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FAILURE IS NOT AN OPTION

Houston, we have a problem.” Anyone who enjoys good movies knows exactly where that quote is from. Tom Hanks, as Captain Jim Lovell, alerts Mission Control in Houston that the Apollo 13 mission is in trouble. Even if they modified that quote (originally Lovell said, “Houston, we’ve had a problem”) this true history tells us that was a huge understatement. This was not a problem; it was potentially a complete disaster that threatened not only the lives of the 3 men on board but the entire Apollo program and the status of the United States in the world.


“Failure is not an option.” This was the rocklike stand taken by Gene Krantz, flight director as every problem seemed to deteriorate into new problems creating a bleak outlook. It took tenacity, courage, great skill, and many other qualities to bring these men home. What looked like a great disaster turned into one of NASA’s greatest success stories. They had a clear mission and kept their focus on that main goal.


“Rail network, we have a problem.” Everyone knows the current rail service in North America approached the level of a disaster, not just a problem. And everyone also knows that failure is not an option. The ultimate success of the rail network, those arteries through which commerce flows, must succeed.


What happened? Under the strategy deployed by Precision Scheduled Railroading the Class I carriers changed operations which allegedly allowed them to cut people (their most valuable resource), classification yards, unit trains, hump yards, power, rolling stock, and more. The claim was that with newly streamlined operations and new service designs fewer resources were needed.


At the fall conference for the North East Association of Rail Shippers (NEARS) in October 2019 Dr. Peter Swan, Associate Professor, Penn State University, raised serious questions about PSR. He asked if the carriers strip down to the bare minimum, how will they manage a surge in business or even growth.


No one foresaw a pandemic nor the government shutting down the economy for any period. An already lean operation was forced to lay off numerous employees during the shutdown, and once operations were permitted to return many of those employees had decided on other options. But cutting to the bone laid the groundwork for the issues they now face. Dr. Swan’s question was very prescient.


How will failure be averted? The Surface Transportation Board (STB) is taking a very active role, holding hearings and requiring reporting to visibly display progress and trends in service for all to see. They might not be able to force change, but such accountability does have some effect.


The carriers are rushing to refill positions and hire crews to service their operations. They are even using terms like “customer-centric”, adding field sales to be more in touch with the customer needs, etc. But unless there is a strategy to better manage the ebb and flow, or even the surge or drop, in business long-term will this prevent any recurrence.


Shippers are learning how to best manage both expectations and operations to accommodate such change. Since the passing of the Staggers Act in 1980 the rail carriers have progressively created an environment where shippers must assume responsibility for much of what the carriers once provided. Balancing this teeter-totter and working together can help to resolve current and long-term problems. Future posts will suggest more details on what can be considered.


To discuss further including how you can best manage in today’s rail marketplace please drop me a note at dennis@ihlogistics.com.


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