The government might give railroads another five years to install costly crash-avoidance technology because the industry is on track to miss its end of 2015 deadline. But some argue the freight railroad industry is missing more than just the target date for the roughly $12 billion mandate.
The railroads’ decision to take the lighter, less costly step of simply enhancing existing signaling systems rather than replacing them entirely may leave operating efficiencies by the wayside, some analysts say. They argue the same technology that automatically shuts down locomotives to head off a crash also could improve railroads’ running time, track capacity and fuel efficiency.
Railroads could more easily switch gears on implementing positive train control technology if Congress approves an extension measure within the House surface transportation bill. The Federal Railroad Administration is expected to give a status update on PTC implementation March 1.
Additional time, however, won’t likely spur the railroads to change course. The technologies able to deliver such capacity and speed gains “exist only as a concept or, if they do exist, are unproven, much more expensive, and will take much longer to develop and deploy,” the Association of American Railroads said in a position paper.
AAR spokeswoman Holly Arthur said it’s “difficult to envision the benefits that any next iteration of PTC would bring,” considering PTC isn’t off-the-shelf technology and there are unresolved issues with installation. Some of the more than 20 major components to PTC systems are still under development, she said.
The industry also argues there is no direct relationship between implementation of positive train control and using GPS data to improve train operations. The AAR said railroads would develop precision dispatching even without the PTC mandate.
There is no link because the industry’s PTC systems are focused only on signaling, said Steve Ditmeyer, a former associate administrator at the FRA. To gain advantages in dispatching, railroads would need to create a freestanding system, instead of using PTC to enhance the existing signaling networks. He said railroads can pursue precision dispatching independently of the PTC systems, but it would make more sense to create a system that does both jobs.
A full PTC implementation could cost more money, although some estimates project a cheaper price tag, largely because the systems would be tied to fewer wayside signals, Ditmeyer said. The adjunct professor at Michigan State University’s railway management program helped develop one of the first PTC systems while he was director of research and development and chief engineer at then-Burlington Northern Railroad.
“If you are doing GPS, why not take all the advantages of having it?” Ditmeyer said.
But just as some airlines resisted GPS-based modernization of air traffic control because of costs, railroads aren’t keen on “a whole different paradigm of traffic control,” he said.
Congress originally pushed the regulation after a runaway train killed 25 people in Los Angeles in 2008.
There may be business gains to be had through a full implementation of PTC, but railroads have easier ways to boost earnings. With little or no competition in most regions, railroads can boost rates — the recent earnings reports from Class I lines showed the evidence of their pricing power. Increasing capacity by running longer trains and adding double track is also more appealing to railroads than a complete reworking of how a railroad manages traffic.
If the railroads get a mandate extension, they are more likely to use the freed-up capital on other infrastructure improvements or share repurchases, said John G. Larkin, managing director at Stifel Nicolaus. The impact also will vary by railroad.
For instance, Michael Ward, president, chairman and CEO of CSX Transportation, said an extension is needed because the railroad is unlikely to meet the deadline due to “complications with developing the new technology and the delay in receipt of some of those new technologies.”
However, Lance Fritz, Union Pacific Railroad’s executive vice president of operations, said the railroad is “making a good-faith effort” to meet the deadline.
There is little chance the PTC mandate will be overturned entirely, but the rail industry has been successful in getting the government to scale back on the mandate.
Railroads might even save on implementation costs as more companies vie for the PTC contracts as the timeline is expanded. The requests for proposals likely will still emphasize the railroad’s industry vision of PTC, however, and not what some analysts think it could be.