The Future of Car Hire
Mike Partica
November 13th, 2008
Orlando, Florida
Agenda
•Car Hire Fundamentals
•Opportunities for Change
•Important Points with Change
•CN View and Process Tree
•Shaping the Future
Basic Car Hire Fundamentals
•Three purposes of Car Hire and Car Hire Rules
Car Hire Rules
1. Compensate
Equipment Owner
3. Ensure fair
Distribution of
work required.
2. Encourage Asset
Utilization
All current and future car hire rules should respect
these basic fundamentals.
Opportunities for Change
Car Hire Rules
1. Compensate
Equipment Owner
3. Ensure fair
Distribution of
work required.
2. Encourage Asset
Utilization
Change methodologies for compensating equipment
owner.
Example: Move to/from mileage compensation
methodology.
Opportunities for Change
Car Hire Rules
1. Compensate
Equipment Owner
3. Ensure fair
Distribution of
work required.
2. Encourage Asset
Utilization
Develop new processes that would improve asset
utilization.
Example: Change the process to highlight situations
of poor asset utilization to allow for improvement.
Opportunities for Change
Car Hire Rules
1. Compensate
Equipment Owner
3. Ensure fair
Distribution of
work required.
2. Encourage Asset
Utilization
Each and everyday, Challenge the work required.
Example: Eliminate a manual process through the use
of automation.
Opportunities for Change
•Take a step back and look for opportunities.
•The right opportunities can be anywhere in the process.
•Changes may be required in more than 1 area.
•Keep in mind that Car Hire is a downstream process from other industry
processes.
•A key change may be in another area.
•Don’t limit yourself to processes in Car Accounting to improve the
Car Accounting process.
Challenge the status quo. Ask questions.
Towers of Hanoi
1. Move blocks from the peg on the left to the peg on the right.
2. You may not move more than 1 block at a time.
3. You may not place a larger block on a smaller block.
Towers of Hanoi
15 moves later…
Towers of Hanoi
1. Move blocks from the peg on the left to the peg on the right.
2. You may not move more than 1 block at a time.
3. You may not place a larger block on a smaller block.
Towers of Hanoi
•
Known as a recursive problem.
 The solution to move 1 block to another tower requires the
solution to move a smaller tower to another tower.
•
Solution requires 2N-1 moves.
 4 blocks = 15 moves
 5 blocks = 31 moves
 30 Blocks = 1,073,741,823 moves
•
Extremely important to know why you are moving each block.
•
You don’t want to be guessing or trying to memorize.
Each additional block is a added level of complexity. Similar to
today’s business processes.
Towers of Hanoi
Let’s try the game again…
Towers of Hanoi
1. Move blocks from the peg on the left to the peg on the right.
2. You may move more than 1 block at a time.
3. You may place a larger block on a smaller block.
Towers of Hanoi
1 move later…
Towers of Hanoi
1. Move blocks from the peg on the left to the peg on the right.
2. You may move more than 1 block at a time.
3. You may place a larger block on a smaller block.
Towers of Hanoi
IMPORTANT:
• Be on the lookout for rule changes!
• They can have a significant impact to what
you do (or need to do)
1. Move blocks from the peg on the left to the peg on the right.
2. You may move more than 1 block at a time.
3. You may place a larger block on a smaller block.
Understanding the past is important…
•The Car Accounting process of pay and wait dates back to the late 1800’s
when Railroads started interchanging cars in order to avoid trans-loading
merchandise.
•1st draft of Per diem rules were accepted around 1887.
•Computer systems did not exist to communicate to an owner when one
foreign railroad delivered their cars to another foreign railroad.
•Over the years many complex and integrated systems have been written
with millions of lines of code to manage the Car Accounting aspect of
railroading.
The key to the successfully changing Car Accounting today is to
find a way to precisely cut into the process where there would be
minimal car hire and systems impact.
Car Accounting – A deeply embedded Railroad process.
Marketing
Car
Management
Costing
Mechanical
Shortlines
Car
Accounting
Field Reporting
Demurrage
Intermodal
Today’s Challenges:
•
•
•
•
•
Data and agreement interpretations
System maintenance, design and
tuning.
Data Integrity Issues
Exceptions
Foreign Carrier and Owner Actions
Potential Benefits:
•
•
•
Improved Asset
Utilization
Reduced Costs
Improved Service
CN’s Simplified Car Accounting Process Tree
•The basic Car Accounting process is
made up of several branches.
•Each branch contains several subbranches for different areas or items:
•Payable
•Receivables
•Railcar, Intermodal Units
•Original Payment
•Adjustment Payments
•Original Reclaims
•Supplemental Reclaims
•Counter Reclaims
•Counter to Counter Reclaims
We need to look at the tree to cut costs and improve efficiency.
A CN View - Branch by Branch approach…
Implementing a centralized
time process would eliminate
all time claims.
Need to develop a process to
dispute interchanges to point
out operation problems.
Industry will eventually
adopt a centralized time
process.
Automating reclaims will
eliminate need for reclaim
validation. Specials will
never go away.
AAR Technical Advisory
group investigating possibility
of automating using an
existing AAR process.
Is it possible to link existing
switch bill process to the
TOL rule 5 at the industry
level?
Industry working on
implementing the
DDCTS system
Industry has implemented RCH
for Car Hire in September
A lot of opportunities exist within the Car Accounting tree.
Shaping the Future
Railroad
Proposal
•Don’t rely on others to fix
things.
EAMWC
•Make proposals, follow-up
and drive change.
•We all play a role in shaping
the future.
TAG
SOMC
Subscriber
Vote
Rule
Changed!
Key Contacts for Rule Change Proposals
Equipment Assets Management Working Committee (EAMWC)
Secretary:
Jim Pinson ([email protected])
919-651-5047
Chairperson:
Deby Murphy ([email protected])
402-544-1809
Conclusion
•Changing an old process is not easy
•Many pitfalls
•Must understand where we are and how we got here to help
map out where we want/need to go.
•Expecting significant change in the Car Accounting process
within the next 5 years
•Everybody should be involved in improving the current
process.
Questions?