Digital rail freight transformation in North America

The North American rail freight industry is undergoing a major digital transformation, with data, connectivity, and real‑time visibility redefining how rail integrates into the wider supply chain. As operators push toward smarter, more automated networks, digital platforms and shared intelligence are becoming essential to improving efficiency, safety, and customer service.

In a recent discussion on the future of digital rail freight, Adriene Bailey (Oliver Wyman), Michael McClellan (Norfolk Southern and RailPulse), and Daniel MacGregor (Nexxiot) explored how these technologies are reshaping the sector. They highlighted how sensor‑driven insights, interoperable data standards, and cross‑industry collaboration are unlocking new value for shippers and railroads — and laying the groundwork for a more connected, resilient, and competitive rail ecosystem.

Key discussion points include:

• How digital rail technologies can modernize the industry and empower railroaders
• Turning raw data into actionable value
• How RailPulse fosters collaboration and why the coalition is critical for the sector
• Aligning rail with the wider supply chain to drive economic growth

Originally published in August 2022.

Daniel MacGregor

Hello everybody. A massive welcome to everyone attending today's webinar in conjunction with Progressive Railroading. It’s Daniel McGregor here from Nexxiot, and we’re going to talk today a bit about rail freight and specifically digitization and how it’s transforming everything we know about the industry.

Now, before I introduce my guests, I’d like to just say a few words of introduction. The world is changing, and supply-chain stakeholders have higher expectations around visibility and accountability. They want guaranteed delivery on time and in full, and they require dynamically accurate estimated times of arrival. The world is changing, and everyone is slowly digitizing or getting into the topic of digitalization. Shippers and cargo owners, manufacturers and retailers—they all require digital cargo services to improve their business processes and planning.

Specifically looking at rail: rail-car fleet operators, rip-and-repair workshops, and transport hubs all require accurate data to manage operations, manage maintenance, and to maximize product life-cycle management. All of this needs better data.

I’m Daniel McGregor. I’m the co-founder of Nexxiot. We’re digitizing the global supply chain; that means hardware, software, and analytics. We’re interacting with the physical world, so we need physical hardware devices deployed there to provide the data. We’re essentially a pioneer in this space—we founded the company in 2015. Making hardware is very hard; that’s why not many people do it, but it’s an enabler to gather the data.

Today, with our guests whom I’ll introduce in just a second, I hope we can unpack a little where we are today and what this means for the industry: where sensors create data, what we do with it, how we create digital services, and how we transform the industry we love and care about.

We’re very fortunate to have some respected experts. I hope I’m not going to embarrass you both, but I’m going to sing your praises for a second because we have people who are extremely dedicated to improving this world—not just in rail but with a bigger picture and a bigger vision for driving ESG targets and bringing improvements across multiple metrics.

We’re joined today by Mike McClellan. Mike is senior vice president and chief strategy officer at Norfolk Southern. He’s been a railroader for several years and is a stalwart of the industry, always looking to the next innovation. Mike also has a double hat: not only is he an established railroader, but he’s also leading the Railpulse initiative—the group of operators driving digitalization across North American rail.

We’re also joined by Adrian Bailey. I met Adrian several years ago in New York at a RailTrends event, looking at the future of rail. Adrian impressed me because she can drill into the details while also taking a 30,000-foot view, understanding rail in the context of the wider supply chain. She combines strategic vision with deep rail expertise and freight-market knowledge. Welcome, both of you.

I’d like to give you both a chance to say a few words about what you’ve been working on recently and what’s important to you in your roles. Bear in mind we have Mike, who’s focused on rail, and Adrian, who’s looking at the wider supply-chain benefits. Mike, a couple of words first—how’s your day going?

Michael McClellan

Day’s going great. It’s good to see everyone, and thanks to all the participants for joining; it looks like we have a good audience. Although I can’t see all of you, I’m head of strategy for Norfolk Southern. The great thing about being a railroad strategist is that, if you look it up in the dictionary, there is really no definition of it—so it’s a large sandbox, and we get to do a lot of interesting things.

Today I’m really here with my Railpulse hat on. As many of you may or may not know, I founded the initiative now known as Railpulse, which was intended to create an industry initiative to help accelerate the effective adoption of telematics on rail cars into the North American rail space—and quite frankly do it in a democratic (small d) way so it benefits the railroads, Class I’s, short lines, the shippers, and the car owners. We put together a great coalition; it’s been a particular passion of mine, and I’m proud to say it’s moving along pretty nicely.

Daniel

Thanks so much, Mike. Adriene, over to you.

Adriene Bailey

Sure—thanks, Dan. Great to be here with both of you and everybody who’s on the call. My name’s Adriene Bailey. I’m a partner with Oliver Wyman, a global consulting firm with a strong rail practice in passenger and freight across the globe. I lead the rail practice for North America. I spent my career at two Class I railroads and then moved into being a customer of the railroad, primarily in the intermodal space. I’m a passionate believer that rail is an incredibly important component of the future of freight. We are in a pivotal moment in the industry, and it’s important to move forward in the right way and make the right choices for the long-term health and success of the industry for many stakeholders.

Daniel

Thanks, Adriene. Quick word from me: this is the kind of hardware device that goes on rail cars; it gives a visual idea of what this is about. The hardware device is what takes data from the assets, and then we look at who needs that data and what we do to create value. Fundamentally, data is a source of value only when we create context and meaning from it. Today we’re bringing together different aspects of the discussion, so I won’t linger on introductions. I’d like to move into the first question and look at the past for a second. Mike, what’s been on offer in the past for railroad operators and fleet managers? It’s worked until now somehow—things travel by rail and arrive. The Class I railroads have provided the data—can you describe that legacy?

Michael 

The way data is collected from railroads now is a combination of things: manual input, AEI scanners (which are essentially RFID), and other types of CLM events. This is input not only by the Class Is but by the short lines as well. It does a good job of providing a mosaic of where cars are—whether they're moving or not. But, quite frankly, RFID technology is almost half a century old. The railroads adopted it in 1992.

I got interested in telematics because, for 18 years, I ran every business at Norfolk Southern except coal. It became very apparent that the quality of the data we were providing—let’s call it 80 or 85 in terms of accuracy, timeliness, or availability—wasn’t getting better, and there wasn’t a path for it to get better. Meanwhile, competitors—trucks primarily, but also barges and delivery trucks—were adopting telematics. While we were providing locations of cars anywhere from every four hours to every four days, competitors were providing locations every five minutes. That’s the visibility the market expects, and railroads didn’t have an industry pathway to provide that type of visibility.

My belief is that the merchandise business in North America has been declining since 2006, and one key reason is that we have not been able to meet customer demands—especially visibility, ETA, and condition of the car. That’s where we’ve been, and that’s why the members of Railpulse are passionate and committed to making the transition to a telematics future.

Daniel

You mentioned RFID—interesting point. For RFID, you need a reader. Maybe to Adriene for a second: if we look at the wider supply chain, why has this taken so long? We’ve had mobile phones and GPS in vehicles for decades, yet millions of shipping containers and rail cars don’t have persistent tracking. Is it because of legacy systems, unclear use cases, or the many stakeholders?

Adriene 

Part of the issue is the many stakeholders. These assets pass between operating control, shipper control, and different modalities, so ownership is harder. Use cases are spread across stakeholders: how do you get the impetus for people to come together, decide on a solution that will work for everybody, and fund it across a broad group? If you’re a trucker, everything is in your house, and you can make a business case; if you’re a container provider inside a giant steamship-line network and the container moves through many handoffs, that becomes a barrier and slows adoption.

Daniel

That’s a good answer and leads to the next question. Nexiot was founded in 2015 and first targeted the maritime industry. Maritime shipping lines weren’t ready for this then, so you flipped to rail—non-powered assets that can’t send data on their own. When we look at the European market, trucks have won share in many places because they can guarantee on-time-in-full delivery and manage the first- and last-mile without the need to align with other modalities. Mike, how did Rail Pulse inspire collaboration? How did you get these diverse participants to agree on a common project?

Michael:

Think about the rail ecosystem in North America: 600 railroads, including the seven Class I's, over 1,200 unique rail-car owners, and over 10,000 shippers—some of whom are also car owners. The Class I railroads only own 17 percent of the North American fleet. They own TTX, which owns another 10 to 11 percent, but overall, the railroad industry owns about 25 percent of the fleet. The problem isn’t technical—as companies like Nexiot perfect the technology, it’s a business problem: how do you get 600 railroads, 1,200 car owners, and 10,000 shippers, all with sometimes conflicting interests, to agree?

I started this in 2019 and met with over 80 participants in the rail ecosystem to get opinions. Some said, “If this takes off, we want to be part of it.” Thus, the five founders became Norfolk Southern as the founding member and then GATX, Genesee and Wyoming, Watco, and Trinity. The core belief we shared was that this was critical to allowing railroads to gain share in the merchandise space. By putting guardrails around what we could and could not do, we set the table and began talking to other participants. We’ve talked to all the Class I railroads and almost all the major leasing companies and shippers. Everyone who owns a railcar is going to be invited to be a subscriber or participant in some way. Rail Pulse is intended to be a very democratic industry initiative.

Since then, Union Pacific joined as an owner, and Greenbrier has joined as an owner. The seven of us now own over 30 percent of the non-coal, non-intermodal North American rail-car fleet, so the group has standing and momentum.

Daniel

Congratulations—that’s an incredible achievement. Getting culture and legacy interests aligned is very difficult. We’ve seen the supply chain come under intense scrutiny, with words like agility, flexibility, and elasticity becoming important. We also saw striking images of thieves from rail cars a few months ago. Do you think people have changed their thinking and feel more vulnerable, therefore needing more data and reliability? Mike, have you noticed that?

Michael

That was stunning to many who aren’t used to rail. This isn’t going to solve theft fully, but it will help create systems and processes to identify, control, and ultimately reduce it. One of the sensors we’ll require as a Railpulse subscriber is doors-open/closed. If we get an alert that a door is open outside the origin or destination zip code it’s supposed to be opened in, that’s an alert: this door is open in a place it should not be. Railroads operate over vast spaces in North America, but this helps pinpoint problem areas and strengthen or harden those points with alerts.

Daniel

That’s an interesting use case. If we keep cars flowing and they don’t stop in high-risk zones, theft is less likely because it’s harder to remove things from a moving car. There are lots of possibilities to add sensors.

Adriene

We’re at a point of great difficulty getting system velocity where it needs to be. Reasons include labor shortages—warehouses full and backed up, equipment and crews constrained—and all these pieces interplay in the network. If the system is congested and we can’t flush and get back to velocity, we’re in an untenable position. The alternative—a world without rail—would impose a huge economic burden, including congestion costs, road construction, and higher energy consumption. We must create an environment where rail takes more market share from highways.

We have never been in a moment where it’s more important for railroads to become scheduled and deterministic. People who work for railroads need predictability in their lives and work. Shippers are pushing for “on time and in full”; on time means reliable, not necessarily fast. We need railroad operations to reach unprecedented levels of reliability. Data—not just on cars but on crews, yards, and line-of-road systems—is mission-critical, so the railroads have the tools to run a scheduled, reliable network.

Daniel

Great point. Rail is more efficient in emissions—often said to be five to seven times more efficient—so sustainability is a big driver. Where’s the innovation—hardware, platform, services, or all of it?

Michael

There are multiple hardware providers; Nexxiot is prominent, but others exist as well. Railpulse will set standards for cars, and car owners decide which hardware and communications they’ll use. Railpulse will set data standards and convert incoming railway data into a common language, enriching it with waybill, CLM, AEI, Umler data, etc. That creates a very enriched data set.

For car owners, that enriched data comes back to them for free, though there are licensing arrangements for specific uses. Some of the data will go back to the railroads, so we can use telematics data to ultimately replace AEI/CLM and improve operations. There are lots of innovation opportunities: hardware competition, data-use services, and analytics. Architecturally, there are three levels: hardware to get data off cars, the translation/enrichment phase, and the use cases. Right now railroad data is a garden hose; this will become a 24-inch pipe. Today, you might get 75 to 150 events on a movement; with telematics, you get thousands of events and alerts per railcar. Winners will be those who build exception-management operating environments.

This won’t solve labor shortages—but it will help railroads improve service, ETAs, and equipment velocity. Our foundational passion with Rail Pulse is to make rail more competitive and capture more share for the benefits that it brings: ESG, supply-chain cost reductions, and more.

Adrian: I’d add two important outcomes. First, Mike and the Rail Pulse team convinced participants to let go of “if I do it myself, I’ll get special returns” and instead create standards to unlock large benefits. Second, they created an organization of the industry for the industry, so data remains in participants’ hands—not an environment where a vendor collects data and sells it back. That’s visionary and a huge undertaking.

This does help with labor in a way: if you can deploy experts to the right places with the right information and tools, people are used to better and get a better work experience. Railroaders are dedicated and hardy; giving them better information improves both performance and job satisfaction. It also attracts new talent because the space becomes data-driven and innovative.

Daniel

We hear “data is the new oil,” but I like to ask: if data is the new oil, why is nobody refining it? How do we get value from raw sensor data? Is the platform the key? How do we take the next step?

Michael

This is a 20-year data journey. The 24-inch pipe will bring a flood of data—so you must do something with it. We’re starting with non-safety-critical components: location (GPS), commercial condition (empty/loaded), doors open/closed, and car health metrics. As we prove we can deliver this data with high accuracy and timeliness, safety-critical sensors will follow: handbrake status, “car-in-motion with handbrake applied” alerts, hot-box detections on axles, etc.

Imagine hot-box detectors every 75 miles versus having axle-temperature data in real time. Instead of waiting for an alert far down the line, you can detect a temperature increase immediately and remove the car somewhere convenient to prevent damage. Over time, we’ll drive safety-critical devices onto cars, improving safety and fluidity with real-time condition data.

Adriene

Another key is innovation enablement: Railpulse opens the data so that many parties with ideas can build value. Value creation isn’t about who controls the data; it’s about who has the best ideas and brings them to market for all to use—attracting talent who can do interesting data science and product work in rail.

Daniel

Quick audience question from James: Will your transmission devices self-report on the physical condition of the car—broken knuckle, air hose, derailment?

Michael

That’s a safety-critical question. It’s not our initial focus, but it’s a critical eventual outcome. Once we demonstrate we can deliver data 99.9 percent of the time within actionable timeframes, those sensors will be pursued. Accelerometers will be a feature and can report many things, including derailments in some cases. The shock profile—magnitude, duration, pattern, location, and time—helps determine cause. There’s the ability both to determine cause and to accelerate response.

Daniel

That accelerates claims and accountability. Adriene, does this connect to insurance and finance?

Adriene

Absolutely. More objective information improves outcomes for business partners. Whether through behavior modification or allocating true cost, objective data reduces finger-pointing and clarifies accountability. For example, if a shipper opens a boxcar and pallets are piled on one side, accelerometer data may show an overspeed event between origin and destination. That informs claims, training, and maintenance priorities.

Michael

Exactly. An overspeed or impact event tells us where to inspect knuckles and draft gear. It becomes a coaching and training moment about coupling speeds and yard practices, and it helps direct maintenance resources.

Daniel

On new business models: could we pay participants according to the value they contribute? How far away is that?

Adriene

Eliminating transaction friction by sharing objective facts is huge. There’s value for every participant: shippers get more predictability and can ship more by rail, reducing costs. Predictability gives confidence and helps multimodal alignment.

Daniel

Nexxiot has now closed a deal with Knorr-Bremse (New York Air Brake) to develop digital rail brakes—that’s an example of enabling future innovation. We’re on this journey together. Any closing thoughts?

Michael

Two quick things: I’m always available to talk about Railpulse; there are many nuances we didn’t cover. Also, people ask why cars rather than locomotives—locomotives get a lot of data, but rail cars are detached from locomotives about 75 percent of the time in North America. The real productivity opportunity is in the cars.

Adriene

This has been a great discussion. It’s a long journey, and it's incumbent on all of us to make the system better. We rely on the supply chain for livelihoods and economic outcomes, so improving performance has huge upside. I look forward to the future because there are opportunities to see performance we’ve never yet seen in rail.

Daniel

Thank you both. This initiative benefits all participants, particularly railroaders. This isn’t about automation replacing railroaders—we value railroad domain knowledge and experience. This is about putting the right tools in the hands of the people who care about the industry to drive improvements across many metrics.

So I’d like to wrap it up. Thank you so much, Adriene — always a pleasure. Michael, thank you for joining us; I know you’re super busy, and I wish you all the best with the next steps of bringing these different parties together and driving this forward. Thank you so much to everyone for joining, and thanks for your time. We look forward to seeing you soon. Thank you—thanks, everyone.

This transcript has been edited for clarity. 

The North American rail freight industry is undergoing a major digital transformation, with data, connectivity, and real‑time visibility redefining how rail integrates into the wider supply chain. As operators push toward smarter, more automated networks, digital platforms and shared intelligence are becoming essential to improving efficiency, safety, and customer service.

In a recent discussion on the future of digital rail freight, Adriene Bailey (Oliver Wyman), Michael McClellan (Norfolk Southern and RailPulse), and Daniel MacGregor (Nexxiot) explored how these technologies are reshaping the sector. They highlighted how sensor‑driven insights, interoperable data standards, and cross‑industry collaboration are unlocking new value for shippers and railroads — and laying the groundwork for a more connected, resilient, and competitive rail ecosystem.

Key discussion points include:

• How digital rail technologies can modernize the industry and empower railroaders
• Turning raw data into actionable value
• How RailPulse fosters collaboration and why the coalition is critical for the sector
• Aligning rail with the wider supply chain to drive economic growth

Originally published in August 2022.

Daniel MacGregor

Hello everybody. A massive welcome to everyone attending today's webinar in conjunction with Progressive Railroading. It’s Daniel McGregor here from Nexxiot, and we’re going to talk today a bit about rail freight and specifically digitization and how it’s transforming everything we know about the industry.

Now, before I introduce my guests, I’d like to just say a few words of introduction. The world is changing, and supply-chain stakeholders have higher expectations around visibility and accountability. They want guaranteed delivery on time and in full, and they require dynamically accurate estimated times of arrival. The world is changing, and everyone is slowly digitizing or getting into the topic of digitalization. Shippers and cargo owners, manufacturers and retailers—they all require digital cargo services to improve their business processes and planning.

Specifically looking at rail: rail-car fleet operators, rip-and-repair workshops, and transport hubs all require accurate data to manage operations, manage maintenance, and to maximize product life-cycle management. All of this needs better data.

I’m Daniel McGregor. I’m the co-founder of Nexxiot. We’re digitizing the global supply chain; that means hardware, software, and analytics. We’re interacting with the physical world, so we need physical hardware devices deployed there to provide the data. We’re essentially a pioneer in this space—we founded the company in 2015. Making hardware is very hard; that’s why not many people do it, but it’s an enabler to gather the data.

Today, with our guests whom I’ll introduce in just a second, I hope we can unpack a little where we are today and what this means for the industry: where sensors create data, what we do with it, how we create digital services, and how we transform the industry we love and care about.

We’re very fortunate to have some respected experts. I hope I’m not going to embarrass you both, but I’m going to sing your praises for a second because we have people who are extremely dedicated to improving this world—not just in rail but with a bigger picture and a bigger vision for driving ESG targets and bringing improvements across multiple metrics.

We’re joined today by Mike McClellan. Mike is senior vice president and chief strategy officer at Norfolk Southern. He’s been a railroader for several years and is a stalwart of the industry, always looking to the next innovation. Mike also has a double hat: not only is he an established railroader, but he’s also leading the Railpulse initiative—the group of operators driving digitalization across North American rail.

We’re also joined by Adrian Bailey. I met Adrian several years ago in New York at a RailTrends event, looking at the future of rail. Adrian impressed me because she can drill into the details while also taking a 30,000-foot view, understanding rail in the context of the wider supply chain. She combines strategic vision with deep rail expertise and freight-market knowledge. Welcome, both of you.

I’d like to give you both a chance to say a few words about what you’ve been working on recently and what’s important to you in your roles. Bear in mind we have Mike, who’s focused on rail, and Adrian, who’s looking at the wider supply-chain benefits. Mike, a couple of words first—how’s your day going?

Michael McClellan

Day’s going great. It’s good to see everyone, and thanks to all the participants for joining; it looks like we have a good audience. Although I can’t see all of you, I’m head of strategy for Norfolk Southern. The great thing about being a railroad strategist is that, if you look it up in the dictionary, there is really no definition of it—so it’s a large sandbox, and we get to do a lot of interesting things.

Today I’m really here with my Railpulse hat on. As many of you may or may not know, I founded the initiative now known as Railpulse, which was intended to create an industry initiative to help accelerate the effective adoption of telematics on rail cars into the North American rail space—and quite frankly do it in a democratic (small d) way so it benefits the railroads, Class I’s, short lines, the shippers, and the car owners. We put together a great coalition; it’s been a particular passion of mine, and I’m proud to say it’s moving along pretty nicely.

Daniel

Thanks so much, Mike. Adriene, over to you.

Adriene Bailey

Sure—thanks, Dan. Great to be here with both of you and everybody who’s on the call. My name’s Adriene Bailey. I’m a partner with Oliver Wyman, a global consulting firm with a strong rail practice in passenger and freight across the globe. I lead the rail practice for North America. I spent my career at two Class I railroads and then moved into being a customer of the railroad, primarily in the intermodal space. I’m a passionate believer that rail is an incredibly important component of the future of freight. We are in a pivotal moment in the industry, and it’s important to move forward in the right way and make the right choices for the long-term health and success of the industry for many stakeholders.

Daniel

Thanks, Adriene. Quick word from me: this is the kind of hardware device that goes on rail cars; it gives a visual idea of what this is about. The hardware device is what takes data from the assets, and then we look at who needs that data and what we do to create value. Fundamentally, data is a source of value only when we create context and meaning from it. Today we’re bringing together different aspects of the discussion, so I won’t linger on introductions. I’d like to move into the first question and look at the past for a second. Mike, what’s been on offer in the past for railroad operators and fleet managers? It’s worked until now somehow—things travel by rail and arrive. The Class I railroads have provided the data—can you describe that legacy?

Michael 

The way data is collected from railroads now is a combination of things: manual input, AEI scanners (which are essentially RFID), and other types of CLM events. This is input not only by the Class Is but by the short lines as well. It does a good job of providing a mosaic of where cars are—whether they're moving or not. But, quite frankly, RFID technology is almost half a century old. The railroads adopted it in 1992.

I got interested in telematics because, for 18 years, I ran every business at Norfolk Southern except coal. It became very apparent that the quality of the data we were providing—let’s call it 80 or 85 in terms of accuracy, timeliness, or availability—wasn’t getting better, and there wasn’t a path for it to get better. Meanwhile, competitors—trucks primarily, but also barges and delivery trucks—were adopting telematics. While we were providing locations of cars anywhere from every four hours to every four days, competitors were providing locations every five minutes. That’s the visibility the market expects, and railroads didn’t have an industry pathway to provide that type of visibility.

My belief is that the merchandise business in North America has been declining since 2006, and one key reason is that we have not been able to meet customer demands—especially visibility, ETA, and condition of the car. That’s where we’ve been, and that’s why the members of Railpulse are passionate and committed to making the transition to a telematics future.

Daniel

You mentioned RFID—interesting point. For RFID, you need a reader. Maybe to Adriene for a second: if we look at the wider supply chain, why has this taken so long? We’ve had mobile phones and GPS in vehicles for decades, yet millions of shipping containers and rail cars don’t have persistent tracking. Is it because of legacy systems, unclear use cases, or the many stakeholders?

Adriene 

Part of the issue is the many stakeholders. These assets pass between operating control, shipper control, and different modalities, so ownership is harder. Use cases are spread across stakeholders: how do you get the impetus for people to come together, decide on a solution that will work for everybody, and fund it across a broad group? If you’re a trucker, everything is in your house, and you can make a business case; if you’re a container provider inside a giant steamship-line network and the container moves through many handoffs, that becomes a barrier and slows adoption.

Daniel

That’s a good answer and leads to the next question. Nexiot was founded in 2015 and first targeted the maritime industry. Maritime shipping lines weren’t ready for this then, so you flipped to rail—non-powered assets that can’t send data on their own. When we look at the European market, trucks have won share in many places because they can guarantee on-time-in-full delivery and manage the first- and last-mile without the need to align with other modalities. Mike, how did Rail Pulse inspire collaboration? How did you get these diverse participants to agree on a common project?

Michael:

Think about the rail ecosystem in North America: 600 railroads, including the seven Class I's, over 1,200 unique rail-car owners, and over 10,000 shippers—some of whom are also car owners. The Class I railroads only own 17 percent of the North American fleet. They own TTX, which owns another 10 to 11 percent, but overall, the railroad industry owns about 25 percent of the fleet. The problem isn’t technical—as companies like Nexiot perfect the technology, it’s a business problem: how do you get 600 railroads, 1,200 car owners, and 10,000 shippers, all with sometimes conflicting interests, to agree?

I started this in 2019 and met with over 80 participants in the rail ecosystem to get opinions. Some said, “If this takes off, we want to be part of it.” Thus, the five founders became Norfolk Southern as the founding member and then GATX, Genesee and Wyoming, Watco, and Trinity. The core belief we shared was that this was critical to allowing railroads to gain share in the merchandise space. By putting guardrails around what we could and could not do, we set the table and began talking to other participants. We’ve talked to all the Class I railroads and almost all the major leasing companies and shippers. Everyone who owns a railcar is going to be invited to be a subscriber or participant in some way. Rail Pulse is intended to be a very democratic industry initiative.

Since then, Union Pacific joined as an owner, and Greenbrier has joined as an owner. The seven of us now own over 30 percent of the non-coal, non-intermodal North American rail-car fleet, so the group has standing and momentum.

Daniel

Congratulations—that’s an incredible achievement. Getting culture and legacy interests aligned is very difficult. We’ve seen the supply chain come under intense scrutiny, with words like agility, flexibility, and elasticity becoming important. We also saw striking images of thieves from rail cars a few months ago. Do you think people have changed their thinking and feel more vulnerable, therefore needing more data and reliability? Mike, have you noticed that?

Michael

That was stunning to many who aren’t used to rail. This isn’t going to solve theft fully, but it will help create systems and processes to identify, control, and ultimately reduce it. One of the sensors we’ll require as a Railpulse subscriber is doors-open/closed. If we get an alert that a door is open outside the origin or destination zip code it’s supposed to be opened in, that’s an alert: this door is open in a place it should not be. Railroads operate over vast spaces in North America, but this helps pinpoint problem areas and strengthen or harden those points with alerts.

Daniel

That’s an interesting use case. If we keep cars flowing and they don’t stop in high-risk zones, theft is less likely because it’s harder to remove things from a moving car. There are lots of possibilities to add sensors.

Adriene

We’re at a point of great difficulty getting system velocity where it needs to be. Reasons include labor shortages—warehouses full and backed up, equipment and crews constrained—and all these pieces interplay in the network. If the system is congested and we can’t flush and get back to velocity, we’re in an untenable position. The alternative—a world without rail—would impose a huge economic burden, including congestion costs, road construction, and higher energy consumption. We must create an environment where rail takes more market share from highways.

We have never been in a moment where it’s more important for railroads to become scheduled and deterministic. People who work for railroads need predictability in their lives and work. Shippers are pushing for “on time and in full”; on time means reliable, not necessarily fast. We need railroad operations to reach unprecedented levels of reliability. Data—not just on cars but on crews, yards, and line-of-road systems—is mission-critical, so the railroads have the tools to run a scheduled, reliable network.

Daniel

Great point. Rail is more efficient in emissions—often said to be five to seven times more efficient—so sustainability is a big driver. Where’s the innovation—hardware, platform, services, or all of it?

Michael

There are multiple hardware providers; Nexxiot is prominent, but others exist as well. Railpulse will set standards for cars, and car owners decide which hardware and communications they’ll use. Railpulse will set data standards and convert incoming railway data into a common language, enriching it with waybill, CLM, AEI, Umler data, etc. That creates a very enriched data set.

For car owners, that enriched data comes back to them for free, though there are licensing arrangements for specific uses. Some of the data will go back to the railroads, so we can use telematics data to ultimately replace AEI/CLM and improve operations. There are lots of innovation opportunities: hardware competition, data-use services, and analytics. Architecturally, there are three levels: hardware to get data off cars, the translation/enrichment phase, and the use cases. Right now railroad data is a garden hose; this will become a 24-inch pipe. Today, you might get 75 to 150 events on a movement; with telematics, you get thousands of events and alerts per railcar. Winners will be those who build exception-management operating environments.

This won’t solve labor shortages—but it will help railroads improve service, ETAs, and equipment velocity. Our foundational passion with Rail Pulse is to make rail more competitive and capture more share for the benefits that it brings: ESG, supply-chain cost reductions, and more.

Adrian: I’d add two important outcomes. First, Mike and the Rail Pulse team convinced participants to let go of “if I do it myself, I’ll get special returns” and instead create standards to unlock large benefits. Second, they created an organization of the industry for the industry, so data remains in participants’ hands—not an environment where a vendor collects data and sells it back. That’s visionary and a huge undertaking.

This does help with labor in a way: if you can deploy experts to the right places with the right information and tools, people are used to better and get a better work experience. Railroaders are dedicated and hardy; giving them better information improves both performance and job satisfaction. It also attracts new talent because the space becomes data-driven and innovative.

Daniel

We hear “data is the new oil,” but I like to ask: if data is the new oil, why is nobody refining it? How do we get value from raw sensor data? Is the platform the key? How do we take the next step?

Michael

This is a 20-year data journey. The 24-inch pipe will bring a flood of data—so you must do something with it. We’re starting with non-safety-critical components: location (GPS), commercial condition (empty/loaded), doors open/closed, and car health metrics. As we prove we can deliver this data with high accuracy and timeliness, safety-critical sensors will follow: handbrake status, “car-in-motion with handbrake applied” alerts, hot-box detections on axles, etc.

Imagine hot-box detectors every 75 miles versus having axle-temperature data in real time. Instead of waiting for an alert far down the line, you can detect a temperature increase immediately and remove the car somewhere convenient to prevent damage. Over time, we’ll drive safety-critical devices onto cars, improving safety and fluidity with real-time condition data.

Adriene

Another key is innovation enablement: Railpulse opens the data so that many parties with ideas can build value. Value creation isn’t about who controls the data; it’s about who has the best ideas and brings them to market for all to use—attracting talent who can do interesting data science and product work in rail.

Daniel

Quick audience question from James: Will your transmission devices self-report on the physical condition of the car—broken knuckle, air hose, derailment?

Michael

That’s a safety-critical question. It’s not our initial focus, but it’s a critical eventual outcome. Once we demonstrate we can deliver data 99.9 percent of the time within actionable timeframes, those sensors will be pursued. Accelerometers will be a feature and can report many things, including derailments in some cases. The shock profile—magnitude, duration, pattern, location, and time—helps determine cause. There’s the ability both to determine cause and to accelerate response.

Daniel

That accelerates claims and accountability. Adriene, does this connect to insurance and finance?

Adriene

Absolutely. More objective information improves outcomes for business partners. Whether through behavior modification or allocating true cost, objective data reduces finger-pointing and clarifies accountability. For example, if a shipper opens a boxcar and pallets are piled on one side, accelerometer data may show an overspeed event between origin and destination. That informs claims, training, and maintenance priorities.

Michael

Exactly. An overspeed or impact event tells us where to inspect knuckles and draft gear. It becomes a coaching and training moment about coupling speeds and yard practices, and it helps direct maintenance resources.

Daniel

On new business models: could we pay participants according to the value they contribute? How far away is that?

Adriene

Eliminating transaction friction by sharing objective facts is huge. There’s value for every participant: shippers get more predictability and can ship more by rail, reducing costs. Predictability gives confidence and helps multimodal alignment.

Daniel

Nexxiot has now closed a deal with Knorr-Bremse (New York Air Brake) to develop digital rail brakes—that’s an example of enabling future innovation. We’re on this journey together. Any closing thoughts?

Michael

Two quick things: I’m always available to talk about Railpulse; there are many nuances we didn’t cover. Also, people ask why cars rather than locomotives—locomotives get a lot of data, but rail cars are detached from locomotives about 75 percent of the time in North America. The real productivity opportunity is in the cars.

Adriene

This has been a great discussion. It’s a long journey, and it's incumbent on all of us to make the system better. We rely on the supply chain for livelihoods and economic outcomes, so improving performance has huge upside. I look forward to the future because there are opportunities to see performance we’ve never yet seen in rail.

Daniel

Thank you both. This initiative benefits all participants, particularly railroaders. This isn’t about automation replacing railroaders—we value railroad domain knowledge and experience. This is about putting the right tools in the hands of the people who care about the industry to drive improvements across many metrics.

So I’d like to wrap it up. Thank you so much, Adriene — always a pleasure. Michael, thank you for joining us; I know you’re super busy, and I wish you all the best with the next steps of bringing these different parties together and driving this forward. Thank you so much to everyone for joining, and thanks for your time. We look forward to seeing you soon. Thank you—thanks, everyone.

This transcript has been edited for clarity.