Technology Hits The Road

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T R A N S P O R T A T I O N
Technology Hits The Road
Transportation companies today find that they're in the information business, too

Stephanie Stahl
Issue date: Sept. 18, 1995

he companies that move people and products in airplanes, rail cars, trucks, and ships these days are more than just transportation companies. They're in the information business. Better ways of collecting data about customers and their goods--made possible by advanced information technology--help these companies stick to their rigorous schedules.

To be effective, chief information officers at transportation companies have had to forge closer relationships with business managers, says Gerry Long, president of Roadway Information Technology, the IT arm of Roadway Services, a $4.5 billion holding company in Akron, Ohio.

"The IT organization has to be part of freight movement," Long says. "We have to understand their information needs to see how we can integrate transportation and logistics. This is an uncommon role. Most IT departments have been internally focused. We have to be externally focused."

Roadway has been concentrating on ways to use IT to improve customer service. For example, its multicarrier tracing system, Roadway Access, allows customers using any of Roadway's services to track their shipment directly from a PC. The company also has a Multiship product, which includes weight rates and other data about Roadway's services, and even those of its competitors. "Unlike other carriers that offer proprietary systems, ours is multicarrier," says Long. "This system makes customers' lives easier."

Roadway recently formed a strategic technology group charged with evaluating the latest technologies being developed at universities and in manufacturers' laboratories.

Package Shippers Go Online
The importance of new IT is well known to Federal Express and United Parcel Service. These shippers have been lauded for their use of technology to help customers track packages. They offer multiple tracking options, from enabling a customer to call a service representative to checking a package's status from their desktop computers.

FedEx and UPS also have begun offering customers a way to take advantage of the Internet to locate packages or order a package pickup. Dennis Jones, CIO at FedEx in Memphis, Tenn., says thousands of customers use the FedEx World Wide Web home page daily to check package statuses.

The shippers are "putting a lot of faith in the consumer," says Jay Rein, airline industry director at Andersen Consulting Inc. in Dallas. "They've always had products that could [provide this kind of information], but now they are putting it out there for anybody to use."

But for UPS, FedEx, and other companies, the Internet and commercial online services are only pieces of a large puzzle. "A lot of people are hyping the Web, but we think it was just a natural step for us," says Jones of FedEx. Most customers use FedEx's Powership network to get information on their packages.

About 75,000 customers have proprietary FedEx terminals on site to order package pickup or to track packages. FedEx also provides PC software to another 70,000 customers for access to Powership.

"We want to ensure that we have an environment where all our customers can communicate online in whatever form they want," Jones says. Fed Ex wants to be the first company to have all its customers interacting with it in an online environment.

UPS is also trying to get its customers online. It plans to spend more than $100 million per year over the next several years to build electronic links for its 1.3 million customers. This fall, UPS will launch UPS OnLine, a Windows-based system to integrate all aspects of shipment processing and package tracking, including billing, auditing, and daily shipping summaries.

The way UPS sees it, the more data it can collect about every package, the more information it can provide to the customer. UPS OnLine, for example, will automatically notify customers about delayed shipments, says Ken Lacy, VP of information services for UPS in Atlanta. It will also serve as the foundation for services such as customer-to-UPS electronic mail.

Managing a complex web of customers and their shipments is an equally big challenge for the rail industry. Union Pacific Corp., long considered an IT leader with its centralized dispatch ing system and computer-equipped locomotives, is moving to a client-server architecture to give its employees easier access to information.

Union Pacific's Omaha-based rail business has rolled out more than 8,000 Windows-based PCs and nearly 500 Unix servers linked through LANs. "The reliability is approaching that of our mainframe," says CIO Joyce Wrenn, VP of IT. "Client-server has allowed us to do things with greater flexibility" than using 3270 terminals connected to a mainframe.

Union Pacific is also working on ways to give employees easier access to customer and business information. The company is installing Lotus Notes in multiple departments, with 4,000 users now connected. The finance department, for example, keeps data on daily and monthly revenue in a Notes database accessible to other departments. The marketing department keeps customer and shipment information in a Notes database field employees can tap into.

Union Pacific has also set up a Notes database to track activities relating to its planned merger with Southern Pacific. "Notes is essential to giving our people the ability to get at information in real time," says Wrenn. "It's much faster than using the phone, fax, or paper, and accuracy has improved."

Also using IT to manage its rail operations is Burlington Northern Railroad in Fort Worth, Texas. An average day at Burlington involves 500 trains across 22,000 miles of track in 25 states and two Canadian provinces.

To make life easier for dispatchers and more efficient for customers, Burlington opened a network operations center in March that brings all rail management activities under one roof. The 45,000-square-foot facility, which CIO Charles Feld says resembles the Star Trek ship Enterprise, consolidates several distributed sites that were responsible for coordinating rail activities.

The center houses a network of IBM mainframes, Unix servers, and OS/2-based workstations, and displays the entire network on large screens. From one of 125 workstations, dispatchers e valuate train schedules, assign locomotive power, review train performance, and locate bottlenecks. "We can look at the entire rail as one unified network," says Feld. That makes it easier for customers who depend on the rail system to move products to know exactly where their freight is and when it will reach its destination.

Air carriers face a similar challenge, except that their "freight" is people. The US-Air Group allocates a daily inventory of 12 million seats. To keep pace with daily fare changes, promotions for frequent travelers, a mix of fare types, and other variables, USAir is constantly tweaking its Excalibur revenue management system. The client-server system helps the airline forecast demand for seats and the value of fares to determine how many seats to sell at every fare level, says Rocky Wiggins, director of inventory management for the Arlington, Va., airline.

Excalibur, running on a Sequent parallel processor, incorporates a neural network that uses flight origin, destination, ti me of day, and other data to forecast seat demand. Every night it reviews about 100,000 flights, sending data to the reservation system.

Wiggins says USAir has other initiatives under way to use more information about passengers to improve seat allocation. For example, frequent flyers can get certain seats or fare levels before other passengers. This is an important trend in the airline industry, says Andersen's Rein. "There is a big movement toward capturing and utilizing customer information," Rein notes. "If [reservation agents] had information on how many times you've flown or how much money you've spent with the airline integrated in the reservation system, the agents could make better decisions on which seats to sell."

The next big trend for the airline industry, Rein says, is ticketless travel. Many airlines are testing the concept, which allows travelers to book a flight, get a reservation confirmation number, and show up at the airport with only that number.

"The rationale behind it is c ost reduction," says Rein. "They are recreating processes to eliminate a valueless [piece of paper] in order to create a more organized flow of data."

Today, airlines collect tickets from passengers, then ship them off to a clearinghouse for processing. Data is collected to make payments to travel agents. From there, the tickets may go to another location for frequent-flyer processing. "With ticketless travel," says Rein, "you can take the information about the customer and format it in ways that it can be passed around more efficiently."

There are still hurdles, such as how travelers can check bags at curbside without showing a ticket. Nevertheless, ticketless travel could help airlines--many of which are struggling financially--make big cuts in ticket distribution and printing costs. "Airlines are financially benefitting from ticketless travel," Rein says, "and that's helping them create a competitive advantage."

(To view the Transportation chart in PDF format click here)

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