As trucking has grown over the past 40 years, the less-flexible option of rail transport has steadily declined. In 1960, trains represented 19 percent of total freight revenue. In 1999, trains accounted for just 6 percent. During America's romance with trucking in the '70s, says Anthony Hatch, an independent transportation analyst based in New York, "Burt Reynolds was the biggest enemy of the railroads."
Deregulation in 1980 offered hope. But while a spate of mergers boosted efficiency, eliminating track redundancy and much of the costly, time-consuming handovers of goods from one carrier to another, the consolidation failed to yield the reliability that customers had begun demanding. In the '90s, a second round of mergers proved disastrous, with everything from incompatible computer systems to incompatible unions causing serious delays. Today, like other industries, rail is turning to communications software to foster efficiency. Rather than attempting more unwieldy acquisitions among the last remaining US companies, the railroads are going the way of virtual mergers - joint ventures focused on providing better data flow, better tracking, and greater ease of doing business for shippers of all kinds. While other efforts are following a now-standard B2B model - providing basic procurement and Web-based information systems - the standout of the new ventures is Arzoon, a San Carlos, California-based company, which aims to simplify the tangled process of pricing, contracting, and record-keeping for manufacturers buying transport. Four of the nation's seven rail companies have joined forces to back the startup. Hugely reliant on so-called intermodal business (like ocean transporters, rail carriers rely more heavily on trucks than the other way around) the railroads are getting in on Arzoon's pick-and-choose system, which allows shippers to combine rail services more seamlessly with other forms of freight transport. The technology enables a shipper's coordinator to manage all his transportation logistics from a single site - to determine, for example, when to shift from rail to truck or vice versa, and how much to pay when.
As an industry weighed down with massive assets and constrained by fixed miles of narrow track, rail stands to gain much ground, if and when infotech delivers on its promise of near-infinite flexibility.
