Creating a better rail hub: interview with William C. Thompson
As Chicago goes, so goes the country's railroad network. It's Bill Thompson's job to see that the region's historically clogged rail system doesn't go to hell in a hand basket.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
By the turn of the century, Chicago, the nation's busiest rail hub which today accounts for one-fourth of the nation's rail traffic, had become intolerably sclerotic. Rail lines built in the mid- to late 1800s were inadequate to meet modern-day demands, let alone any future growth. A train that took 48 hours to travel 2,200 miles from Los Angeles to Chicago was, by 2003, taking almost that long just to get through Chicago.
On June 16, 2003, Chicago Mayor Richard M. Daley announced the creation of an extraordinary public-private sector task force to tackle the problem. The "Chicago Region Environmental and Transportation Efficiency Program," better known as CREATE, marked the first time so many competing railroads—the six big ones serving Chicago—would collaborate to improve the efficiency of an urban rail network.
The following year, William C. Thompson, a 35-year rail veteran—23 of those with Union Pacific Corp. —was named CREATE's program manager. Thompson was tasked with overseeing the development of 70 projects, 36 of them freight-specific. It is a work very much in progress, yet as Thompson tells DC Velocity Senior Editor Mark B. Solomon in the following interview, much progress has been made.
Q: It has been 10 years since CREATE's launch. Can you quantify the progress that's been made in reducing the amount of time to traverse Chicagoland? A: The railroads have seen about a 30-percent reduction in cross-town transit times. In 2003, it was taking trains just under 43 hours to move through the Chicago terminal. In 2012, trains were moving through the terminal in 32 hours. The Chicago terminal is ringed by automatic equipment identification (AEI) readers that enable us to accurately measure performance. Each railcar in North America has an AEI tag on it. By using data from the AEI readers, the railroads are able to receive the real dates and times a car entered and departed the terminal.
Q: Have there been any forecasts of savings that would accrue to shippers by "unclogging the drain"? A: Individual shippers have not notified us of specific savings or efficiencies. But we know businesses are managing inventory better than ever before. The goods held in railcars are part of their production or finished-goods inventory. Chicago is a very important link in the transportation chain. It makes sense that if the time it takes to move a shipment is reduced by 11 hours, there is added value for the shippers.
Q: What is CREATE's goal for reducing transit times through Chicago? A: This is really a function of future traffic increases. The Chicago terminal was on a path to gridlock (0 mph) between 2020 and 2030 based on expected traffic growth if nothing was done. While speed and time are very important, the critical item is volume and carloads through the terminal, especially as traffic continues to increase.
Q: CREATE's existence has coincided with the "railroad renaissance" that began around 2004, and, in particular, the strong growth of intermodal demand. Did the program anticipate the dramatically brightening fortunes of the industry, and have increased traffic flows complicated your work? A: Many in the industry have seen this coming for a while. In 1999, there were predictions of gridlock by 2030. Some early terminal modeling was forecasting gridlock conditions as early as 2020.
The Western Avenue corridor [one of four rail corridors running through the Chicago region] sees a tremendous amount of intermodal traffic. Some is destined for Chicago, some originates in Chicago, and some passes through Chicago. As the Western Avenue improvements are completed, the rails' intermodal product will move with greater reliability through the terminal. The CREATE program supports both domestic and international intermodal growth.
The industry has not changed its forecasts about future gridlock. In fact, the increase in fuel costs is driving more demand for rail services than perhaps many had earlier projected.
Q: Increasingly, intermodal equipment is being grounded and loaded in urban areas. Given intermodal's growth and Chicago's pivotal position in the country's rail axis, does the positioning of containers make your task more difficult? A: The CREATE program effectively supports the logic the railroads are using for handling the intermodal product. While CREATE is not building upgrades inside any intermodal yards or terminals, it is improving access to some intermodal yards and between many. In addition, the railroads in recent years have invested over $3 billion in infrastructure improvements in the Chicago region that are not part of CREATE. The idea is to get the train with the containers to the location where they are loaded or unloaded.
Q: What are the major challenges still facing railroads in unclogging the region? A: The major challenge is to obtain the needed funding to finish the remaining projects in the face of continued traffic growth. It is important to remember that CREATE is not just about freight. It is also about improving intercity and commuter passenger rail service, and reducing road congestion. The railroads have agreed that passenger trains will have top priority for movements. This is known as the "Chicago Protocol." The protocol results in a shutdown of much of the Chicago-area mainline freight operations Monday through Friday between 6 a.m. and 9 a.m. and between 4 p.m. and 7 p.m. This amounts to a 25-percent reduction in track capacity during that time. The challenge is to continue to build facilities that will permit the freight and passenger operations to be separated during those critical rush hours.
There are still many grade separation projects and passenger projects that must be cleared environmentally, designed, and constructed. The challenge facing the CREATE partners is to gather sufficient funding to complete the program. So far, we have received about $1.2 billion in funding for a $3.2 billion-plus program. Currently, 16 CREATE projects are complete, 12 are under construction, and 19 are in the design phase. Twenty-one of the 70 projects have not started design.
Q: Does CREATE's work have an endgame? If freight growth continues at the pace that many project over the next 20 to 30 years, is there a concern capacity in Chicago will not keep up with demand and the region will find itself back in the same situation? A: The railroads believe they have a reasonable plan to address the expected continued growth of rail freight transportation. The 2008-09 downturn allowed for a small breather. But the respite was short lived, and traffic has continued to grow. The question is, if traffic growth projections are exceeded, when will Chicago reach gridlock? Should transportation demand continue to increase and if CREATE progress were to stop, it is estimated that in 20 years, freight delays could triple and passenger delays would increase fivefold.
Q: Is this a program that can be established in other cities, or is Chicago a unique case? A: The railroads are working with the Louisiana Department of Transportation and Development (LDTD) in New Orleans to address similar issues. The LDTD railroad program is still in development.
Q: How did you come to run CREATE? A: In 2004, the railroads decided to hire a program manager to represent the entire industry in Chicago and to work with the Illinois and Chicago transportation departments and the Federal Highway Administration as design and construction efforts were ramping up. The industry also wanted to minimize disruptions to the current operation during construction. My work in the railroad industry for 23 years in construction and maintenance, along with three years in consulting, provided a good track record of skills the industry needed.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.