How is the rail industry working to improve the safety of the transport of flammable materials, including crude oil? During today's OnPoint, Ed Hamberger, CEO of the Association of American Railroads, discusses the details of his organization's first State of the Industry Report.
Monica Trauzzi: Hello, welcome to OnPoint. I'm Monica Trauzzi. With me today is Ed Hamberger, CEO of the Association of American Railroads. Thank you for joining me.
Ed Hamberger: Glad to be here, Monica, thanks.
Monica Trauzzi: Ed, your organization this week is releasing its first-ever State of the Industry Report, which is quite surprising that it's a first-of-its-kind report. Why is this such an important moment for your industry to be educating stakeholders and lawmakers on the state of play?
Ed Hamberger: Well, thank you for having me, and what we are trying to do is build upon a report that we've been doing annually. Every January we do an outlook, for the last several years, about what we think the industry will be doing this year, what traffic patterns might be looking like. But we decided that we needed to get into more detail and more depth on some of the various sectors of our industry. For example, the one that we're releasing tomorrow is called Safety and Innovation. So what we're trying to highlight are some of the new technologies that are being developed to address those areas of concern and safety.
Monica Trauzzi: And obviously industry safety has been getting a lot of attention nationally. Crude by rail is a major focus for our viewers here at E&E.
Ed Hamberger: Yes, of course.
Monica Trauzzi: What is your industry doing currently to improve safety in the transport of flammable materials and to avoid incidents like the ones that we've seen in 2015?
Ed Hamberger: Well, really it's a three-legged stool. I know that you've had my good friend Jack Gerard on several times. We have been working together with the API and its members on areas of training, areas of course last year with the tank car regulation. The API and AAR submitted joint comments calling for a more robust tank car that would last longer if there was an accident. And of course the third leg of that stool is prevention. And that is making sure that we do everything we can so that an accident doesn't occur in the first place.
Monica Trauzzi: So rail safety violations were at an all-time high in 2015 according to the Federal Railroad Administration. Has enforcement been more aggressive, or is this a case of the industry not doing what it needs to do?
Ed Hamberger: Well, I don't know that it's either. I personally believe that the metric that makes the most sense is what is the accident rate doing, what is the injury rate of our employees doing, and it is constantly going down. 2014 was the safest year on record since 2013, which had been the safest year on record since 2012.
Monica Trauzzi: We're also transporting less in recent years.
Ed Hamberger: Well, it's a rate. So it's the accident rate per million train miles. So it is apples to apples. We think that 2015 based on preliminary data will be safer still. It's what we are doing as an industry. We cooperate, and this report tomorrow has a guest interview with John Tunna, who is the head of research and technology at the Federal Railroad Administration, and we have a very good partnership with the FRA in trying to do some research on new technologies to address areas like broken rails and broken wheels so that we can identify those rails or wheels that might be prone to break before they break and replace them.
Monica Trauzzi: So on the whole, how much is your industry investing in safety measures?
Ed Hamberger: Well, safety per se is hard to break out because a well-maintained railroad is a safe railroad. In 1980 when 25 percent of the industry was in bankruptcy and something called deferred maintenance was the rule of the day, we were not nearly as safe as we are now. A well-maintained railroad is a safer railroad, and we're spending in the neighborhood of $25 billion a year. Last year it was $29 billion, but since 1980, $600 billion on new technologies, better infrastructure, better locomotives and, key, good training for our employees.
Monica Trauzzi: So technology, as you mentioned, it's a big part of this. What are some of these new advanced technologies that you are working on currently and working to employ in the system?
Ed Hamberger: Well, one that I'm very excited about is being tested right now at the transportation technology center in Pueblo, Colorado, which we run a DAR under contract with the FRA. It's something called a phased array, and what it is is a multi-dimensional X-ray. And what we talk about in our report tomorrow is what if the body is 140,000 miles of steel, and that's what our body of work is, it's 140,000 miles of rail that has to be X-rayed, and this new technology is able to come at it from all the angles, not just from the top down, so that we're able to discover microscopic cracks and take corrective action.
Monica Trauzzi: And it's financially viable?
Ed Hamberger: We're going to find out. The first thing is, is it going to work, the technology, and if it works, I'm sure we'll put it out there.
Monica Trauzzi: And any sense of how far off it could be?
Ed Hamberger: I believe that the final testing should be done this year and we're hoping to get it out in the field next year, 2017.
Monica Trauzzi: In terms of legislation, at the end of last year the president signed a $305 billion transportation funding bill into law -- does that go far enough to advance safety, and where do you see the biggest challenges for your industry?
Ed Hamberger: Well, it did have a number of good safety issues in there. It made the tank car rule that came out of PHMSA even stronger, with our support and lobby in favor of that. What that bill did more though of course is address highway and transit safety, as I'm hopeful that your viewers all know, we are privately owned, privately maintained, and do not get subsidized by the federal government. But what's important is our fastest-growing segment of our business, and in fact now the largest segment of our business, is intermodal, where we work in cooperation with the trucking industry to have the long haul done by the rail and the pickup and delivery at either end by trucks.
Monica Trauzzi: So what are your plans for this report? Are you going to be shopping it around on the Hill? Who are you looking to educate? What's your market?
Ed Hamberger: Well, when I first got this job one of the things that we complained about is that we had the greatest story never told, and we tried to remedy that. What we want people to know is that we are dedicated to safety. There are some who believe that we did not run as fast as we could to implement, for example, positive train control. Not true. We spent over $6 billion through 2015, thousands of people dedicated to it, it's a complex technology, it will be installed completely by 2018 and operational shortly thereafter. So we just want the communities in which we operate, policymakers, to know that we are focused on safety.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show, I appreciate your time.
Ed Hamberger: Thank you, my pleasure.
Monica Trauzzi: And thanks for watching, we'll see you back here tomorrow.
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