Cost-based strategic review of carload freight operations, including profit improvement plan
Operational strategy: For a European state railway, Oliver Wyman conducted a cost-based strategic review of carload freight operations and developed a profit improvement plan for the business. We analyzed the railway’s current shared and dedicated cost structure by route and identified the primary factors controlling each cost element. Oliver Wyman used the results of this analysis to determine the optimum selection and configuration of freight business routes and, combined with an analysis of truck costs and price levels, to determine the conditions under which rail is competitive against road. We assessed the available means for reducing costs through improved management of train crews, maintenance, terminals, and overhead and to reduce the capital requirements of the business through better utilization of locomotives and railcars.