THE next time you see a freight train anywhere on Europe’s railway network, there is a strong chance that many of its wagons are owned by VTG. Europe’s largest private wagon leasing company has an 80,000-strong fleet, serving customers from across the continent as well as providing multi-modal logistics services.

Identifying a VTG wagon would also probably mean that you have a better idea of where that specific asset is at that time than its owner does.

VTG Connect 54For years, the lessor has relied on manual tracking to identify the location of its wagons, with operators referring to maps, and picking up the phone to call clients, or sending e-mails and faxes, when they need to find their rolling stock. In reality, they were never quite sure of exactly where an individual wagon was at any given moment, especially when it is in service.

VTG also only had a limited picture of the condition of its rolling stock, withdrawing wagons on a time-interval basis for maintenance. While one wagon might have covered 300,000km in this period and is showing significant wear and tear, another might have only travelled 5000km and is like new.

As well as being inefficient Dr Niko Davids, VTG’s chief digital officer, points out that this situation has left the lessor vulnerable in the event of an incident.

“If we know exactly where our wagons are, it opens up the possibility for liability if the damage is known to occur at a precise time and location,” Davids says. “At the moment we can never be sure who is responsible.”

Yet a solution is afoot via the Industrial Internet of Things (IIOT) and machine-to-machine technology, which is promising to transform VTG’s operations management and open up new business areas.

VTG has partnered with Nexiot, Switzerland, to rollout the start-up’s smart sensor technology across its entire wagon fleet. The technology uses a combination of GPS and a geographic information system (GIS) which maps railway infrastructure to provide the location of an individual wagon or asset within 5m. This, and other diagnostics information from sensors fitted to the device, is sent via a 2G/3G/GSM network, or Nexiot’s own wireless network to the cloud, where data processing takes place.

Nexiot was born from ETH Zürich, one of the world’s leading technical universities, and the smart wagon sensor is the result of 10 years of research into algorithms, data systems and hardware. According to Mr Daniel MacGrgeor, Nexiot’s director of marketing and sales, the aim of the project was to build an integrated solution that adapts GPS technology used in road vehicles for the past 25 years for industrial applications.

Critically the system is maintenance-free, harvests its own energy, and is quick and easy to install. The device is powered by a battery which is charged by a specially-developed solar panel and is able to send a message every five minutes when the asset is moving. It is able to operate in poor weather or even adjust its function in cold conditions. If exposure to sunlight is limited, the power cell or battery can store sufficient energy to emit a signal for a few months.

MacGregor says that with most of the world now having access to some kind of mobile signal, the chosen solution will provide coverage in most areas, and when it is out of coverage, will immediately begin sending a signal when it is restored. “Other solutions push up the price,” MacGregor says. “We could look at using satellite solutions but there is a sweet spot between functionality and cost.”

The hardware is also deliberately simple to keep costs down - a similar battery-based solution could cost up to $US 500 per unit, and would involve complicated and time-consuming maintenance procedures, making such a solution unviable to most prospective customers. It also promotes ease of use. With the data processing taking place in the cloud, no information is lost if the device is damaged, and energy consumption is minimised. VTG staff on the ground can access information retrieved from a specific asset via an app which can connect to an NFC communication chip installed in the device, or by scanning a QR code, which VTG is mounting on the side of its vehicles. The cloud platform also provides a business interface to the operations centre, alerting operators of certain events. For example, if the asset is damaged, or if a wagon enters or leaves a predefined geographic zone.

The device itself uses robust IP67 industrial-grade plastic and is Atex-certified, which is important for companies like VTG which often transport hazardous materials. The system can help VTG’s customers to monitor the temperature of certain shipments so that the lessor knows whoever is responsible for that particular asset at that time is taking care of it as they should.

MacGregor says the GPS system uses the latest satellites and is future-proofed, and was preferred for the tracking technology because of its greater reliability over RFID, which has gained some traction in the freight sector in recent years. “In an industrial environment, which is often dirty, it is easy for a RFID system not to register the location,” MacGregor says. “If the wagon is travelling too fast, that could also cause a problem plus RFID solutions require costly installation and maintenance.”

Full deployment

VTG is the first major freight wagon owner to implement the technology on its fleet, and it is aiming for full deployment by the end of 2020.

According to Dr Hanno Schell, head of technical innovations at VTG, the company is currently installing 500-700 sensors per week, and has a three-pillar approach to the rollout: during maintenance at the workshop; through mobile service teams inspecting vehicles; and when customers have the vehicles at their sites.

“Our approach is that if it is not fitted, fit it,” Schell says. “We allow 10 minutes for the job, but in reality, it takes four minutes. The units weigh around 1kg each, are 36cm wide, including the metal plate, and are connected using two 6.3mm stainless-steel rivets.”

Nexiot has structured the project for VTG as a cost-optimised solution. Rather than buy the boxes, VTG is actually purchasing the data as a service. MacGregor says this is reflective of procurement in other industries. For example, he says that Rolls Royce no longer sells engines to the aviation industry, but flight time.

“By changing our approach to this we have changed the end customer and tapped into new revenues,” MacGregor says. “We wanted to look at the bigger picture. Buying data rather than hardware reduces the upfront cost to the customer, and makes it more attractive.”

Davids says in reality the cost of the service is comparable with buying the boxes, and that financing the project was not a problem for VTG. However, he says it reflects Nexiot’s desire for fleet-wide deployment which is necessary if operators like VTG are to truly unlock the benefits of the system.

With VTG charging its customers a day rate for use of its vehicles, increasing the efficiency of its operations, which could reduce the number of wagons a client actually needs, might have a negative impact on revenues. Yet Davids says the company sees the bigger picture. By offering a more efficient service, it hopes to reduce its own costs. It also believes it can attract new customers to use rail.

“Our vision is to increase the transparency and to make all of the processes simpler and easier to manage,” Davids says. “It also makes rail easier to use in general. Today it is easier to arrange transit by truck, and rail is a lot more complicated, but it doesn’t have to be. The technical possibilities are there and we are keen to implement it.”

VTG is already marketing its new Nexiot-based service, VTG Connect, to customers promising them up-to-date and accurate information on their shipment for a fee. The service can aid plant management, just-in-time manufacturing, and help to control the supply chain. And with the potential to add more features as they become available, it is likely that this service will become more sophisticated over time. Indeed, MacGregor says the solution currently has an energy surplus, with the possibility to add up to 124 sensors to measure anything from hot axles and wheel flats to brake block wear and even the weather.


The platform therefore presents the possibility of true M2M communications that could revolutionise operations management. For example, data on precise asset condition could automatically inform maintenance scheduling at VTG’s depots in Wesseling, near Cologne, and Ateliers de Joigny in France, or at its partners’ facilities, with 300 partner workshops used in 2016.

It could also open-up new and different services for customers. Davids says the company is looking at how the data could enable it to rationalise its fleet and increase availability which could present new offers such as wagon sharing, or premium-price pay-as-you-go services. Here customers could get immediate access to fleets exactly when they need them, which might be particularly attractive in urban areas.

Davids says Nexiot is the first start-up to work with VTG and that this new type of collaboration reflects how the company is attempting to embrace different ways of thinking as it moves towards digitising its business.

While VTG and Bertschi, a tank wagon operator which is using the system to monitor the location and temperature of its assets, are the early adopters, MacGregor says the general reluctance in the industry so far to embrace new technologies like Nexiot’s is reflective of the conservatism at the executive level of railways and a general unwillingness to takes risks.

For Davids, the benefits on offer are so great, that installation of the system is a “no-brainer.” He says there is no estimation yet on how much it will save VTG in the long-term, only that the potential is huge. “Other keepers say we are nuts,” Davids says. “But I don’t understand why they are not doing this as well.”

If the system does deliver what it promises, then VTG’s competitors are sure to soon follow suit. They cannot afford not to. IIOT has the potential to provide rail freight companies with the opportunity to gain true control over their assets for the first time, offering vast improvements in the level of service on offer, and the competitiveness of rail freight as a whole. A sector which has long been in the doldrums in Europe might be about to turn a corner.

“Everyone has been saying for a long time how IoT and M2M are going to change the world,” MacGregor says. “For a long time they have talked, without necessarily taking action. But now we are here and are looking to change how the industry is thinking. We are throwing down the gauntlet.”