The economics of Positive Train Control

Trains Magazine General Discussion
1

The AAR and Oliver Wyman consultants have released a study of the economic benefits of Positive Train Control.

93 pages here: http://www.aar.org/NewsAndEvents/PressReleases/2010/04/~/media/AAR/NewsFiles/2010/042710WymanPTC.ashx

Many points made in the study have been previously noted here on the forum. The bottom line is that the economic benefits that have been ascribed to PTC by some other studies are based on some faulty assumptions. The return on the investment, even including possible benefits to shippers, falls far below a reasonable level to justify the system on economic grounds.

"II. Summary of Findings

At its core, the “positive train control” (PTC) mandate focuses strictly on improving the safety of train operations. The benefits being ascribed to PTC, however, are largely non-safety related and based on the assumption that the railroads and shippers will realize collateral benefits by implementing complementary technologies as part of PTC. This assumption, derived largely from the analyses of an early PTC-type project carried out in the late 1980s, ignores the tremendous strides that the US railroad industry has made in the past three decades in terms of productivity and efficiency – improvements driven in large part by the industry’s continuous pursuit of state-of-the-art operational processes and technology. These advances – and railroad plans to continue this process independent of PTC – greatly reduce the collateral benefits that might be realized by implementing PTC. In some cases, the implementation of PTC likely will be of no benefit or even have an adverse impact on railroads’ ability to fund technologi

2

Thanks for posting that piece. I intend to read it, but first let me ask a question about the context. I assume that there are two schools of thought on PTC; one that is promoting it, and one that says the cost is not worth the benefit. Which one of these two positions does the FRA adhere to, or are they neutral?

3

IINM, it is by FRA mandate that PTS is being implemented…

4

That is kind of what I thought, so if true, the FRA would be a promoter of PTC. I assume that the linked report takes the opposite position, so I wonder why the FRA would publish it. Does the report blind side the FRA on PTC?

5

Be nice if the FRA would fund their mandate!

6

It was the AAR-Association of American Railroads that comissioned and released the report. Obviously the AAR is going to be on the position of its member railroads, that is against, but my reading of the report was that it presents a fair assessment of the system.

Some of the conclusions are based in part on FRA statistics on the issue. As for the FRA position, they are mandated by law to see that PTC is implemented, so they have no choice but to “promote” the program. It is possible that some among the FRA, including the Administrator, have the personal view that PTC is not a good economical deal, but unless you happen to be, say, Joe Szabo’s brother-in-law you sure aren’t going to hear anything like that. Anybody in politics opposing PTC would find their career just as dead as the poor victims of the next train crash that could have been prevented by PTC.

7

Matt Rose, in this months issue of Railway Age, as part of his acceptance speech for winning the Railroader of the Year award from RRA, pointed out that the cost to benefit ratio of PTC is 22:1, for every $22.00 railroads will spend implementing PTC, $1.00 in possible benefits may be realized…not what I would call a favorable ratio, and that is not the first time or the first place I have seen and heard that ratio.

He went on to point out that next year, 700 million dollars of BNSF capital projects will be shelved to spend the money on the first stages of PTC.

He further pointed out that said money will most likely have to come from projects like tie replacement and track maintenance that are known to enhance safety and profits.

In that same issue, (different article) there is a graph that shows the year 2009 has the one of lowest number of injuries and fatalities for quite some time…

Food for thought.

8

I also seem to think I have seen that some of the lines that the FRA is mandating PTC on, no longer carry the type of traffic that require PTC as well as the changes in routing of HAZMAT to satisfy the biggest number of NIMBY’s will also reduce lines that would ‘require’ PTC on it’s passenger/HAZMAT requirements.

PTC is a knee jerk piece of legislation and rule making forced through by jerks who are more likely to have ‘broken the rules’ than the engineer in the crash that caused all the problems.

9

Ed,

The cost/benefit ratio of 22:1 seems like a good reason not to do PTC. Can safety measures like PTC just be foisted on the railroad industry because nobody can be opposed to safety? If so, is there any limit to what can be mandated in the name of safety? Why not just mandate a complete separation of grade crossings while they are at it?

10

The FRA doesn’t make laws…

They do make policy recommendations and legal suggestions.

They are charged with enforcing the laws and each railroads own rules.

The Legislature makes the laws, and once it becomes law, the FRA has to enforce it, no matter if it makes sense or not.

A good example is the requirement that all TIH cars, (Toxic InHaliation) cars like chlorine may not be allowed to remain in a yard over 24 hours before delivery to a customer, and that all of these cars must be tracked by placement in the yard tracks, plus we now have to get a signed receipt from the shipper on deliver of the car to their facility.

So, if I switch a chlorine car out into a track, then later in the day swing that track, I have to inform my yard master of the car number and reporting mark, where the cars is, what track and how many deep from the head end.

When we take that track out to work the industries, we have to cut the cars out of the train, then place them in a spot where the receiver can inspect the cars for IEDs, (improvised explosive devices) or bombs…before they can allow us to place the cars in their plant…then we have to have them sign a reciept for each car, dated and time noted of delivery.

Now, I guess it is OK for the car to have a bomb on it when it is in the yard, because there is no requirement to inspect for IEDs when we receive the car from our Class 1 member lines, and we don’t have to sign a receipt for the cars, but the TSA managed to convince law makers that the silly procedure we now have to go through to deliver the car somehow makes things safer…so the FRA will watch us deliver cars, the TSA daily stops by the yard a request a TIH car location report, and the bureaucracy grinds on, totally ignorant of the fact that blowing up a chlorine car in a rail yard or one of these plants will not wreck the industry or create the type of media hysteria the bad guys want…not enough civilian casualti

11

Ed,

Slight correction from one who worked Hazardous Material Control for 13 years. Your ammonium nitrate train is not a rolling bomb. It will not detonate even if hit with dynamite or other high explosive charge.

The OK City bomb was home made ANFO, ammonium nitrate fuel oil, mixture. Commercial ANFO is a blasting agent, relatively insensative to initiation. It is used as an explosive in part because it is less sensative than many other explosives and therefore safer to use. When initiated properly it makes a fine explosive as publically demonstrated at OK City.

Yes I know a shipload of Ammonium Nitrate blew up in Texas City shortly after end of WWII. The ship was on fire. As I recall they were fighting the fire with water. I do not recall seeing a detailed report on this event but would point out that a ship can hold a lot more product, and is a much stronger containment vessel, than a hopper car. The ship case is the exception. Ammonium nitrate is not an explosive. As you know it is classed as an oxidizer.

Mac McCulloch

12

Note that the guts of this report are really only 53 pages - the rest are various appendices, including 20-plus pages on the preparer’s qualifications = 40-plus percent, which pretty unusual in my experience. The entire ‘PDF’ format file is about 736 KB - not too big for what it is. Here’s the Table of Contents for your further information:

Table of Contents

I. Introduction … 1

II. Summary of Findings … 2

III. Background and Context of PTC Benefits Analysis … 8

A. Overview of PTC Requirements … 8

B. Projected PTC System Implementation … 9

C. Context of Analysis… 9

IV. Core Assumptions Governing PTC Benefits for Rail Operators… 11

A. Line Capacity/Network Velocity

13

Ed,

I understand your point about the distinction of the role of the lawmakers as opposed to the role of the FRA, but are they not sort or joined at the hip? You have the public sector FRA, which wants to grow larger, teemed up with the public sector lawmakers who can impose mandates on private industry. Those mandates will grow the FRA. For example, how much larger will the FRA become if it is to administer the implementation and regulation of PTC?

Although the FRA cannot mandate anything until it is made into law, doesn’t the FRA have a hand in promoting an idea to be made into law? They spend money developing safety measures such as PTC, ECP brakes, remote coupling and uncoupling, and freight car side reflectors before any laws are made that require these safety improvements. Surely this development of safety ideas must boost the chances of getting congress to make laws that require them.

Will the government soon m

14

Very generally, my understanding is that the FRA helped along the development of PTC as a Reseach & Development project since about the mid-1990’s.

But it’s been the NTSB that has been ‘beating the drum’ for it since the mid-1980’s or so. Yes, their paychecks come from the same place, but the NTSB’s recommendations often seem to be devoid of any cognizance of the financial constraints of the industry, whereas the FRA is supposed to at least consider that kind of thing when implementing its rules. But when Congess says “Jump !”, the FRA’s response is supposed to be only to ask “How high ?”

15

Those are some good questions, Paul.

I think the devil is in the details, here. The disconnect occurred between the time the law was passed and the FRA wrote the regs interpreting the law. The FRA’s “flavor” turned out to be very expensive (e.g. all equipped locomotives need a display for the conductor) Add to this the regs regarding minimizing the risk for moving hazardous stuff through routing changes and you have a landscape where moving hazardous stuff is a very expensive proposition. There are very, very few class 1 route miles that won’t need PTC.

Now, add to this the current push by some shippers for a stronger STB that could reduce revenues a good bit and you have real possibility that regulation could kill the goose that laid the golden egg. Any one of these, but itself, might not be so bad, but together, they are stifling - at a time when gov’t is trying to make rail a big piece of their environmental policy.

So, the RRs are fighting back by pulling on any levers they can. First, they tell the chemical shippers they are going to have to pay for the incremental costs for PTC to cover those lines the FRA now says their shipments have to move on. This is to get some leverage on those shippers who are pushing for a stronger STB - they can’t have it both ways. The chemical shippers fire back that PTC has all these tangential benefits which the latest from AAR refutes.

Certainly, PTC as an overlay on existing block signals and CTC will reduce the max capacity, but as a replacement for existing signally and the backbone of computer based train control, there is the potential for increasing capacity. Having to install it almost everywhere when capacity constraints will only occur on small portion of the network and there are other, cheaper remedies, makes the non-safety benefits of PTC rather small.

Had the implementation requirements been more limitied and stretched out over more time, I think you’d see less push-back.

At least, that’s how it seems to me.

16

True, but my point was anyone with rudimentary bomb making skills has access to this train.

A 55 gallon drum of gasoline poured into one of the hatches, and about $25.00 spent at Radio Shack and you could do quite a large amount of damage.

The Texas City explosion was a direct result of the fire reaching the AN dust in the ships second bunker, which exploded, and subsequently ignited the other holds.

The other part of my point was simply this thing is accessible, the produce has been used as a bomb quite successfully in the past.

I can tell you that the TSA has the same mentality as most government agencies…and the number one rule at any government agency is to make sure you have a job to come back to tomorrow.

Everything else is secondary, I know, I worked for The Office of the Attorney Ge

17

Ed,

As to the TSA you have my sympathy. When OSHA stuck their noses into haz mat train wrecks they took all of the fun out of it. We have done far more damage to ourselves with the TSA than the terrorists did or likely would ever do. I do not expect sanity to return soon. If I say more I will get bounced for political speach.

Best personal regards from one of the Ilk,

Mac

18

I agree…

And thats the bad thing about government agencies like this…

Once your create them, they are very hard/impossible to do away with.

Crandel was right, they will fabricate fear and panic because it keeps them employed.

19

I read the report as far as the statement that it does not consider the safety impacts of PTC, but only “other” economic impacts.

At that point I lost interest. PTC is for safety. We, through our representative form of govt, have decided that it is worth what it costs to gain improvements in railroad safety.

What would interest me greatly is the report that details the costs and safety benefits of PTC. What are the assumptions or agreed values for:

The costs of human lives saved and disabilities prevented?

The costs of repairs to and replacement of equipment prevented?

The costs of operational interference and lost revenue due to accidents avoided?

The reduction in insurance premiums due to better RR safety?

There’s more, but I think you will get the idea.

We can certainly consider the report that is the subject of this thread part of the evaluation: it would show us a non-safety benefit if the impact is increased efficiency on non-safety aspects of RR operations, or it would show us a cost if the impact is decreased efficiency. If the decision-makers did not take this into account in the overall evaluation, maybe they should have.

But the main issue nevertheless is RR safety. That’s the cost-benefit analysis that I’d like to see.

20

I would like Mudchicken to weigh in on this question. Would a consideration of a combination of ATS and ATC be a good alternative to what appears to me a very much more expensive and not that safer system being proposed?.

I realize that it may take legislation to allow that option. That may be the only way to get the FRA under control.

One thought. Did the RRs shoot themselves in the foot when they were able to get the ICC to allow them to remove many ATS or ATC cab signal systems? I know it was economic decisions when the RRs were suffering a major downturn.

One last thought. Why has NS extended the cab signals system of the PRR to new routes? Many of those projects were started before PTC was even proposed. We also know Metrolink is ;presently installing ATS on all the lines they own although the freight carriers that use their lines do not have to have ATS working when on Metrolink.