positive train control overview, risk factors and research needs

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Positive Train Control Overview, Risk Factors and Research Needs

October 15, 2012

Carl Van DykeINFORMS Annual Meeting - Phoenix

1© Oliver Wyman www.oliverwyman.com

Agenda

Oliver Wyman’s PTC related activities

Introduction and context of the positive train control (PTC) project on the Class I railroads

An understanding of the new sources of business risk generated by PTC technology

Potential areas for further research



Federal Railroad Administration issued its final rule for the implementation of Positive Train Control in 2010 (since amended)

The FRA did not associate business benefits with PTC, despite having indicated possible benefits in earlier reports

Based on the FRA reports and estimated implementation costs, the benefits of PTC from a commercial perspective were highly unfavorable

A number of shipper advocacy organizations produced a report that attempted to associate large commercial benefits with PTC, based largely on prior reports and analysis performed on behalf of the FRA

Oliver Wyman was retained in 2010 to review the various reports on the commercial benefits of PTC, as well as collect first person view points on this issue through interviews of railway personnel

This resulted in an in depth analysis of the issue published in a 100+ page report issued by the AAR, which concluded that while there were some benefits, the overall commercial economics of implementing PTC remained highly unfavorable

It is from undertaking this analysis that Oliver Wyman draws its view point on PTC


Agenda






What is positive train control (PTC)?PTC is a collision avoidance system centered on the locomotive and mandated for certain rail lines by the US government. The proposed initial system will overlay existing signal and train control technologies with PTC-based systems.

Description

FRA Requirement for Installation

Exceptions toFRA Requirements

Driven by safety concerns; goal is to enhance prevention of collisions between trains, over speed situations, work zone incursions, and use of miss-aligned switches

PTC is an additional set of systems overlaid on existing train control systems

PTC centers on a locomotive continuously confirming that it is operating within its permitted section of track at the permitted speed, such that it can stop safely before the limits of the permitted section

All mainlines over which regularly scheduled commuter or intercity passenger trains operateAll mainlines of Class I freight carriers carrying five million gross tons or more annually over

which any amount of TIH/PIH (toxic/poisonous by inhalation) hazardous materials are handled Such other lines as designated by the US Secretary of Transportation

All Class II and III railroads, regardless of tonnage or number of TIH/PIH cars handled if no passenger trainsClass II or III lines of <15MGT having fewer than six pairs (in signaled territory) or two pairs

(in dark territory) of passenger trainsClass I lines of <15MGT having fewer than 100 TIH/PIH cars annually, loaded or residue,

but with very restrictive conditions (i.e., 1 load and 1 empty per week)Mainlines in terminal areas where rules limit trains to restricted speedCrossings at grade of Class I PTC-equipped lines by Class II or III lines if the speed does

not exceed 40 mph in any direction

Note: The Federal Railroad Administration (FRA), is part of the US Department of Transportation. One of its functions is to promulgate and enforce rail safety regulations.


PTC generic architectureThe overall PTC network consists of a number of sub-systems that will be overlaid on existing railroad control systems currently in use by Class I railroads.

Source: PTC presentation by Alan Polivka TTCI , March 2010, Progressive Railroading Webinar.


What is the scale of deployment of PTC?The FRA’s PTC ruling will impact the majority of the units in the Class I locomotive fleet and key segments of US Class I mainline network.

Current initial implementation costs for the freight railroads are estimated to be $5.8 billion. Total costs (including maintenance) are estimated to be in excess of $13 billion over 20 years.

Locomotives Network

+/-75 percent of Class I mainline route miles will need to be equipped with PTC

+/- 75 percent of the locomotive fleet will need to be equipped with PTC

There are approximately 24,000 locomotives in the Class I fleet

Both mainline and local locomotives may need to be equipped

Class II and III fleets are not yet required to be equipped, but will likely need to be equipped if they operated over Class I trackage

Approximately 17,000 to 18,000 Class I locomotives will need to be equipped with PTC

There are about 94,000 route miles of Class I mainline track and about 139,000 route miles of total mainline track in the US

PTC will be installed on both signaled and non-signaled Class I mainline tracks

PTC will need to be installed on an estimated 60,000 to 75,000 Class I route miles– ~51,500 miles with CTC systems– ~9,000 miles with ABS systems– ~13,000 miles non-signaled

Note: CTC = centralized traffic control system; ABS = automatic block system. These are existing control systems in use on portions of the US rail network.Source: Association of American Railroads, Class I interviews and Olive Wyman analysis.

The above may be somewhat mitigated by the FRA revising the HazMat related rules determining which lines need to have PTC installed on them (allowing railroads to eliminate PIH on some lines)


The PTC initiative is the largest industry wide capital project in historyImplementation and operation of PTC will impact every aspect of railroad operations from dispatchers to train crews to locomotive maintenance to signaling to MOW

• 17,000 to 18,000 locomotives will need to be shopped and outfitted with interoperable control hardware• Computer Display Units (CDU)• GPS sensors• Crash hardened memory module• Antenna array for all PTC data transmissions

• 60,000 to 70,000 route miles of track will need to be mapped, equipped with wayside monitoring devices, and brought under PTC control• Switch position monitors• Integrated and stand-alone Wayside Interface Units (WIU)• Wayside database contains over 200 characteristics of track and trackside assets

• Requirements for additional radio frequency bandwidth resulted in the purchase of the 220 MHz data radio spectrum for switch and signal communication, and development of data radio capabilities for this spectrum (total costs of over $180 million for spectrum and R&D work)

• Approximately 75% of some 150,000 employees will require at least some training

• Back-off and dispatch systems will need to be updated to integrate PTC capabilities, including for unsignaled territory

Association of American Railroads7 1/29/2013


Railroads’ position on PTC costs The position of the Class I railroads and the Association of American Railroads (which represents the Class I’s) is that PTC will be expensive and will divert capital away from capacity expansion.

The FRA has estimated that Class I railroads will have to spend over $5 billion just to install PTC. To put this into perspective:– $5 billion is roughly what the Class I railroads spend in a typical year on all infrastructure-related

capital spending– $5 billion is about what the Class I railroads spent in the past four years combined for capital

spending related to infrastructure expansion.– Additionally, after PTC installation, the railroads will have to spend hundreds of millions of

dollars per year to maintain the PTC systems.

Over 20 years, the FRA estimates that it will cost railroads in excess of $13 billion to install and maintain PTC systems.– The FRA estimates that PTC safety-related benefits over the same period will be between $440

million and $674 million. The FRA did not directly identify any non-safety benefits in its final rule.– The implication is that the Class I railroads will incur approximately $20 in costs for every $1 in

realized benefits.

While other perspectives exist on benefits, it is generally agreed that use of the PTC “overlay” systems as proposed by the railroad industry will yield minimal business benefits

Note: FRA estimates given as ranges due to changes in assumptions on discount rates and other factors.Source: “Positive Train Control,” Association of American Railroads, May 2010.


Railroads’ position on PTC impacts and benefitsThe position of the Class I railroads and the AAR is that PTC will not provide an economic return for the railroads – the short time frame for implementation is driving the use of “overlay” solutions to minimize risk, which also means few commercial benefits.

The types of accidents that PTC systems are designed to prevent are rare:– “Of all train accidents on rail main lines over the past 10 years, around 3 percent — about 30

accidents per year — would have been prevented had PTC systems been in place.”

PTC deployment in and of itself will not yield major business benefits for railroads. According to the AAR: “Because of current technological limitations and the need for railroads to rush PTC implementation, for the foreseeable future, PTC will not make rail operations faster or more reliable, or create meaningful new capacity.”

Many of the business benefits identified for PTC actually have little or nothing to do with it.– For example, a key claim is that PTC will reduce train delays and allow more trains to move

over each rail line. These benefits, however, are primarily due to the use of “precision” or “optimized” dispatching, for which there is no direct relationship to PTC.

According to the AAR: “Because railroads have limited funds to devote to infrastructure projects, expenditures on PTC will mean reduced expenditures on other projects that would increase capacity for freight and passenger trains, promote economic recovery, improve service, provide environmental benefits, and enhance safety in more effective ways.”

Source: “Positive Train Control,” Association of American Railroads, May 2010.


An independent assessment and approachOliver Wyman was asked by the AAR and Class I rail carriers to review previous PTC benefit claims through a process that tested the reliance of each benefit on PTC and recalculated the magnitude of the stated opportunity.

Validate or recalculate the magnitude of the opportunity

Catalog and validate the key benefit assumptions

New benefit estimate

Are they attributable to PTC as mandated and as will be implemented by the Class I

railroads?

$0 benefit attributable

Y

N

Oliver Wyman’s analysis found that few of the benefits attributed to PTC were dependent on PTC implementation. In many cases, the benefits are already being realized prior to PTC deployment.


Oliver Wyman’s findings on non-safety benefitsRailroads already have achieved many of the benefits ascribed to PTC through alternative, less costly technologies and processes.

While PTC’s mandate focuses on improving the safety of train operations, the majority of benefits previously ascribed to PTC are not safety related.

These non-safety benefits are expected to be achieved primarily through:– Implementation of a new level of dispatching, known as “precision” or “optimized” dispatching– Improvement in over-the-road train performance through improved train control and signaling

Oliver Wyman has found no direct relationship between precision dispatching and PTC implementation, and that PTC will have an insignificant impact on the performance of existing dispatching systems

Additionally, PTC implementation will not materially increase effective line capacity or train speeds on single or multi-track mainlines.– The overlay systems that will be implemented by the Class I railroads will not include more

advanced concepts that might generate capacity/velocity benefits.– The additional layer of PTC technology may actually degrade performance through additional

component failure and more conservative train handling.

More advanced PTC systems that might improve capacity are more expensive to implement and would present much higher implementation risks.– The European experience in implementing more advanced PTC systems has demonstrated

significantly higher implementation costs and long time horizons to bring the system to full operational capability.

– Time to test and implement such systems in the United States is simply not available, given the 2015 deadline.


Overlay system may actually reduce line capacity Sole benefit from dynamic track authority support in dark territory$191.6 MLine Capacity

Assessment of incremental PTC commercial benefitsOliver Wyman’s analysis determined that PTC could produce approximately $413 million in incremental direct commercial benefits for the Class I railroads.

Overlay PTC may actually reduce velocity Most velocity benefits tied to precision dispatching, not PTC$0Railcar Velocity

$413.2 MTotal Benefit

Only selected signals could be removed, but track circuits remain due to type of PTC system implemented – any change requires FRA approval $30.7 MElimination of Track

Circuits, Line Signals

Railroads already possess relevant technology not tied to PTC Reliability issues from additional PTC components may offset $0Locomotive Service

Robustness

Railroads have already implemented working technological solutions not tied to PTC$0Track Maintenance

Work Blocks

Railroads have implemented or will implement technology not tied to PTC that provides this benefit$0Train Work Events

All sources of benefit are dependent on technologies being developed and implemented that are not tied to PTC

Precision dispatching implemented separately from PTC Some benefit from increased location data provided via GPS

Oliver Wyman Rationale

$0

$190.9 M

Oliver Wyman Estimate

Communications for Precision Dispatching

Fuel Economy

Previously Stated PTC Benefit

Note: All benefits are shown in 2009 dollars on a net present value basis, using a 7 percent discount rate and a 20-year planning horizon.

All sources of benefit are dependent on technologies being developed and implemented that are not tied to PTC$0Shipper Benefits


Agenda






PTC has real possibilities of increasing business riskAny negative impact on network capacity or increased project costs will have a direct impact on the rail carriers’ ability to maintain current financial performance.

Loss of CapacityBraking EnforcementIncreased ComplexityCost Escalation

New technology

Massive and rapid deployment

Emerging technologies during implementation

Overlay system, not a replacement

More systems provide more sources of failure

Few corridors of mixed passenger and freight operations are fully field tested

Pilots to date in Europe of overlay systems have raised serious concerns

Current braking rules/algorithms are conservative

Improvements in train handling will come from field experience and additional investment

Corridor capacity, in terms of trains per day, will likely be reduced

Resurgent growth may be limited in constrained corridors – with additional investment required to counterbalance loss

Train handling will be more conservative

Corridor capacity, in terms of trains per day, will likely be reduced

Resurgent growth may be limited in constrained corridors

Key Issues

Key Impacts

Priority access to scarce capital driven by legal deadline

Inter-operability mandate reduces quick adaptation

System failure will either stop the locomotive or reduce the allowed speed

Slower trains rapidly reduce network capacity


Cost escalation risks: European experienceAs the implementation of advanced technologies moves from pilot phase to final design, the costs can escalate substantially.

Comparison of UK Historical Cost Estimates vs. Current Cost Estimates for ERTMS Implementation(2002 base year for all costs)

In the United Kingdom, estimated project costs on the two first corridors grew by 300 percent within 5 years between the second and third iteration of project plans.

Corridor

GW: Retrofit – 1 cab per vehicle

1993/1994 BR-ATP Report

1997 Review Percent increase 1994-1997

4/1/2002 –Supplied by EPT

Percent increase from 1997

Train / Cab £50,000 £80,000 68% £352,000 340%

Track / Signal £10,000 £15,000 41% £72,000 380%

Chiltern: New – 2 cabs per vehicle

Train / Cab £30,000 £56,000 83% £272,000 386%

Track / Signal £6,000 £17,000 169% £72,000 324%

Source: Train Protection: Review of Economic Aspects of the Work of ERTMS Programme Team, NERA, 2003.


Line capacity risks: European experienceEurope has significant experience with advanced train control systems similar to PTC, with field results demonstrating the potential for a loss of network capacity.

The European system is called ERTMS or ETCS. The level 1 and simpler level 2 ERTMS systems are similar to the proposed PTC overlay systems being implemented in the United States.

“SBB already has wide experience on ETCS since solving many of the initial problems in its pilot project on the Zofingen-Sempach line. But the main challenge...is that there is always a loss in capacity when stricter safety requirements are imposed, and ETCS L1 LS is no exception. Since one of the reasons for Switzerland to adopt ETCS is to enable capacity to be increased, a careful balance has to be maintained between capacity and safety, as well as a third element: cost.”1

“Capacity and performance: ERTMS Level 2 Systems D and E (without visual signals) can enhance local capacity by decoupling signalling block design from train braking characteristics and block location from signal sighting needs. This effect can be used to improve network performance (reduce delay) or enhance capacity (provide extra train paths). ERTMS Level 1 in its simplest form has a negative effect on network capacity. ERTMS Level 2 System C (applied over conventional signalling) has a broadly neutral impact on capacity/performance.2

1. “Limited Supervision, Unlimited Potential,” International Rail Journal, April 2010.2. Strategic Rail Authority (SRA), 2005, National ERTMS Programme Team 2004/05 Progress Report.


Agenda






Government Initiatives = Research OpportunitiesWhen the government funds new initiatives, or mandates actions through regulations, research opportunities can arise.

Here are three examples of government initiatives that likely will spawn research opportunities:

In this presentation we will focus on research opportunities arising from the PTC initiative

High Speed Passenger Rail Program

Over $10 billion in initial funding is being provided to support high speed and “higher speed” intercity passenger rail

A large proportion of this service is expected to share the tracks and/or rights of way of existing freight railways

Significant research is required on line capacity and safety issues for joint operations, equipment management, demand forecasting, station placement, etc.

Positive Train Control (PTC)

The industry is required to implement PTC by the end of 2015 This huge program will require

expenditures of $8 to $10 billion by 41 railways and agencies in next 5 years “The technology is immature at

best and unproven at worst” –Frank Lonegro, President of CSX Technology Research and testing of all

types is proceeding at a feverish pace - including opportunities for OR and IT

Hazardous Materials Routing Regulations

These regulations dictate that the risks of how certain hazardous materials are routed be assessed, and the movement of these cars be tightly managed and monitored

The regulations also impact the design of certain classes of railcars

Significant research has been required on risk assessment, routing algorithms, rail car design, and car management issues


Research Opportunities (Part 1 of 3)One area of research needs to focus on mitigating and managing deployment costs and risks

Braking algorithm design

• Issue is predicting the stopping location of trains based on the characteristics of the train, the rail line, and the speed of the train, such that there is essentially zero chance of violating a signal

• Currently driven by worst case assumptions about braking performance, availability of dynamic brakes, degradation in the braking coefficients, etc.

• Result is trains will likely be stopped well short of the signals, and in general will be operated more conservatively, having an adverse impact on running times and train capacity

Radio coverage strategies

• An entire, new communication system is being developed to support PTC, including new radios operating on a new frequency

• Huge capital costs raise questions on how to deploy communications in the most cost effective manner – do you need complete radio coverage, or can you rely on satellite, wayside, or cellular communications for selected territories to reduce costs? Can modeling help find the right strategy?

Wayside equipment placement strategies

• A huge number of wayside devices need to be deployed to monitor train locations, switch position, and track occupancy

• Are there ways to optimize the deployment of this equipment to reduce the total costs?

Strategies to minimize impacts of component failures

• The lost of a single component could cause a PTC failure for a train or an entire line, forcing all trains on the line to operate at reduced speed, greatly lowering line capacity

• Are there strategies to reduce the impact of component failures through selective redundancy, or focusing on the reliability of selective components? Can modeling help pinpoint the right strategy?


Research Opportunities (Part 2 of 3)Another area of research is on minimizing deployment costs, and PTC’s potential adverse impacts on capacity

Locomotive equipment outfitting, placement & management strategies

• A huge number of locomotives need to be equipped – in what order and how should this be done to minimize costs and disruptions

• Are there strategies that could reduce these costs?• While only the lead locomotive may need to be equipped, are the management

costs and risks of train delay from reducing the number of equipped locomotives acceptable or too high?

• Are there other ways to roll-out the equipment in a more effective manner? • Should age of locomotives be factored into the process, and the fleet be

redeployed in some manner to change which locomotives are equipped?

Assessing and mitigating the impacts on line capacity

• The European experience indicates that PTC “overlay” systems reduce capacity• It is assumed this is the case for the U.S., but the level of impact is unknown –

can simulation be used to determine the degree of impact?• There may be positive impacts on dark territory – can this be proven? How

should the new systems be designed to achieve these potential capacity impacts• Are there ways to mitigate the capacity impacts through precision dispatching,

train handling, operating practices, or other means?

Routing strategies to reduce impacted lines

• One driver of whether a line will require PTC is the presence of toxic inhalation hazards on the route

• Can alternative routings be adopted to reduce the number of impacted lines? Would it pay to relocate certain shippers and consignees – or pay for alternate delivery methods?


Research Opportunities (Part 3 of 3)Other areas of potential research include further risk management strategies, exploring how to leverage the PTC data streams, and looking forward to the next generation of PTC

Investigating ways to leverage PTC information streams

• PTC will provide new data streams on train movements that may include more timely information on train locations

• When coupled with the likely expansion of precision dispatching systems, the accuracy of information on projected train arrivals may be greatly improved

• How can this information be leveraged to improve the management of railroads? For example, better workload planning strategies, or better locomotive management?

Economic case for next generation PTC systems (moving block, signal elimination)

• While the “overlay” systems are likely to degrade line capacity, the use of more advanced systems that use moving block or dynamic block type technologies have the potential of increasing capacity

• However, the technology risks have been deemed too high to assure successful deployment by 2015, and the view is that the costs may be prohibitive

• To understand the cost-benefit trade-offs, significant research must be undertaken to understand the available technologies, and how they will impact line capacity, the ability to avoid capital investments in tracks, and the general economic case (if any) for the next generation of PTC

• Modeling will be key to building, or refuting the, the case to go beyond the current technology


Summary of Implications for Further ResearchAs with any large scale technology-driven development where the limits of proven solutions is being exceeded, the PTC initiative has many gaps requiring further research

Research opportunities fall into many groups:– Hardware design, testing and development– Control technology design, testing and development– Deployment strategies– Impact analysis and mitigation strategy development

Given the focus of INFORMS, our focus will be on areas where OR, IT, and algorithms can play a role, including:

– Braking algorithm design– Radio coverage strategies– Wayside equipment placement strategies– Locomotive equipment outfitting, placement and management strategies– Assessing and mitigating the impacts on line capacity for dark and signaled territory– Routing strategies to reduce impacted lines– Strategy development to minimize impacts of component failures– Investigating ways to leverage PTC information streams– Economic case for next generation PTC systems (moving block, signal elimination

positive train control overview, risk factors and research needs

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