Benefit

Estimated benefits for shippers using an integrated shipment, equipment, and freight status information system equate to a 6.2 percent reduction in shipment costs.


September 2003
Memphis,Tennessee,United States; Oakland,California,United States


Summary Information

In 2001 the FHWA released a solicitation for a cost sharing cooperative agreement to test solutions for improving the efficiency of intermodal freight operations. The solicitation called for solutions to improve asset tracking, increase cargo visibility and develop a Freight Information Highway (FIH). The FIH would serve as the backbone for the communications and data sharing required for asset tracking and maintaining cargo visibility. The FHWA awarded the solicitation to a team of transportation and logistics companies (American Presidents Line, Union Pacific Railroad, PAR LMS and Transentric). In 2002 the team deployed a prototype FIH for tracking intermodal freight and exchanging data across different modes, agencies and locations. The evaluation examined the benefits of using web-based applications to provide end-to-end cargo visibility during the life cycle of a cargo shipment.

Benefits from an internet-based information system for tracking cargo from point-to-point were realized by increasing the efficiency of modal shifts from rail to truck, reducing errors in data entry and shipment mishandling, reducing customer service and tracking costs, and reducing penalties and delays. (The evaluators had expected to see stronger benefits from the reduction of unscheduled transloads (the shifting of a shipment or cargo from one mode to another mode) to meet customer needs and reduced inventory carrying costs. However, the industry managers of the deployment did not view these benefits as substantial.)

The table below shows the estimates of several components of the cost avoidance benefits of the FIH for a very large shipper or a small class of shippers representing 2.2 million shipments per year. The adjusted factors are based on the weak benefits associated with the infrequent and spurious nature of emergency transloads and the uncertainty over the value of reducing inventory costs.

Benefits ComponentAdjusted Evaluation of Estimated Benefit per ShipmentFIH Return on Investment Benefit per Shipment
Increased Modal Shift from Truck to Rail$17.05$40.91
Reduced Emergency Transloads$0.00$10.66
Reduced Inventory Carrying Costs and Outages$0.00$29.25
Improved Collaboration, Reduced Data Entry and Shipment Mishandling$9.00$9.00
Reduced Customer Service and Tracking Costs$1.20$1.20
Reduced Systems Integration Costs$1.16$1.16
Reduced Penalties and Delays$0.25$0.25
Total Benefits$28.66$92.43

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Source

Evaluation of the Intermodal Freight Technology Working Group Asset Tracking and "Freight Information Highway" Field Operational Test Final Report

Author: Mark Jensen

Published By: U.S. Department of Transportation, Federal Highway Administration

Source Date: September 2003

EDL Number: 13950

URL: http://ntl.bts.gov/lib//jpodocs/repts_te/13950.html

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Goal Areas

Productivity

Typical Deployment Locations

Rural Areas, Statewide

Keywords

automated vehicle location, computer aided dispatch, automatic vehicle locator, AVL, CAD, AVL/CAD, Asset Tracking, Cargo Visibility, Freight Information Highway

Benefit ID: 2010-00638