InformationWeek
Defining The Business Value Of Technology
May 10, 1999
Transportation:Signs Of Y2K Imbalance
Date change prompts early shipments, but most of travel industry appears ready to
By Bruce Caldwell
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ne of the most worrisome economic aspects of the year 2000--that the supply chain could be disrupted--is already being felt by freight carriers. A disruption is under way not because of actual system glitches, but because of fears of glitches. Cargo shipments that would normally have been scheduled for the first quarter of 2000 are being booked for the second half of this year, according to several transportation companies.The early bookings are signs of concern that shipments may be delayed, or even canceled, early next year. They also indicate the desire to stockpile parts in the event that year 2000 problems shut down overseas manufacturing operations.
"Eighty percent of our customers want to import now rather than take a chance early next year," says Rick Ginley, director of marketing and communications at APL Ltd., an Oakland, Calif., shipping company with more than 60 container ships. Similarly, Crowley Maritime Corp., one of the largest tug and barge operators in the world, is already booking orders for the fourth quarter, says Juanita Chaney, year 2000 communications manager at Crowley, also in Oakland. "People want to get their inventory in before the end of the year."
Most of the attention on the transportation industry is on the passenger air-travel segment and the Federal Aviation Administration. Y2K information about airports and overseas air-traffic control operations is still scarce, but recent tests indicate that airplanes, airline operations, the FAA, and travel-reservation systems will function normally on Jan. 1.
Reports from land and sea transport companies in the United States indicate good progress on Y2K projects as well. Matt Saikkonen, VP and CIO at Consolidated Freightways, says all of Consolidated's critical systems have been remediated, tested, and put back into production. "Everything looks like it will be ready," he says.
At Sabre Inc., the IT services organization that supports hundreds of airlines with its vast travel-reservation network, Y2K remediation was completed last year, and critical reservation and inventory systems have successfully begun managing transactions with dates in 2000, says Greg Webb, VP of corporate systems and enterprise projects. "That's increased my confidence level," he says. "I'm comfortable that we'll move into the new year with just some minor inconveniences."
InformationWeek Research's poll of 240 IT managers shows respondents in the transportation industry expressing a higher level of confidence, at 8.1 on a scale of 10, than respondents from other industries, which rated transportation at 7.6. The industry acknowledges that it may not have done as much as it could have disseminating information on Y2K projects. "Every major shipping line, trucker, and railroad has sent us letters explaining they have a plan and are moving ahead," says Crowley's Chaney, "but a lack of public information may contribute to the perception that transportation lags."
According to the industry's own responses to the InformationWeek survey, it does in fact lag behind others in terms of its custom applications, with only 91% assessed and 80% compliant. That's better than the health-care and telecommunications sectors, but worse than financial services, manufacturing, and even utilities.
For some, a lag is understandable. CSX Corp., for example, was on track to complete its Y2K project in June, but the acquisition of Conrail has pushed the completion date back to August, says Broughton Bracewell, director of the Y2K project at the multimodal carrier. CSX has invested 900,000 people-hours in its Y2K project, which Bracewell says will cost a total of $56 million. To date, it's 87% complete with remediation of its 50 million lines of Cobol code. Oracle and PeopleSoft implementations were accelerated to be completed before this year, he says, adding that CSX won't upgrade any systems this year.
CSX had an early taste of what Y2K problems could do. Its locomotives are scheduled for overhauls every three years. In January 1997, locomotives were called in for maintenance. As soon as the work was done, they were sent again because the scheduling system thought the next overhaul was slated long overdue for 1900, instead of 2000.
At Burlington Northern Santa Fe Corp., the merger of the two railroad companies accelerated Y2K compliance because Santa Fe had developed mainframe systems with Y2K compliance built in, says Kenneth Crane, recently named director of electronic commerce, with continued responsibility for business continuity and year 2000. The systems were a factor in the merger, he adds, and have since been used to support the merged organization.
"Public perception is probably the greatest threat we face," Crane says, adding that the company counsels customers not to wait until the fourth quarter to stockpile, since that's peak season for transportation companies. "If demand surges abnormally high at peak time, it could put too much strain on the transportation system."
All that demand could boost profits for transportation companies this year. But what about next year, if inventories are piled up and not used? Consolidated Freight's Saikkonen isn't worried. "If companies overstock, it could improve our business next year because they'd have to move excess goods out to move other goods in." he says. Looks like a win-win situation--at least for the transportation industry.
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