Healthy equipment is essential to the everyday operations of the freight industry, but maintaining equipment is expensive. In 2020, the Railinc Car Repair Billing Data Exchange processed around $1.4 billion in foreign, AAR-billed repairs. With foreign repairs often costing significantly more than repairs done by equipment owners, equipment owners need new methods to manage repair costs.
What contributes to foreign repairs?
Most equipment owners don’t find out that their equipment needed a repair until they receive a bill from a foreign road. With the current state of equipment health management, equipment owners usually have to wait for an alert to know that equipment needs attention. This means that there’s no way to know what the remaining useful life of components on equipment is.
When you don’t know when equipment will reach alert level, you’re likely to continue to route it as if it is healthy, unintentionally incurring foreign repair charges. The financial costs of not knowing the useful remaining life of a component are potentially significant. Take wheel repairs, for example. A large percentage of wheelset changeouts, one of the most expensive repairs, are done by a party other than the equipment owner.
Why are foreign repairs costly?
Repairs done by other railroads will be billed at AAR repair rates. Since AAR pricing includes labor rates, you might be paying more than it would cost for labor at your own shop or a contract repair shop. Additionally, these repairs may have higher material costs.
Due to the nature of the rail industry, railroad-owned shops don’t have time to stop and call equipment owners for input before embarking on repairs that fall within AAR interchange rules. Where you might have chosen a turned wheel, a railroad shop might go ahead and replace a defective wheelset with a new one. Circumstances vary, but in some cases, these major repairs done at AAR rates can be almost twice as expensive as repairs done by equipment owners.
The Future of Equipment Health: Predicting Component Failure
TransmetriQ Wheelset Intelligence estimates remaining miles of useful life for wheelsets. Understanding when, on average, components are changed out allows us to estimate component lifespans accurately, giving equipment owners new visibility into equipment health. To quantify the probability that the equipment owners will have a car in their possession prior to component failure, the TransmetriQ team also analyzes past equipment utilization.
In simpler terms, predictive component failure analytics will allow equipment owners to choose to repair equipment in a manner that balances getting the most mileage out of equipment without incurring foreign repairs. For example, if you know a wheelset is likely to reach an actionable alert level in 5,000 miles but could use that car for a shipment that’s 900 miles, you can use that car with the confidence that you’re unlikely to receive expensive foreign repair bills for that wheelset.
Ultimately, better component failure predictions will help reduce the likelihood of paying expensive AAR rates for foreign repairs. For many equipment owners, wheelset replacement costs make up about half of their maintenance spending. Whether you perform maintenance using your own shops and crews or partner with a contract shop or mobile repair units, moving a higher percentage of your wheelset changes under your control can result in significant savings on maintenance spending. In optimal circumstances, a car owner’s overall maintenance spending may be reduced by 20 to 25 percent.
Schedule a demo today to learn how Wheelset Intelligence puts control back in your hands.