Magazine Article | July 25, 2006

Real-Time Location: The New Reality In Service

Source: Field Technologies Magazine

By creating a GPS (global positioning system)-based dispatching solution, this railway service company generated $75 million in revenue in one year.

Integrated Solutions, August 2006

RailCrewXpress (RCX), a 1-year-old company, was formed to provide crew transportation services to class-one railways in the United States. RCX’ customers are undeniably a niche customer base. But railways’ concerns for real-time information are similar to concerns of other companies that might be your customers. Using voice and data communications can help you provide the information, but you can add LBS (location-based services) to provide precise visibility to the information to create an irrefutable business benefit for your customers. RCX presented railways with a GPS-based, real-time communication solution, which enabled the company to generate $75 million in revenue in its first year of operation.

Scott Boyes, president and CEO of RCX, and three other cofounders started the company because they saw a  need for technology solutions to streamline an essential component of the freight railway business: crew transportation. Railways depend on third party providers to transport crews, mainly engineers and conductors, from train to train. Why don’t the crew members just get on another train? Good question. The infrastructure for freight rail transportation is very limited, yet the capacity is high: tracks that should handle 10 trips per day handle 40. The freight routes are also fairly short, 150 to 250 miles, and the trains and crews are scheduled to the limit. A crew might need to be back at an originating location an hour after finishing a route; if the train tracks go over a one-track bridge and a train is already coming the opposite way, the crew would have to wait. Additionally, the crews’ working hours are highly regulated by the U.S. Federal Railroad Administration (FRA). When crews’ allowable working hours are up, they have to get off a train and go back to their home rail depots. All of these factors contribute to a logistical challenge for railways to manage their skilled crews.

Until recently, railways depended on small, regional crew transport companies to handle their needs. These companies, some of which were mom-and-pop businesses, did not have sophisticated scheduling or reporting capabilities. “Everything with these companies was paper based,” says Boyes. “The transportation needs came from the railways by telephone, and the companies wrote down the trip order with details [who, when, and where the pickup and/or drop-off would take place]. The companies created paper trip tickets, like taxi invoices, after a trip was completed. The trip tickets were then manually bundled together and mailed to the railways.”

As railways’ costs rose, they encouraged their crew transportation partners to update their methods so the railways could operate more efficiently; namely, the companies needed to improve their ability to report trip events (e.g. pickups and drop-offs, and any stops, such as for food or gas, along the way), automate billing processes, and provide better visibility of crews in transport. “It is very important for railways to know where their crews are,” says Boyes. “Railways have invested heavily in huge crew management systems that constantly track the crews, making sure they’ll be in position to  be placed on a train. The railways wanted and needed real-time information and visibility.” However, the small crew transport companies did not have the budgets, manpower, or technological expertise to provide such improvements — yet the railways still had to use the companies’ services. Basically, the railways were hamstrung. That’s where Boyes and his partners saw their opportunity.

Boyes had worked in the railway business for years, and two years ago he worked for a Canadian crew transport company. He worked with the company to develop a technology solution that provided more accurate and timely reporting of railway crew locations. Seeing the quandary the U.S. railways were in, he decided to expand the solution into the United States. When the Canadian company balked at the idea, Boyes left in March 2005, found some partners, and raised venture capital money, basing the pitch to investors on the LBS solution the fledgling company would provide for railways. “I presented the business model of providing crew transportation for railways on a large scale, relying on location-based technology to provide the services railways direly needed,” says Boyes. “I received the funding I needed in a month.”

The next part of RCX’ formation is probably frightening to most companies. With no customers yet, RCX invested $6 million in the technology it needed. “We knew railways needed this technology, so there was no question of getting a payback,” says Boyes. “We told our first potential customers what the technology could do, and the companies we were going to purchase [so RCX would have drivers and fleets of vehicles from the beginning]. The first customers signed up.”

RCX’ technology solution is composed of Psion Teklogix Workabout Pro (S) rugged handhelds; PointSync, a mobile software platform from MobileDataforce; and Wireless Matrix Mobile Base Stations (MBSs). The PointSync platform was used to create a customizable mobile application to operate on the handhelds and communicate in real time with RCX’ dispatch headquarters in Toronto. The real-time communication takes place via the MBSs installed on the vehicles, which communicate via multiple networks and technologies, including terrestrial GPRS (general packet radio service) networks, satellite networks, and 802.11 WLANs (wireless LANs). The MBSs also are GPS receivers, providing instant visibility of the precise locations of RCX’ crew.

With the mobile solution, workers in RCX’ dispatch center can access crew transportation orders from railway Web sites. The information is input into a Web-based dispatch application, which automatically designates a vehicle and driver for the trip based on the driver’s availability, location, and the hours of service the driver has logged for the day or week (RCX must adhere to U.S. Department of Transportation guidelines on driver hours). The dispatch system, which is integrated with the MobileDataforce application, sends the trip order to the appropriate driver’s handheld computer, which emits an audible tone, alerting the driver he has another trip.

Once the driver receives a trip order, he records all of the actions (e.g. picking up the crew, departing the rail yard, stopping along the way, and arriving at the destination) taken during the transport on the handheld device. All of this information is recorded by pushing a button on the handheld, which records the latitude, time, and mileage from the last time the button was pushed. Applications that transmit such specific data and require such limited data entry are typically performed on less rugged (and less expensive) handheld devices, such as smartphones and PDAs. But RCX wanted a more rugged device, especially given its founders’ experience in the railway industry. “The railways use the Workabout Pro quite extensively, so we wanted a device they’d be familiar with to establish trust,” says Boyes. “Also, our drivers spend a good deal of time in the rail yards, which are very rough environments. We wanted a device that could be dropped, get wet, or get dirty and still work.”

All of the information collected during a trip is sent back to the dispatch system in real time, so railways can log on to the Web-based program and see the real-time locations and trip information of their crews. Additionally, the dispatch system creates a data file of each trip that is linked to RCX’ general ledger, billing modules for the railways, and payroll file. The billing and payroll are then automatically processed by the system. “One of the companies we acquired took three days to complete a bimonthly payroll,” says Boyes. “Because we’re receiving real-time electronic data, it only takes us 30 seconds — we just create a file and send it to ADP [RCX’ payroll company]. Also, our billing cycle is much faster than what some of the companies we acquired experienced, because we just send electronic files to railways, rather than mailing stacks of paper trip tickets.”

RCX completed the development of the solution in August 2005 and began using the solution for its first customers, Union Pacific and Burlington Northern Santa Fe railways, in a few locations (Oklahoma City, Houston, Dallas). Using those deployments to demonstrate the solution, RCX is now negotiating a deal with Norfolk Southern. Now, a year after the initial availability of the technology, RCX will be able to count half of the U.S. class-one railways as its customers, which has created $75 million in revenue. By the end of 2006, RCX anticipates to be operating in 122 locations throughout the United States, all because it saw a need for location-based technology and went for it. Though your customers probably won’t be in the dire predicament RCX’ were, LBS can still provide better visibility of products or people than what you’re using now — and that can’t help but add to your bottom line, as well.