1. George Mason University The School of Public Policy Policy Analysis Center Closing the Loop! Rail, Air, Trucking Lecture 9

2. George Mason University The School of Public Policy Policy Analysis Center Rail Railroads have changed their business model more than any other sector. –Wide ranging modernization Rail beds Technology upgrades Business partnerships Equipment modernization Passenger service

3. George Mason University The School of Public Policy Policy Analysis Center Rail Beds Continuous welded rail on high traffic and high speed corridors Concrete rail beds with new fasteners technology –Less maintenance –Longer service life –Greater safety

4. George Mason University The School of Public Policy Policy Analysis Center Technology Infrastructure Railroad systems have developed a sophisticated integrated technology base –Customer Supplier Management System –Railroad management systems Automated freight yard operations Imbedded sensor technologies for real-time freight management Road bed safety systems (crossings, etc)

5. George Mason University The School of Public Policy Policy Analysis Center Business Partnerships Route planning and data sharing with other carriers (domestic / international) Long-term planning with critical customers Shared equipment design with large manufacturers (standardization) In-house brokering services

6. George Mason University The School of Public Policy Policy Analysis Center Equipment Modernization Leading fuel economy standardization with innovative equipment manufacturer partnerships (GE, Electro-Motive Diesel) –Hybrid engines; –Hydraulic drives –Cantenary innovation –Magnetic Braking

7. George Mason University The School of Public Policy Policy Analysis Center Passenger Service Increased service and demand due to airline route closings and downsizing –Less security intrusion –Greater comfort, less hassle –Increased regional service –Better service – luxury –Marketing to “boomers” – long term leisure travel

8. George Mason University The School of Public Policy Policy Analysis Center Air Airline industry going through a tough period of consolidation and restructuring –Route consolidation/closure –Security upgrades/innovation –Regulatory reform –Freight innovation –International partnerships –Regional Hubs for Executive/Corporate traffic

9. George Mason University The School of Public Policy Policy Analysis Center Air Openskies Airline – https://www.flyopenskies.com/home/en_us JetBlue MINT http://www.jetblue.com/flying-on-jetblue/mint/ The future of business travel? –Security, comfort, personal service

10. George Mason University The School of Public Policy Policy Analysis Center Route Consolidation Political/Regulatory and Financial pressures have forced route consolidation –Two tier (regional/national) system is under attack and greater scrutiny –The feeder system is loosing public and governmental support due to safety concerns (pilot pay/training) –System is breaking down the profit margins

11. George Mason University The School of Public Policy Policy Analysis Center Security/Innovation Government/Industry effort to design security systems that are less intrusive Baggage handling capability key to innovation and security efforts Local security and profiling measures are being implemented internationally Industry working with national/international police authorities to increase safety

12. George Mason University The School of Public Policy Policy Analysis Center Regulatory reform Lobbying for upgrade to FAA traffic control system – critical for airline growth Improve maintenance practices –Spare parts screening –Outsourcing preventive maintenance –More rigorous inspection cycles –Increased scrutiny of technical training and certification

13. George Mason University The School of Public Policy Policy Analysis Center Freight Innovation Improve cargo handling by partnering with Land and Sea carriers Develop common air transport scheduling and tracking systems that allow for quick routing changes of air freight due to airline specific delays Standardized freight contracts, specifications and guidelines among the airlines

14. George Mason University The School of Public Policy Policy Analysis Center International partnerships Airlines increase partnerships with foreign carriers on freight, security, passenger traffic –System innovation –Political/Bureaucratic advances –Standardization (containers, cargo types, tracking standards, and security) –Increased Fly-in agreements (increase foreign landing rights on American airports)

15. George Mason University The School of Public Policy Policy Analysis Center Regional Hubs for Executive/Corporate traffic Increase ability of regional airports to service Executive/Corporate traffic Develop new security standards that address needs of regional hubs Develop long-range plans for building regional infrastructures in anticipation of future private and corporate needs

16. George Mason University The School of Public Policy Policy Analysis Center Trucking Realign national/regional road infrastructure planning –Safety –Environment – (i.e., carbon credits) –Engineering Highway Trains (higher loads) T. Boone Pickens - Natural gas trucking plan is gaining traction in congress and the White House Smart Highways –Partnerships/Regional expansion

17. George Mason University The School of Public Policy Policy Analysis Center Safety Trucking regulation enforcement –Driver awareness – truck technology Automated time logging Alertness sensors Satellite services Highway congestion –Automated routing –Rail Partnerships –Carrier “Blackouts” on congested highways

18. George Mason University The School of Public Policy Policy Analysis Center Environment Hybrid, Natural Gas, and Clean Diesel Carbon regulation/trading –What does an exchange look like? –Partnerships with rail, air, water –Regional emphasis vs. national presence Containerization – new standards –Trailer/Load safety –Land Train options –Multi-modal hubs (managing high density areas)

19. George Mason University The School of Public Policy Policy Analysis Center Engineering Infrastructure –Bridges – higher, stronger –Highways – new construction standards –Smart Highway (temp, mechanical, physiological, etc Highway sensors Truck sensors Physiological sensors – Flex routing

20. George Mason University The School of Public Policy Policy Analysis Center Partnerships/Regional expansion Regulations will force trucking companies to change – Quickly –Mileage standards –Fuel –Safety –Environmental These issues will force trucking companies to look at “Regional/Local” innovation rather than “National”. Partnerships, Carbon trading, and adaptive routing will provide competitive advantage

21. George Mason University The School of Public Policy Policy Analysis Center Final Thoughts The industry as a whole will be forced to change significantly over the next decade Overall the changes will be positive because the system will become more optimized and thus competitive The outlier is water transport – depending on environmental regulation and industry leadership, water transport could (along with rail) reap most of the benefits of this new competitive environment.