1. Using Technology to Protect the Railway Asset Global Rail Freight Conference New Delhi, March 22, 2007 Dr. A. J. Reinschmidt

2. TTCI and TTC: Two Different Things
TTCI: The Company
TTC: The Facility

3. The Transportation Technology Center, Inc.
Our Landlord
Our Owner

4. AAR - Association of American Railroads
A not-for-profit association, established in 1934
Represent 8 class 1 freight railroads (200,000 mile of trackage, 2.1 trillion ton-kilometers Freight Haulage)
Annual Revenues - $36 Billion dollars
Public policy advocacy
Network efficiency and interchange by electronic information exchange

5. TTCI: The Company
Wholly owned subsidiary of the Association of American Railroads
Headquartered at TTC
Operated by our own management team
Guided by our own Board of Directors
Charged with developing TTC to become the worlds leading railway research testing and training facility

6. U.S. Freight Intercity Modal Market Share
Measured in ton-miles (see left hand pie chart), railroads have 28% of all freight ton-miles, but, more importantly, 42% of the U.S. intercity freight market — well ahead of trucks (28%) and more than any other transportation mode. The rail ton-mile share has been trending slightly upward over the past 10 to 15 years, after falling steadily for decades. [2001 is most current data available.]
 However, largely because they are so efficient and because of the enormous rate pressure they typically face, in return for hauling 42% of intercity ton-miles railroads receive less than 10% of intercity freight revenue (right hand pie chart).
 The rail share of intercity freight revenue has been trending downward — from 14% in 1990 and 21% in 1980 — a reflection of the intense competitive environment in which railroads operate.
Pipeline 2%
Water 1%
Other 7%
RRs
10%
Pipeline
17%
RRs
42%
Water
13%
Trucks
80%
Trucks
28%
Ton-Miles
Revenue
“Other” for ton-miles is less than 0.5% Source: Eno Transportation Foundation

7. Class I Railroad Traffic in 2005 (Gross Freight Revenue)
RRs transport a huge spectrum of commodities:
 Coal (vast majority to electric power plants, but some for export) has historically been the most important single commodity carried by rail. In 2005, coal accounted for 43% of tonnage and 20% of revenue for Class I RRs. Coal accounts for ~50% of all U.S. electricity generation, and railroads handle approximately 67% of all U.S. coal shipments.
 Other major commodities carried by rail include chemicals (including massive amounts of industrial chemicals, plastic resins, and fertilizers); grain and other agricultural products; non-metallic minerals such as phosphate rock, sand, and crushed stone and gravel; food and food products; steel and other primary metal products; forest products, including lumber, paper, and pulp; motor vehicles and parts; and waste and scrap materials, including scrap iron and scrap paper.
Intermodal* - $10.1 bil
Coal - $9.4 bil
Chemicals - $5.4 bil
Transportation equipment - $4.0 bil
Farm products (mainly grain) - $3.6 bil
Food - $3.3 bil
Lumber & wood - $2.3 bil
Pulp & paper - $2.0 bil
Primary metal products (e.g., steel) - $1.7 bil
Stone, clay & glass products (e.g., cement) bil
Nonmetallic minerals (e.g., sand, gravel) - $1.3 bil
Source: AAR *Estimated. Some intermodal revenue is also included in individual commodities.

8. Intermodal is Now the Top Class of U.S. Freight Rail Traffic
Rail intermodal transportation — the movement of truck trailers or containers by rail and at least one other mode of transportation, usually trucks or steamships — has been the fastest growing major segment of the U.S. freight railroad industry for many years.
2005 intermodal volume (11.7 million units) was 284% higher than 1980– that’s a unit every less than three seconds.
In 2003, for the first time ever, intermodal accounted for more revenue than coal, traditionally the most important rail commodity. In 2005, intermodal = 23.0% of revenue; coal = 21.0%. (=BNSF, CSX, KCS, NS, and UP combined)
Intermodal combines the door-to-door convenience of trucks with the long-haul economy of railroads.
Intermodal growth driven largely (but by no means entirely) by international trade, especially with China. In fact, ~50% of rail intermodal movements are imports or exports.
Intermodal and Coal as a % of Revenue*
*Data for BNSF, CSX, KCS, NS, and UP Source: railroad financial reports

9. Railroads Are Moving More Traffic Today Than Ever Before
RRs are not immune from this trend. Demand for rail service right now is very high.
 In fact, U.S. freight RRs are moving more freight today than ever before. This chart shows quarterly year-over-year increases in U.S. freight rail traffic since the first quarter of
 Intermodal traffic has been especially strong – 17 straight quarterly increases.
 This sharp increase in traffic caught railroads and shippers by surprise and has led to capacity and service issues in some areas and points on the U.S. rail network.
U.S. Rail Traffic: % Change From Previous Year –
Q1-01 to Q2-06
Carloads
Intermodal
Source: AAR Weekly Railroad Traffic

10. U.S. Rail Ton-Mile Growth: 1964-2005 (Index 1981 = 100)
This chart shows how the industry has performed since Staggers:
Volume (green line, = revenue ton-miles) is up 86%.
Staggers Act Passed Oct. 1980
Source: AAR

11. U.S. Class I Tons Originated (billions)
 The bottom line is that it takes an enormous amount of money to run our nation’s freight rail system. It simply cannot be done on the cheap.
 And in fact, railroads have long been spending enormous amounts of money on their systems, with the pace of spending trending upward over time.
 From 1980 through 2005, Class I RRs invested nearly $360 billion (and short lines spent additional billions) to maintain and improve their infrastructure and equipment.
RR investment in itself – that is, capital spending on infrastructure and equipment as well as maintenance spending on infrastructure and equipment – is about $15 billion- $17 billion per year, or about 45% of revenue.
As this slide shows, spending on a per-mile basis has been trending upward, a reflection of the diligence with which railroads address capacity and service issues.
[Note: chart shows current dollars. When expressed in constant dollars, the
trend is flatter, but still rising.]
Source: AAR

12. Railroad Traffic Density is Rising Millions of Class I Ton-Miles
 As noted earlier, U.S. freight RRs today are hauling more traffic than ever before. At some points on the rail network and on some rail corridors, in fact, there basically is no more room.
As this chart shows, traffic density – defined as ton-miles per mile of railroad – has been moving steadily upward for years. From 1980 through 2005, traffic density on average is up 218%. Since 1990, it’s up 105%. (Story is essentially the same if the measurement used is ton-miles per mile of track.)
 Obviously, not every line has had the same traffic density increase as every other line. But this chart does illustrate why freight railroads in some areas already face capacity limitations due to sharp increases in traffic.
And it’s probably only going to get worse. The U.S. Department of Transportation is projecting a 55% rise in rail freight traffic demand by 2020 compared with 2000 levels.
Making the investments in upkeep of existing infrastructure and equipment and building new capacity to handle increased demand will be critical for our economy moving forward.
Millions of Class I Ton-Miles
Per Mile of Road Owned
Source: AAR

13. Railroads are Safe and Getting Safer
RRs have made tremendous safety gains. According to FRA data, the rail industry reduced its overall train accident rate 65% from 1980 to 2005, and 15% since (red line on this chart).
The rate of railroad employee casualties (lost workday injuries and illnesses per 100 full-time equivalent employees — yellow line) has been reduced 80% since and 70% since 1990.
The employee casualty rate and the grade crossing incident rate for all of 2005 was the lowest in history.
Even rail cargo is safer: loss and damage as a % of revenue is down 73% since (green line).
RR Safety Trends: (1980 = 100)
Source: FRA, AAR

14. RRs Are Safer Than Other Industries Avg. All Private Industry
Today, in fact, railroads are one of our nation’s safest industries.
 According to U.S. Bureau of Labor Statistics data, railroads have lower employee injury rates than other modes of transportation and, indeed, most other major industry groups, including agriculture, construction, and manufacturing, as well as private industry as a whole.
 U.S. railroads also have employee injury rates well below those of most major European railroads.
Cases With Days Away From Work, Job Transfer, or Restriction Per 100 Full-Time Workers
Avg. All Private Industry
Trucks
Constr.
Avg. Mfg.
Source: U.S. Bureau of Labor Statistics

15. Class I Spending* on Infrastructure & Equipment
Railroads Have Been Increasing Spending for a Long Time...
 The bottom line is that it takes an enormous amount of money to run our nation’s freight rail system. It simply cannot be done on the cheap.
 And in fact, railroads have long been spending enormous amounts of money on their systems, with the pace of spending trending upward over time.
 From 1980 through 2005, Class I RRs invested nearly $360 billion (and short lines spent additional billions) to maintain and improve their infrastructure and equipment.
RR investment in itself – that is, capital spending on infrastructure and equipment as well as maintenance spending on infrastructure and equipment – is about $15 billion- $17 billion per year, or about 45% of revenue.
As this slide shows, spending on a per-mile basis has been trending upward, a reflection of the diligence with which railroads address capacity and service issues.
[Note: chart shows current dollars. When expressed in constant dollars, the
trend is flatter, but still rising.]
Class I Spending* on Infrastructure & Equipment
Per Mile of Road Owned
Trend line
*Capital spending + maintenance expenses - depreciation Source: AAR

16. ...And Are Poised to Spend Even More
 Railroads have announced plans to increase their spending even more in
Class I RR Capital Expenditures
($ Billions)
e – AAR estimate Source: AAR

17. RRs Have Far Higher Capital Expenditures Than Other Industries
Railroads are at or near the top among all industries in terms of capital intensity.
For example, in the 10 years from , Class I railroads spent 17.8% of their revenue on capital expenditures each year, on average. The comparable figure for the average U.S. manufacturer was 3.5%.
 From 1980 through 2005, Class I RRs invested nearly $360 billion (and short lines spent additional billions) to maintain and improve infrastructure and equipment.
 After accounting for depreciation and adding expenses, freight railroads typically spend (capital expenditures and expensing together) $15 billion- $17 billion each year — equal, on average, to around 45% of their operating revenue — to provide the high quality assets they need to operate safely and efficiently.
Capital Expenditures as a % of Revenue: Avg
Class I RRs
Petrol. &
Coal Prod.
Avg. All Mfg.
Computers
Plastics
Transp.
Equip.
Nonmet.
Minerals
Paper
Chemicals
Wood Prod.
Food
Sources: U.S. Census Bureau, AAR

18. EFFICIENCY Railroad Spending Trends Total Spending = 37.7 Billion
There are four principle spending categories (Capital and Repair & Maintenance) :
Transportation = 43 %
Cost centers
Fuel = $4.4 Billion in 2004
27 % spending increase from 2003
59 % spending increase from 2002
Labor (Train Crews)
Equipment = 22 %
Freight car and Locomotive (Repair & maintenance)
Way & Structures = 23 %
Rail & OTM
Tie
Ballast
Bridge
Source: Class I railroad (R-1 data) 2004.
Spending is independent of depreciation expense.

19. Railroad Spending Trends Roadway (MOW) Track Related Spending
The Rail & Track Material account includes special trackwork.
From rail surveys conducted in 1994 and in 2001 rail life has increased as a result of technology based solutions.
Premium Rail
Lubrication systems
Improved grinding practices along with optimal Wheel/Rail profiles
Are considered key attributes to this rail productivity
Source: Class I railroad (R-1 data) 2004.

20. Rail and Crossties Laid
Year
New Rail (tons)
Crossties (thousands)
1995
443,084
12,784
1996
491,488
14,269
1997
549,726
13,363
1998
653,612
12,185
1999
698,713
12,147
2000
689,992
11,454
2001
623,866
11,383
2002
584,942
13,416
2003
572,828
13,777
2004
471,426
13,813

21. Anatomy of Track Strength
Typical
Curve Spirals
Mainline Track
Track
Transitions
Special
Trackwork
Poor
Foundations
New
Construction
Bonded
Track on
IJs
Bridges
3091-Davis-1

22. Anatomy of Train Loads Steering Trucks Heavy Curves Bad Actor Trucks
Tangent
Track
Track Transitions
Special
Trackwork
3091-Davis-2

23. Methods of Reducing the Stress State
Strengthen all track (e.g. Rail Steels)
Fix weak points
Better (Dynamically Designed) track
Match track strength to train loads
Forces
From Train
Potential Problems

24. Methods of Reducing the Stress State
Strengthen all track
Fix weak points (e.g. Rail Welding)
Better (Dynamically Designed) track
Match track strength to train loads
Forces
From Train
Potential Problems

25. Methods of Reducing the Stress State
Strengthen all track (Capital Intensive)
Fix weak points
Better (Dynamically Designed) track (e.g. STW)
Match track strength to train loads
Forces
From Train
Potential Problems

26. Methods of Reducing the Stress State
Strengthen all track (Capital Intensive)
Fix weak points
Better (Dynamically Designed) track
Match track strength to train loads (e.g. TOR)
Forces
From Train
Strength of Track
Where train is applying high forces, track is strong.

27. Inspections with Existing Technologies
Truck Curving (TPD)
High Lateral Loads
High L/V Ratio
High Angle of Attack
Acoustic Bearing Detector (TADS)
Smart HBD’s
Machine Vision Based Inspection Systems (FactIS)

28. Truck Performance Detector Site
N.A. Freight – 18 TPD Installations

29. Trackside Acoustic Detector Site
N.A. Freight – 8 TADS Installations

30. Example: Inner Ring or Cone Defect
Time history and frequency spectrogram
Sound file for cone defect

31. Example: Outer Ring or Cup Defect
Time history and frequency spectrogram
Sound file for cup defect

32. Example: Roller Defect
Time history and frequency spectrogram
Sound file for roller defect

33. Wheel Profile Condition Monitoring
3 FactISTM Sites in North America

34. Cracked Wheel Detection
Problems:
Annual costs related to cracked railroad wheels is approximately $24 million
Thermal cracks and shattered rim cracks account for many derailments
Problem continues to grow under HAL
Goals:
Develop a wayside inspection system
Reduce derailments resulting from broken wheels
Develop new wheel alloys
Accomplishments to date
Developed and demonstrated effectiveness of a wayside cracked wheel detection system
Hospital and FAST train tests

35. Cracked Wheel Detection Wayside Tracking System
SRI 6A Cracked Wheel Detection
Conceptual Operation
Cracked Wheel Detection Wayside Tracking System

36. Cracked Wheel Detection Wayside Tracking System
SRI 6A Cracked Wheel Detection
Actual Operation
Cracked Wheel Detection Wayside Tracking System

37. Cracked Wheel Detection - Results
Pattern Recognition
A-Scan
Electronic Strip Chart
Artificial Flaw Indications
Service Flaw Indications
Artificial and Service Flaw Indications

38. HAL Axle Program Problem:
Derailments due to broken axles have increased over the past 4 to 5 years
Approximately 20 broken axles per year in the 2000’s as compared to 4 in the late 1990’s
Problem Size is $15M+
Goals:
Determine the ability of currently designed 286,000-lb Class F axles to survive in the railroad environment
Reduce/eliminate derailments caused by broken axles
Research Approach
Multi-faceted program focused on both prevention and detection
Prevention – New axle designs?
Detection – Laser ultrasonics

39. Cracked Axle Detection
Beam Turning and Shaping
Air-Coupled Transducers
Wheel Sensors
Indexing Mirrors
Turning Mirrors
Laser Heads

40. Prototype System No Crack Present Crack Present Direct Wave
Amplitude
Time (microseconds)
Crack Present
Reflected Wave
Amplitude
Direct Wave
Time (microseconds)

41. Cracked Axle Inspection System
No Crack Condition
Primary wave detected at ~1130 microseconds
Calculated primary wave for a 36-inch wheel is ~1145 microseconds
No crack reflection present
Direct Wave
Direct Wave
Optic Base Station
Beam Expander
Axle Inspection Station
Direct Wave
Direct Wave
Reflected Wave
Reflected Wave
Crack Condition
Crack located 89 mm from axle centerline
Calculated primary wave for a 38-inch wheel is ~1265 microseconds
Crack reflection expected at 1339 microseconds
Crack reflection observed at 1340 microseconds

42. ATSI & EHMS Steering Committee – Mission
Provide overall leadership and governance for the industry’s Advanced Technology Safety Initiative and Equipment Health Management Systems (EHMS)

43. ATSI & EHMS – “Changing Finders into Fixers”
Develop shared responsibility for car condition
Railroads
Private Car Owners
Maintenance Responsible Parties
Use detector data to identify distressed cars and assess level of distress
Issue notifications to maintenance reponsibile party to affect repair

44. 2006 Accomplishments
Worked in conjunction with the AAR’s Equipment Engineering Committee & the SRI Program to develop criteria for truck hunting performance
Developed consensus on 2007 – 2008 detector focus
Bearings – Acoustic detection and temperature trending
Vision systems for wheel profile and brake shoes
Imbalanced / overloaded car detection

45. Progress: High Impact Load Wheels – 3-year Trend

46. Progress: Estimated Truck Hunting Alerts
767
528

47. 2007 Activities and Focus Areas
Rule 88 Examination
When in the car owners control, are all appropriate conditions identified and repaired?
Home Shopping
How can the industry work together to efficiently identify and remediate cars that need extensive repair?
Interface with Other AAR Activities
How can ATSI & EHMS support other related AAR initiatives?

48. ATSI & EHMS Technology Roadmap
Wheel Profile
Data in InteRRIS® – late ’06
Remediation recommendation – ’07
Rules not specific to wayside detection systems
Truck Performance
Data in InteRRIS® – ’02
Remediation recommendation – late ‘07
Overload / Imbalance
Base data in InteRRIS® – ‘01
Additional work needed for alarming (SRI Program in ’07)
Remediation recommendations – ‘09

49. ATSI & EHMS Technology Roadmap
Hot / Cold Wheel
Data in InteRRIS® – Ready to accept data
Remediation recommendation – ‘09
Brake Shoe – Visual
Data in InteRRIS® – ’08
Remediation recommendations – prior to ’10
Rules not specific to wayside detection systems
Vision Systems
Data in InteRRIS® (beyond WPMS) – ’08
Remediation recommendation – ’10

50. ATSI & EHMS Roadmap Technology Driven Train Inspection
Data in InteRRIS® – Early ’08
Remediation recommendation – ‘11
Cracked Axle
Data in InteRRIS® – ‘10 (est)
Remediation recommendation – prior to ’11
Cracked Wheel
Data in InteRRIS® – ’09
Remediation recommendations – ‘13

51. ATSI vs TDTI “Changing Finders to Fixers”
Focus on interchange process
Develops shared responsibility for car condition
Railroads
Private Car Owners
Maintenance Responsible Parties
Uses detector data to identify distressed cars and assess level of distress
Issues notifications to maintenance responsible party to affect repairs

52. ATSI vs TDTI “Changing Finders to Fixers”
Focus on regulatory revision
Uses detector data to certify car health
Vehicle health report in lieu of visual inspection
Car health sufficient to make it to destination

53. InteRRIS® - EHMS Review
Functions
Contrasts
Customers
Progress
Issues
Functions
InteRRIS® vs RR vs EHMS/Railinc Systems
Contrasts in Responsibilities
Customers
Non-Railinc: AAR/SRI; International,; Transit
Progress
InteRRIS® status
Expectations
Issues
Support Level (conflicting priorities)

54. Functions: Understanding InteRRIS®
Industry Objectives for InteRRIS®
Centralize railroad detector data for mutual sharing
Support preventive and predictive maintenance planning through data availability [provide a commercial service] to private car owners
InteRRIS® was designed for and is built to support industry vehicle health monitoring initiatives
ATSI adopted InteRRIS® because it readily provided the initially required functionality without modification
ATSI was initiated in 6 months by using existing systems
KEY Concept: FLEXIBILITY
Integrate all detector data
Provide knowledge to user/system
Designed to be:
Flexible
Integrated
Secure

55. Functions: How InteRRIS® meets industry requirements (current/future)
Receive and house detector detail data
Feed directly to RR systems: data and Events (Alerts)
Feed data to subscribers (car owners, RRs, fleet mgrs.)
Distribute Event Notices: EHMS, subscribers
Access to data for analysis: SRI, RRs, subscribers