Union Pacific Distribution Services (UPDS) Fills the Gap in Rail Services
Omaha, Nebraska USA
April 6, 2004
Richard Armstrong

Key Personnel:
Gary DiMasi, President
Greg Shimonek, Director – Business Development
Senior Managers
UPDS specializes in 3PL services that pick up where traditional rail services leave off. The services are in a series of niches often tied to its parent, Union Pacific Railroad. The combined results produce a very profitable 3PL with high employee productivity. Net revenue per employee at UPDS is $167,000. That’s $28,000 per employee better than powerhouse C.H. Robinson.

How does UPDS and its core group of senior managers get it done? Company size (133 employees), cohesiveness, communication and Midwestern work ethic are key components. Good working relationships with parent, Union Pacific Railroad and UP’s software subsidiary, Transentric, also help. But UPDS’s identification of key value-added niches has been essential.

The niches UPDS has chosen include door-to-door intermodal, door-to-door carload transloading, specialized truck brokerage and rail shipment management. Door-to-door intermodal is 49% of UPDS’ business and its largest segment.

The strategic mission of UPDS intermodal is to provide a direct UP connection to key customers like Ford and DaimlerChrysler. UPDS eliminates the need for an intermediary IMC. As a result, UP maintains higher brand identity of an integrated product. Following this strategy, UPDS handles over 140,000 containers per year using Pacer stack-trains for most of linehaul. UPDS has a competitive advantage to Mexico, eastbound from northern California and in Union Pacific corridors. UPDS’ service is good enough to hit half hour windows for major customers. This service can be a strong truck conversion alternative.

Another truck to rail conversion service is to provide transloading of railcars with subsequent short-haul movement by truck. This service works well for high volume food, beverage and bulk products where railcar transit times are tolerable. UPDS’ customers can load 3-4 truckloads on a railcar which is then transloaded (crossdocked) to tractor-trailer units for final delivery. The customer saves on truck linehaul costs by shipping to one of UPDS’ 175 agent locations. Customers normally sacrifice 2-3 days of service using this program but save over $200 per truckload.

UPDS’ logistics division is a rail shipment transportation manager. UPDS tracks, manages events, corrects problems, manages claims and other functions. This operation does outsourced shipment monitoring. It’s in business primarily because many companies have found it more economical to let UPDS do it than to do it themselves. This product is sold and operated under the Rail Source trademark in order to provide services across the railroad.

UPCS is a specialized truck brokerage within UPDS. Its primary activities are to move container loads within commercial zones, provide ramp services from smaller cities like Indianapolis to Chicago and arrange deliveries and pickups in Mexico.

The IT glue for all of UPDS’ operations is supplied by three integrated modules developed by Transentric. Pattern OMS is the order management system. It holds rate and customer information libraries and interfaces to a Siebel routine for yield management. Commodity information can be dealt with at the SKU level. Orders are feed to Shipment Vision for management and tracking. Shipment Vision also generates reporting, including KPIs.

Messaging between modules is handled by Agilink. Agilink also produces electronic waybills and broad messaging at all levels. Information is convergent among all the UPDS Pattern modules.

This year UPDS will increase revenue. They are looking for new opportunities, particularly in truck transportation conversion. If history repeats itself, they should do well.


Sources: A&A Primary Research, https://www.louplogistics.com

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