Smart Railroads. IBM Approach. 28 October Yuri Karadjov IBM Business Development Executive, Travel & Transportation, Central and Eastern Europe

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1 Yuri Karadjov IBM Business Development Executive, Travel & Transportation, Central and Eastern Europe 28 October 2010 Smart Railroads IBM Approach 2010 IBM Corporation

2 A mandate for change Morgan Stanley estimates that there will be US$300 billion worth of global investment to upgrade, expand and initiate railway networks during the next five years. Consistent with this investment, consider the growth that is occurring across the world: By 2012, rail industry revenue is forecast to be US$514 billion, with a 3.3% compound annual growth rate (CAGR) from 2007 to 2012 The global rail supply market grew 9% from 2006 to 2007 and is expected to continue growing 2.0%-2.5% over the next nine years Asia Pacific will grow at 6% average CAGR, while China alone will grow 11.8% CAGR from 2007 to 2012 U.S. freight railroad demand will increase 88% by 2035, requiring an estimated US$148 billion of investment for existing lines Europe s passenger railway market will have a value of US$116.5 billion in 2012, an increase of 19.3% from 2007 and a CAGR of 3.6% Based on an independent study commissioned by IBM, the top four challenges cited by global rail executives were: Capacity and congestion Operational efficiency and reliability Structural and competition issues Safety and security IBM Corporation

3 High-speed railway is already challenging air travel because it is perceived as more convenient, greener and competitively priced (under 600 Km) 80% 70% 63% 60% 50% 46% Share of Madrid-Seville market AVE Estimated share of UK 3-hour domestic market SNCF Share of Korea market KTX Share of Tokyo-Akita market JR East Decline in inter-city flights THSR Share of Madrid-Barcelona market AVE An airplane on wheels Air France-KLM Chairman, Jean-Cyril Spinetta on the TGV IBM Corporation

4 The mandate for change is a mandate for smarter railroads The infrastructures, systems and processes that underpin how business and society function are becoming digitally aware, interconnected and infused with intelligence. The new intelligence applies to how services are delivered, to the movement of people, freight, money, information and electricity, and more. Each represents a chance to do something better, faster and more productively. This is a new frame of reference with enormous promise for economic growth, with opportunities to think and act in new ways IBM Corporation

5 Smart means Instrumented, Interconnected and Intelligent INSTRUMENTED Giving us the ability to measure, sense and see the exact condition of everything. INTERCONNECTED Allowing people, systems and objects to communicate and interact with each other in entirely new ways INTELLIGENT Responding to changes quickly and accurately, and getting better results by predicting and optimizing for future events IBM Corporation

6 The transformation to smarter is enabling a railroad to become more efficient, productive and responsive. Traditional approach Instinct and intuition Corrective Years, months, weeks Decision support Efficient Smarter approach Fact-driven Directive Hours, minutes, seconds Action support Optimized IBM Corporation

7 + + = A smart railroad thinks and acts in new ways: Predict demand and optimize capacity and assets Dramatically improve the endto-end traveler or customer experience Improve operational efficiency while reducing environmental impact Assure safety and security IBM Corporation

8 Smart railroads: Predict demand and optimize transportation capacity and assets Netherlands Railways uses an application to weigh 56,000 variables including passenger demand and available assets to assemble and schedule over 5,000 trains per day, realizing a 6% savings in operating efficiency and saving $28.5M per year. Also improved on-time performance by 2%, helping capture an additional $57M in revenue. A large railway in Asia uses an automated crew scheduling system that evaluates the skills and location of available employees in real time to assign staff to scheduled trains. Employees receive their assignments via cell phone text messages, and log in to work using biometric scanners, ensuring positive identification and access control. The system provides management with real time information about available staff and forward-looking intelligence to optimize resource allocation, reducing staff shortages and overtime expense IBM Corporation

9 Smart railroads: Dramatically improve the end-to-end traveler or customer experience. Singapore Land Transport Authority provides a unified payment system using smart cards for public transit, tolls and parking, improving the commuter experience. Planners use data from the system to develop optimal routes and schedules, reducing congestion and increasing the appeal of public transit. Reduced fare leakage by 80% and cost of fare processing by 2%. Air Canada deployed a solution for the Apple iphone, ipod Touch, and Blackberry allowing passengers to book flights, download electronic boarding passes, check-in, get flight status and book rental cars and other services. There were over 30k downloads of the app from 47 countries in the first 6 days and a 13.5% increase in mobile check-ins. 93% of Air Canada passengers say multichannel self service has improved their travel experience. Canadian New Media Award for Best Mobile App of IBM Corporation

10 Smart railroads: Improve operational efficiency while reducing environmental impact. A major European railroad reduced maintenance cost by 30% by moving from curative and preventative maintenance to predictive maintenance Taiwan High Speed Rail Corporation uses condition-based monitoring for their asset management in order to predict and act on maintenance requirements and manage over 320,000 asset elements. They have improved asset life and availability resulting in 99.15% ontime train performance. COSCO, a global shipping firm, optimized their supply chain. As a result, COSCO consolidated from 100 to 40 distribution centers, lowered logistics cost by 23% and reduced CO 2 emissions by 15% IBM Corporation

11 Smart railroads: Assure safety and security. An Italian Rail Company reduced their security staff and increased the level of security for their 10 hub facilities using a solution that centrally monitors intrusion, access control readers, digital video and other sensor technologies. A national rail system in Europe monitors its rail infrastructure in real time and resolves more than 50% of issues before they affect train operation using a dedicated service management solution IBM Corporation

12 Smart Railroads: Business Analytics and Optimization Next Gen Positive Train Control : Monitoring Trains To Proactively Prevent A Catastrophic Failure Remote Locomotive Control on the Main Line Emerging Sensor Networks for Automatic Train Formation Embedded Sensors for Condition-Based Monitoring and Predictive Maintenance Video Inspection of Rolling Stock Video Security of Rail Yards / Property Customer Loyalty, Analytics, Performance Dashboards Customer On-Board Buying Trends Traditional Passenger Rail Schedule Optimization Railroad Blocking Optimization for Freight Rolling Stock Optimization Planning Rolling Stock Preventative Maintenance Planning Infrastructure Preventative Maintenance Planning RFID Tracking For Operational Monitoring & Analysis IBM Corporation

13 IBM Research: Improving Safety, Efficiency & Resilience Condition monitoring Enable accurate, real time & effective sensing Asset Condition Analysis Integrate, mining, predict & real time alarm Dynamic Scheduling Analyze impact & generate optimal response plan Asset Failure How to optimize maintenance schedule: Are there any patterns of the asset lifetime? e.g. certain type of asset/model in certain geo location & weather conditions has shorter lifetime. Use cases Time-table rescheduling Sensor based asset Inspection & Monitoring Accident Integrate Asset lifetime pattern analysis Emergency detected ->Dynamic Response Asset condition prediction Dispatch center Rolling stock rescheduling Driver & crew rescheduling Way side environment monitoring Natural Hazards (e.g. Weather) How to reduce unexpected asset failure? e.g. predict when a certain asset s certain measurement would be over safe/alarm limit Maintenance rescheduling Timely React: Train halt, low down speed, reroute, cancel train run, new work/maintenance schedule, IBM Corporation

14 IBM Research: Massive Passenger Detainment Simulation & Forecast for Railway Operations Emergency Management Massive Passenger Detainment Train emergency (accident) Emergency Station Train Track emergency (disaster) Railway emergencies always happen Accidents and disaster emergencies Railway emergency brings major secondary safety challenges for railway operations Massive scheduling changes Massive passenger detainment at major stations Research project: Massive Passenger Detainment Simulation & Forecast Emergency classifications and impact cascading analysis Interact with train scheduling system Passenger detainment progression analysis Passenger behavior & evacuation simulations Need access to customer data & scheduling system interfaces IBM Corporation

15 IBM Research: Mote-Based Wireless Sensor Networking Business Challenge Data from existing trackside sensors, including the RFID-based Automatic Equipment Identification (AEI) System, Hot Box Detectors, Wheel Impact Load Detectors (WILD), are sparse due to high deployment costs. Data does not provide timely information (e.g. bearing failures) to circumvent problems (e.g. derailment). Strategic Initiative Develop next generation rail car technology infrastructure to provide near real-time information One infrastructure supporting multiple sensor modalities Solution: Mote-based wireless sensor networking Maintains a mesh network for the train that is continuously updated as railcars are added to /removed from the train Supports periodic condition reports and real-time alerts Mote-based wireless sensor networking Gateway Wireless sensor nodes Railcar tracking Weight distribution Bearing temperature Sensors Brake control IBM Corporation

16 Investing in Smarter Railroads IBM Global Rail Innovation Center (GRIC), Beijing Opened June 2009 Foster collaboration across ecosystem of partners and advisors Passenger and freight railroads from US, Canada, Europe and Asia Prestigious universities in US and China Solution providers including RMI, Motorola and Sabre Evolving advisory role for government agencies worldwide Drive co-creation of solutions, industry standards, research and thought leadership Help railroads increase capacity, network velocity and efficiency while enhancing customer service Passenger sales and service Reservation and Ticketing Systems Asset management, maintenance, scheduling, and rail network management Safety and security including Digital Video Surveillance Wireless monitoring of rolling stock and fixed infrastructure Supply chain and energy use optimization for railroads and their customers Draw on assets and expertise from across IBM: IBM Watson and China Research Centers IBM China Software Lab IBM China Systems Center IBM Analytics Solution Centers (Beijing and other global sites) Global Delivery Centers worldwide Recent acquisitions including ILOG, Cognos and Maximo IBM Corporation

17 IBM s solution strategy is aligned with the needs of the Railroad Companies STRATEGIC IMPERATIVES Predict demand and optimize transportation capacity, assets and infrastructure. Demand and revenue management Enterprise asset management and MRO Route and schedule optimization Traffic modeling and prediction Irregular operations management IBM SOLUTIONS Road user charging Fleet optimization Integrated fare management Dramatically improve the end-toend traveler/customer experience. Improve operational efficiency while reducing environmental impact. Assure safety and security. Reservation system modernization Multichannel self-service Ticketing and payment systems One view of the customer Customer analytics Enterprise asset management Enterprise infrastructure management Enterprise application systems Green supply chain optimization Identity and access management Condition based monitoring using wireless sensors Data and application security Server and endpoint security Loyalty management Cargo management Risk management CRM Resource optimization Carbon management Condition monitoring Systems virtualization Biometric identification Risk analytics Digital video surveillance Network security IBM Corporation