply chains, and how employees can help contribute to improve safety, service, and efficiency.
One example is the use of drones and ultrasonic rail tests, which allow for train inspections to use technology in their own advantage. Rail professionals who might otherwise be tasked with these tasks can focus their attention on other higher-value work.
As mentioned above, change is the only constant. Rolling with the changes in industry, in history, and in the supply and demand of what the United States and other countries need will remain at the center of the rail industry’s flexible mission in 2018. If that’s the case, the rail industry is poised for a future of investment, of sustainability, of continued reliability, and a stance rooted in exceeding customer expectations. The future, undeniably, is encouraging.
- On January 15, 2018