a case study: the benefits of information based
TRANSCRIPT
SEARS Conference – October 27, 2021
Kevin Brandon – President
Road & Rail Services LLC
Confidential
A Case Study: The Benefits of Information Based Preventative Railcar Maintenance Programs
Agenda
Addressing Railcar Condition and Reliability
1. Introduction
2. Railcar Component of Supply Chain
3. Steps for Improvement
4. Improving Reliability
5. Case Study - Real Life Example
6. Conclusion
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INSPECTION, MAINTENANCE AND REPAIR
Serving clients across industries and geography
COMPANY OVERVIEW LOCATIONS NETWORK
34YEARS
62LOCATIONS
17STATES
5CORE
SERVICES
7INDUSTRIES
SERVED
1,047ASSOCIATES
Corporate
HeadquartersLOUISVILLE,
KENTUCKY
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Serving Automotive, Intermodal,
Chemicals, Food & Consumer, Paper,
Fertilizer & Agriculture, Coal
TRACK RAILCAR TRAIN AUTO / IM MATERIALSSERVICES SERVICES SERVICES LOGISTICS TRANSLOADING
A multi-faceted leader in logistics solutions
L O G I S T I C S S O L U T I O N S D E L I V E R E D
We are an industry leader in
new track construction and
track and facilities
maintenance for industries who
rely on the condition of their
track, yard and rail terminals,
as well as engineering firms
who rely on us to execute their
plans for new track.
We service a wide range of
railcars encompassing
inspections pre-trip, railcar
cleaning, preventative
maintenance and mechanical
program work, general and
mobile response repairs,
mechanical repair and
electronic AAR billing.
We set the bar for efficient
train processing, including
loading, unloading and brake
testing. And our automated
reporting keeps you informed,
documenting throughput,
dwell, elapsed time,
locomotive inspections and
servicing and more.
We specialize in crafting
comprehensive logistic
solutions for even the
most complex automotive
logistics problems, all
tailored to the unique
demands of your specific
manufacturing
environment.
We offer environmentally
compliant material handling,
with advanced reporting and
technology for accurate
inventory management and
detailed product verification. We
also provide robust securement,
so you know your product is
sealed, secure and tamper-free.
SERVICESOUR CORE
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Railcar Component of Supply Chain
Elevating global competiveness in the supply chain – costs matter
Increasing supply chain capacity constraints
Less predictability in supply chains
PSR continues at Class 1 Railroads
Railcar ages are increasing
Railcar maintenance programs are fragmented
Fact based decision making needed to manage railcar fleets
RAILCARS IN THE SUPPLY CHAIN
Railcar Component of Supply Chain
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Rail supply chains are complex
Railcar equipment is capital intensive
Maintenance programs can reduce costs
Bad orders add significant expense
RAILCARS IN THE SUPPLY CHAIN RAIL EQUIPMENT IS DIVERSE
Railcar Component of Supply Chain
RR and Pvt Cars Number Avg Age Percentage
RR Cars 431,037 25.8 25.74%
Pvt Cars 1,243,574 17.4 74.26%
GRAND TOTAL 1,674,611 19.56 100.00%
RAILCAR EXPENSE FLEET OWNERSHIP
* Source – AAR and Umler as of Jan 2019; TTX included as Pvt Cars
Private Cars Number Avg Age
Box Cars 32,672 17.8
Covered Hoppers 443,717 17.9
Open Hoppers 86147 18.9
Gondolas 109,802 21.5
Flat Cars 145,011 18.4
Refrigerator 3,584 17.2
Tank Cars 419,694 14.9
All Others 2,947 28.5
TOTAL 1,243,574 17.4
• Replacement costs between $100k - $200k• Improved turn times reduce fleet size needs• The bad order process is expensive• Rail fleets are aging and replacement is slow• Coordination with the railroad is important• Steel prices have escalated• Using data and technology is critical to managing a
fleet
Preventative Maintenance Process
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1. Survey fleet for critical life cycle areas 2. Review Bad Order History3. Review Repair Performance4. Develop repair programs to address critical areas of asset and life cycle5. Review materials required and usage for performance improvement6. Adjust Maintenance footprint and work scope to present conditions.
Steps for Improvement
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Isolate Volume
Dense Lanes
Focus on Higher Volume
Origins or Destinations
Select the Best Location (s) for Field Services
Establish Equipment
Baseline Standards
Survey and Inspect Railcar
Equipment
Record Data, Measure, and Pursue Root
Cause Analysis
Adjust Program and Develop Best
Practices
Communicate and Monitor
Steps for Improvement
COORDINATE WITH CAR OWNER
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Fleet Survey – Provides Strategic View of Asset Condition / Life Cycle
Note condition 1 is the best and condition 4 the worst and would generally cause equipment to out of service.
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Fleet Survey – Provides Strategic View of Asset Condition / Life Cycle
Survey indicates – Category 3 cars need deck top & underside programs to extend life cycle.In addition trends continue for Category 2 cars – Feedback provided to car builders & certification shops
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Fleet Survey – Provides Strategic View of Asset Condition / Life Cycle
Audits performed to ensure consistent standards by Inspectors.
Improving Reliability and Reducing Cost
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Bad Orders - Improving Reliability and Reducing Cost
3% BAD ORDER COST LESS THAN 1% BAD ORDER COST
Site/Network Volume 10,000
Site/Network Bad Order Ratio 3%
Bad Order Railcars 300
Origin Switch (Per Car) $300 $90,000
Road Haul to Shop $1,000 $300,000
Destination Switch $300 $90,000
TOTAL $480,000
Bad Order Cycle Time (Days) 70 $40 $840,000
TOTAL $840,000
TOTAL BAD ORDER COSTS $1,320,000
PER BAD ORDERED RAILCAR $4,400
Example Bad Order Parameters
Estimated Transportation Costs Handling Bad Orders
Railcar Car Costs (Out of Service)
Site/Network Volume 10,000
Site/Network Bad Order Ratio 0.17%
Bad Order Railcars 17
Origin Switch (Per Car) $300 $5,100
Road Haul to Shop $1,000 $17,000
Destination Switch $300 $5,100
TOTAL $27,200
Bad Order Cycle Time (Days) 70 $40 $47,600
Onsite Repair to Alleviate BO's 3 $40 $33,960
TOTAL $81,560
TOTAL BAD ORDER COSTS $108,760
PER BAD ORDERED RAILCAR $363
Example Bad Order Parameters
Estimated Transportation Costs Handling Bad Orders
Railcar Car Costs (Out of Service)
Loss of equipment availability to transport product
Potential modal diversion at higher costs
Increases the need for additional equipment in the fleet
Congestion and/or additional rail handling
Possibility of product degradation
OPPORTUNITY COSTS OF BAD ORDERS
Improving Reliability and Reducing Cost
Case Study: Real Life Example
REAL LIFE EXAMPLE BACKGROUND
Parameters
• Volume, density and consistency allow field maintenance operation
• No conflict with performing railcar maintenance due to car ownership
• Willingness of railcar owner to authorize maintenance
• Need to increase velocity and eliminate bad order delays
Case Study: Real Life Example
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ORIGIN LOCATIONS
⚫ Railcar Prepping Services
⚫ Maintenance Issues Addressed at Origin
⚫ Other Maintenance Services Implemented
in
Four States
Reduction to 0.17% Bad Order Ratio
ORIGIN OR DEST SITE NEEDED BAD ORDERS CAN BE REDUCED
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
0
50,000
100,000
150,000
200,000
250,000
300,000
2016 2017 2018 2019 2020 2021 YTD
Bad Order Analysis
CARS PREPPED BAD ORDERS %
Case Study: Real Life Example
Deck - Rusted, 66
Deck - Grating Damaged -Replacement Required, 57
Door - Seal Safe Hood Replacement, 51
Misc. Rack Defect (add detail remarks), 30
Door Hinge Broken AVC, 29Door Track Top -
Replacement Required, 28
Door Track Bottom -Replacement Required, 26
Door Bent Inward Due to By Pass Coupler, 18
Misc Defect, 16
NRC Bearing Assembly Replacement, 16
Door Bent Outward Due to Load Shift, 15
Received Home Shop For Mainline, 10
2020 SHOP Bad Order Reasons Deck - Grating Damaged - ReplacementRequiredDoor - Seal Safe Hood Replacement
Misc. Rack Defect (add detail remarks)
Door Hinge Broken AVC
Door Track Top - Replacement Required
Door Track Bottom - ReplacementRequiredDoor Bent Inward Due to By PassCouplerMisc Defect
NRC Bearing Assembly Replacement
Door Bent Outward Due to Load Shift
Received Home Shop For Mainline
Scrap Candidate
Door - Seal Safe Pivot Bolt Replacement
Deck - Spring/ Pulley - ReplacementrequiredTire Guide
Door Missing
Door Post Damaged - ReplacementRequiredRoof Defect
Data Benefits
• Defect codes established
• Data tracking assists root
cause analysis.
• Information can be shared
with parts manufacturers.
• Parts inventory can be better
managed.
• Railcar construction can be
improved with feedback.
• Out-of-Service days reduced
Case Study: Repair Programs Implemented and KPI’s monitored
Preventive Maintenance KPI’s – Performance includes Brake Systems
An example of testing program that finds defects based upon testing schedule vs. fleet failure.
Conclusion
Preventative Maintenance Programs are Effective
1. Preventative Maintenance Programs Reduce Enterprise Costs
2. Railcars Are Expensive and Increasing Velocity Improves Efficiency
3. Improved Velocity Results in Less Railcars Needed
3. Direct Expenses and Opportunity Costs of Bad Order Equipment is Significant
4. A Focus on Data, Process and Facts are Needed to Maximize Program Benefits
5. Rail Equipment is an Essential Part of the Supply Chain and Costs Can Be Reduced
Questions
Thank You and Questions