1. Freight Railway Integration Strategy For Inter-American Development Bank Transport Week 2009 by Transportation Technology Center, Inc. (TTCI) Subsidiary of the Association of American Railroads November 9, 2009

2. The Transportation Technology Center, Inc. Railway Research &Testing, Engineering consultancy and On-track testing Operates FRA’s Transportation Technology Center (TTC) - the world’s leading and largest railroad technology development and test center The largest concentration of railroad research and test engineers in the Western Hemisphere

3. TRANSPORTATION TECHNOLOGY CENTER, INC. NA Interchange Rules (AAR) Freight Car Components Freight Car Loading Mechanical Advanced train equipment Improved wagon components Vehicle-Track System Vehicle track performance Train condition monitoring Network efficiency solutions Permanent railway Improved track components Bridge asset life extension Improved signal reliability Heavy Axle Loads Heavy axle load implementation IDB Transport Week 2009: Freight Railway Integration Strategy

4. PRESENTATION OUTLINE Introduction to Freight Railway Integration Strategy ­ Overview of Interchange ­ Key elements of Interchange North American Railroad Interchange Model Recommended Interchange Strategies ­ Overview of Technical Programs Brazil as a Model for Interchange Strategies IDB Transport Week 2009: Freight Railway Integration Strategy

5. INTRODUCTION TO INTERCHANGE STRATEGIES Key words: Integration, Interoperability, and Interchange of railway freight traffic Definition: Cooperative agreements to operate between railroad companies (carriers) to ensure the safest and most efficient movement of freight traffic Objective: Provide potential strategies for interchange to Latin American Countries from North American Model ­ Improve safety, productivity and environmental issues related to transportation ­ Rules and standards recommended for interchange are designed to build confidence between carriers and countries to improve the modal ratio from highway (roads) to rail (railroads) ­ Meet the transport demand of Latin America’s growing economy with technology based rail solution IDB Transport Week 2009: Freight Railway Integration Strategy

6. INTRODUCTION TO INTERCHANGE STRATEGIES Key elements of interchange: ­ The Demand to move goods by rail between railroads ­ Primary demand strategies for interchange operations –Environmental driven (air pollution) –Rail to truck (highway congestion) –Demand driven (meet production goals) –Economically driven (shorter distance or reduced operating expense) ­ The Supply of railway resources to move goods by rail between railroads ­ Primary supply characteristics for interchange –additional track capacity on other railroads that may be utilized –additional equipment capacity ­ Structure to support the interchange system ­ Rules, Standards and Cooperative Agreements Between railroads –Government (Regulation) –Industry Railroad Groups (Self Regulation, Railroad Committees) –Individual Railroad Companies (Carriers) IDB Transport Week 2009: Freight Railway Integration Strategy

7. The North America Rail Network Connects Canada, United States and Mexico IDB Transport Week 2009: Freight Railway Integration Strategy NORTH AMERICAN RAILROAD INTERCHANGE MODEL

8. North American Railway System ­ Operating Statistics, U.S. Class I Railroads (2008) ­ 160,000 Miles of Track ­ 1.6 Million Wagons (N.A. Interchange) ­ 1.78 Trillion Revenue Ton-Miles ­ Interchange Traffic (75%) –Foreign RR Traffic 15% –Private Wagons 50% Significant Event for U.S. Freight Railroads ­ Government Deregulation (Staggers Act, 1980) ­ Major increases in railroad technology development ­ Increase in interchange traffic between carriers (new rule development) ­ Significant improvements since 1980 –Productivity –Safety IDB Transport Week 2009: Freight Railway Integration Strategy NORTH AMERICAN RAILROAD INTERCHANGE MODEL

9. Source: AAR Staggers Act Passed Oct. 1980 Interchange Developments (Index 1981 = 100) Productivity- revenue ton-miles, 1.78 Trillion in 2008 IDB Transport Week 2009: Freight Railway Integration Strategy NORTH AMERICAN RAILROAD INTERCHANGE MODEL

10. Sources: FRA, Railroad Safety Statistics Annual Report, 1980-2008 (preliminary 2008 data). Note: Excludes grade crossing accidents. 11.43 3.18 IDB Transport Week 2009: Freight Railway Integration Strategy Accidents per Million Train-Miles 72% reduction from 1980 to 2008 4.13 NORTH AMERICAN RAILROAD INTERCHANGE MODEL

11. RECOMMENDED INTERCHANGE STRATEGIES (ASSESSMENT STUDY) Assessment study of interchange in the region ­ Demand ­ Supply ­ Structure (Regulatory) Select pilot project route ­ Current interchange, or a demand for a cooperative agreement Economic analysis ­ Cost ­ Administrative ­ Technical Standards (rule development, infrastructure investment, and on going operations) ­ Benefits ­ Safety, Network Productivity and Environmental Advantages ­ Identify financing options Impacts ­ Existing environmental policy ­ Socio-economic impacts IDB Transport Week 2009: Freight Railway Integration Strategy

12. Railway Integration Strategy Focus: Define standards Develop track standards  Certify routes for interchange Focus: Define standards Develop mechanical rules & standards  Components  Loading Focus: Network integration  Efficient interchange operations  Automate accounting activities Information Solutions (software & hardware) Defined rules and structured processes OVERVIEW OF TECHNICAL PROGRAM STRATEGIES Mechanical OperationsInterline Services Railway Technology Railway Committee Structure Government Regulatory Interchange Agreement IDB Transport Week 2009: Freight Railway Integration Strategy

13. Program Regulatory Structure ­ Railway Technology ­ Track rules developed by Railroads and Government –Regulated by Government –regulated track rules document (route certification) ­ Mechanical Operations ­ Equipment rules developed by Railroads Committees –Regulated by Railroad Committees –regulated equipment rules document (interchange of wagons/locomotives) ­ Interline Services ­ Rules developed by Railroad Committees –Managed by private sector IDB Transport Week 2009: Freight Railway Integration Strategy OVERVIEW OF TECHNICAL PROGRAM STRATEGIES

14. Standards Development & Certification AAR STANDARDS MANUAL IDB Transport Week 2009: Freight Railway Integration Strategy

15. BRAZIL RAILROAD INTEGRATION ASSESSMENT Associacao Nacional dos Transportadores Ferroviaarios (ANTF) contracted TTCI to do an assessment for integration on the Brazilian Railway system ­ Assessment of Brazilian railways indicate a demand for interchange between railroads and bordering countries ­ Proposed site for a pilot project ­ Porto de Santos area (MRS, ALL, CPTM) ­ TTCI proposed limited track and equipment standards ­ Basic track safety standards ­ Basic wagon safety standards –wheels, axles and bearings –loading (open top) ­ Basic Information Technology & Accounting functions ­ Developed integration strategy to expand to other geographic regions ­ May be considered a model for interchange with other countries IDB Transport Week 2009: Freight Railway Integration Strategy

16. BRAZILIAN RAILWAY NETWORK IDB Transport Week 2009: Freight Railway Integration Strategy

17. MAIN PILOT PROJCT CORRIDOR IDB Transport Week 2009: Freight Railway Integration Strategy

18. CONCLUSIONS Interchange strategies have been tested and implemented in North America with continued improvements in productivity and safety Assessment study is vital to understanding the feasibility of interchange for each railroad and country The pilot project should be designed to expand to other regions Primary benefits of interchange is related to increasing traffic volume, improving safety, and environmental issues related to highway congestion Assessment of Brazilian railways indicate a demand for interchange between railroads and bordering countries IDB Transport Week 2009: Freight Railway Integration Strategy