Trains with Brains – GE Strives to become a Technology-Driven Conglomerate- And Dumb Toll Roads

freight-train-of-the-30s

Picture credit: http://www.usgwarchives.net/

With GE’s move to Boston, there has been a meaningful shakeup in the corporate approach at GE. One bright emergence has been Beth Comstock as Chief Marketing Officer (CMO) at HQ as attention is finally being paid to incorporating innovations into the GE product families. IAI was shocked to learn from GE Global Research that freight trains spend 60% of their time in train yards ! 2016 rail carload traffic has been pretty disappointing. Can’t we find a way to improve this infrastructure to be safe and double the efficiencies?

A freight car visits many rail yards in its journey from origin to destination. Incredibly, rail cars spend over 60% of their time in yards and less than 40% of the time traveling. The average speed of freight trains in the U.S. is around 20 mph, but the speed of freight cars is less than 7 mph. Increasing average train speed by just 1 mph could save a class 1 railroad over $200 million a year. Decreasing dwell time of cars in rail yards and minimizing the fuel consumed can further save hundreds of millions of dollars.

Case in Point – Intelligent Trains:

For two decades, GE has lost train rolling stock contracts to ABB and Siemens despite their high cost structure. Now, GE realized that giving trains “intelligence” will improve efficiency, promote safety, and help operators achieve high system performance. The “Trains with Brains” push involves making trains “self aware” using (at least) these tree tools:

  • Trip Optimizer: A 2009 launched software suite that’s tantamount to cruise control for trains which minimizes braking, adjusts speed for terrain, and ensures that trains arrive at their destination on time;
  • Movement Planner: Like a WAZE for trains (a 2013 Google pickup), this program in use at Norfolk Southern enables network engineers to engage in train dispatch planning in an 8 to 12 hour window to anticipate scheduled events like meets, passes, crew changes, maintenance stops and other planned events. NS’s Unified Train Control System (UTCS) is a sophisticated dispatching and customer information system that operates across all 11 divisions and throughout its 22 state reach but it took a decade to deploy and a $75M investment, according to Dan Plonk, NS transportation planning and operations systems (See Oliver Wyman’s 2012 Transport Conference agenda).
  • Yard Planner: Offering a rail classification yard software suite, YP is a real time classification and planning tool aimed at reducing car dwell in the yards. The YP impacts include: a) improved car connection performance, b) improvement in on-time train departures, c) improved train/car velocity, and d) reduced equipment CapEx and OpEx.

Rodney Case, the Wyman Rail Practice Head, pointed out last year that the U.S. rail network made significant capacity increased over the past decade but the challenge now is a “Service Imperative” for customers. Case calls this “Rail Renaissance II” where operators focus on network fluidity and service based on a) supply chain transparency, b) convergence in planning, c) mission completion, and d) a new social contract. Case argues compellingly that the highway infrastructure is deteriorating, investment is declining, and the capital deficit is increasing. Rail continues to gain cost competitiveness over long-haul and LTL trucking as the construction cost index is also growing faster than the CPI, so cash strapped cities and municipalities are facing a funding crisis, imposing increased “user fees”, and are also increasingly turning to pension funds seeking “public/private partnerships” (PPPs) to fund infrastructure development (which the World Bank is pushing aggressively). The early model was to make the public entity a co-investor rather than a client of the Build-Operate-Transfer (BOT or “bought”) model but ScienceDigest points out that the European model has had mixed results. But these issues of concern has revolved even in PPPs around governance, corruption, and conflicts of interest. Of course, this gets into the contentious issue of selling public assets to private, margin maximizing investors rather than public good seekers.

infrasteructure-demand

Chart credit: Reuters,  C.Chan, 13 June, 2016.

In this regard, pension funds recently bought the Chicago Skyway (for $2.8B) and the Indiana Tollway ($5.7B). There remain a lot of questions to be asked regarding accountability for these transactions. Both of these transactions suggest that users will face increasing access costs, higher user fees, lower service levels, and a complicated transition to (at the minimum) driver-less trucks and car fleets (see Uber [starting in Pittsburgh] and Lyft). Lyft says robots will drive most of its cars in five years. And, not surprisingly, the cost shifting by governments for infrastructure use and even property you own is being seen in the toll rate increases imposed and higher property taxes in Chicago…Maybe the WCX or West Coast Infrastructure Exchange has some ideas that can be constructive in these contentious debates.

Maybe we are not like Ben Richards in Running Man, but we may be like Hauser running for a Johnny Cab on Mars (as seen in the 1990 Schwarzenegger classic, Total Recall – https://www.youtube.com/watch?v=xGi6j2VrL0o).

Here’s a nice history of the U.S. freight train network from 2014 (for train buffs): https://www.youtube.com/watch?v=7GV18QXWqdE

 

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