Let’s build a smarter planet: Transportation

Let’s Build a Smarter Planet:

Transportation

© 2009 IBM Corporation

V12
Let’s build a smarter planet: Transportation

Transportation: The big picture.

Mode of transportation
Infrastructure
Air

Land Sea

 Automobiles  Roads  Airlines  Passenger  Ships and  Ports

 Trucks  Parking terminals ferries  Cargo
 Buses  Tolls  Air cargo terminals
 Railroads  Rails terminals
 Metro transit  Terminals
 Bridges
 Tunnels
 Signals and
communications

 Passengers and freight

 Local and long distance
 Commercial or publicly owned
 Vehicle and infrastructure manufacturers
 Supporting service providers for travel and freight
2 © 2009 IBM Corporation
Let’s build a smarter planet: Transportation

Transportation is critically important to civilization.

Across town or across the globe…

 Freight: Food, clothing, shelter, fuel, materials, manufactured products.
 People: Travel to work, school, shopping, healthcare, recreation.
 Economic vitality depends on the availability of transportation.
 Quality of transportation improves quality of life.
 Cities could not exist without transportation of goods into the city.

3 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Demands on transportation providers will increase over time, driving

the need for new intelligence and insight, greater connectivity and
transparency, and improved customer service.
DRIVERS OF CHANGE CHALLENGES STRATEGIC IMPERATIVES
Population explosion Capacity and congestion Predict demand and
World population is growing and Meet the growing, changing
transportation providers will need demand efficiently, consistently
optimize capacity and
to expand capacity to keep up. and profitably? assets.

Urbanization Empowered customers Dramatically improve

As the number and size of cities Deliver transportation choices
grows, pressure on transportation and information in the way that
the end-to-end customer
systems to move people and end customers value. experience.
materials between and within
those cities grows.

Globalization Efficient, green operations Improve operational

The growing interconnectedness
of the world is driving inter-city and
international growth in demand, with
an expectation of improved service.
Reduce cost and dependency on
scarce resources while reducing
efficiency while reducing
environmental impact. environmental impact.

Technology Safety and security Assure safety and security.

Technology now enables the capture Unobtrusively reduce exposure
and analysis of real-time information to security risks and increase the
about the status, location and safety of operations, with less
condition of everything. cost and impact on customers.

4 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Drivers of change
Exploding populations, urbanization, globalization and technology
are driving change, which creates unique challenges and
opportunities for transportation providers.

2 billion / 7 billion 476 cities over 1 million

It took all of history for human
population to reach 2 billion, and only
one generation to more than triple to
nearly 7 billion.
In 2010 there are 476 urban areas with at
least 1 million people. That’s an increase
of 573% from 1950 when there were 83.
Over half the world’s population now lives
in urban areas.

>100x growth 4 billion / 1 billion

International trade in manufactured Today, there are over 4 billion mobile
goods increased more than 100 times phone users, and over 1 billion internet
(from $95 billion to $12 trillion) in the 50 users, growing rapidly to 2 billion.
years following 1955.

5 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

The need for progress is clear.

Capacity and congestion Empowered customers

100 billion Euros 30,000 in 6 days

Traffic congestion costs the European 30,000 people from 47 countries
Union over 1% of GDP, or over 100 downloaded an airline’s new smartphone
billion Euros per year. application in the first 6 days.

7 billion / 6 billion 59% purchase influence

By 2020 there may be global demand for 7 59% of on-line consumer purchases in
billion air passenger trips. Yet airports and China are influenced by user generated
airlines will only have capacity for 6 billion. content.
(Organization for Economic Cooperation and Development)

$30 trillion 60% and -19%

The world will spend about $30 trillion over 60% of consumer sentiment around the U.S.
the next two decades on new roads and air travel industry is negative, and there are
similar projects according to CIBC 19% fewer brand-loyal travelers in 2008 than
economist Benjamin Tal. in 2006—a recipe for commoditization.

6 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

The need for progress is clear.

Efficient, green operations Safety and security

2.8 billion gallons >41 thousand lives

4.2 billion hours
U.S. road traffic congestion during 2007
wasted 2.8 billion gallons of fuel and 4.2
billion hours. Total cost of wasted fuel
and time was $87.2 billion.
3% or 13%
Airlines worldwide generate 3% of all
greenhouse gas emissions. Some say
that because aircraft operate in the upper
atmosphere, the impact may be equivalent
to 13% of emissions from all sources.
The U.S. Department of Transportation
reports over 41,000 road fatalities every
year from 1995 to 2007.
$5.9 billion
>60% of operating cost
Airlines spend $5.9 billion per year on
security (IATA). Airports spend >60% of their
operating cost on safety and security (ACI).

7 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation
The opportunity for progress is clear.
18% less traffic
A European city reduced traffic by up to 18%,
and increased use of public transit by 80,000
passengers per day. Citizens voted to
support the project.
1.5% per year
50% by 2050
Airline industry environmental targets:
1.5% average annual improvement in
fuel efficiency from 2009 to 2020.
Cap aviation CO2 emissions from
2020 onwards (carbon neutral growth).
50% reduction in CO2 emitted by 2050
relative to 2005.
8 © 2009 IBM Corporation
423 miles using 1 gallon
One ton of rail freight can be moved 423 miles
using one gallon of fuel, and a single freight train
can replace 280 trucks, reducing fuel use,
congestion and emissions.
10% fewer breakdowns
A container port in the UK reduced equipment
breakdowns by 10%.
60% fewer delayed bags
A European airport reduced mishandled baggage
by 60% using an innovative RFID-based solution.
99.15% on time
An Asian high-speed railway achieves
99.15% on-time performance.
Let’s build a smarter planet: Transportation

The reality of living in a globally integrated world is upon us.

 Frozen credit markets, limited access to capital, unpredictable funding.

 Economic downturn and future uncertainty of economic growth.
 Environmental sustainability challenges and new global regulation.
 Oil and fuel volatility and long-term cost escalation.
 Information explosion, channel proliferation and loss of market-making power.
 Emergence of indirect substitutes and alternatives.
 Changing travel demand and shifts in buying behaviors.
 The need to increase or decrease capacity rapidly to align with demand.
 New customer demands and business models.

The world is connected:

economically, socially and technically.

9 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

The world is becoming smaller and flatter,

and also smarter.

10 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

This mandate for change is a mandate for smart.

The infrastructures, systems and processes that underpin

how business and society function are becoming
digitally aware, interconnected and infused with intelligence.

The new intelligence applies to how services are delivered, to the movement of people,
freight, money, information, electricity and more. Each represents a chance to do something
better, faster and more productively.

This is a new frame of reference with enormous promise for economic growth, with
opportunities to think and act in new ways.
11 © 2009 IBM Corporation
Let’s build a smarter planet: Transportation

Success will depend on deeper, more holistic and informed planning,

collaboration and execution. Transportation providers will need to
become smarter.

PREDICT DEMAND AND DRAMATICALLY IMPROVE THE

OPTIMIZE CAPACITY AND ASSETS END-TO-END TRAVELER OR
Predict demand, align transportation CUSTOMER EXPERIENCE
assets and infrastructure deployment Understand customer needs
and continuously adapt operations. and provide information and
services to meet those needs
in the manner preferred.
TRANSPORTATION
PROVIDERS

IMPROVE OPERATIONAL ASSURE SAFETY

EFFICIENCY WHILE REDUCING AND SECURITY
ENVIRONMENTAL IMPACT Leverage new sources of
Continuously balance cost and information and new ways
environmental impact of scarce of using that information to
resource use while exploring new improve security and safety.
operational alternatives.

12 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

They will do so by becoming

instrumented, interconnected and intelligent.

13 © 2009 IBM Corporation

 Let’s build a smarter planet: Transportation

The transistor was

invented 60 years ago… Over 4 billion mobile
phone subscribers by
the end of 2009… By 2010, there will
Today, there are 1 billion be 30 billion RFID
transistors for each tags embedded into
person on earth. our world.

1 billion people
are connected to
the internet…

Soon growing to
2 billion people.

14 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Almost all usable information was once authored or processed by

a person. That kind of information is now being overwhelmed by
machine-generated data from sensors, RFID, meters, microphones,
surveillance systems, GPS systems and all types of objects.

Volume of digital data

The number of emails sent every day is estimated to

be over 200 billion.

Every day, 15 petabytes of new information is being

generated. This is 8 times more than the information
in all U.S. libraries.

By 2010, the amount of digital information will grow to

988 exabytes (equivalent to a stack of books from the
Sun to Pluto and back).

15 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

With the expansion of information sources comes a large variance

in the nature of the data. This creates significant challenges to
promoting real-time decision making.

Variety of information

Today, 80% of new data growth is unstructured

content, generated by emails, documents, images,
and video and audio.

38% of email archiving decisions receive input from

a C-level executive and 23% from legal/compliance
professionals.

The average car will have 100 million lines of code

by 2010.

The Airbus A380 contains over 1 billion lines of code.

16 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Decision making velocity is about optimizing the speed of insight as

well as the confidence that decisions and actions taken will yield the
best outcomes.

Velocity of decision making

Every week, the average information worker spends

14.5 hours reading and answering email, 13.3 hours
creating documents, 9.6 hours searching for information
and 9.5 hours analyzing information.

For every 1,000 knowledge workers, $5.7 million is

lost annually in time wasted reformatting information
between applications.

Not finding the right information costs an additional

$5.3 million per year.

42% of managers say they inadvertently use the wrong

information at least once per week.

70% of executives believe that poor decision making has

had a degrading impact on their companies’ performance.

17 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Our world is becoming INSTRUMENTED…

Giving us the ability to measure, sense and

see the exact condition of everything.

 The use of sensors, kiosks, meters, PDAs,

appliances, cameras, smart phones, biometric
devices, turnstiles or the Web.
 Instrumentation is about sensing what is happening
right now, whether it is the temperature of a train
wheel bearing, the location of a misplaced suitcase,
metal fatigue in a bridge or the number of cars on
a highway at 6:00 AM.

18 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Our world is becoming INTERCONNECTED…

Allowing people, systems and objects to

communicate and interact with each other in
entirely new ways.

 Integrating data across an end-to-end process,

organization or value chain. The interconnection
of people and things—customers, drivers,
employees, roads, aircraft, airports, cargo,
suppliers—creating the ability to improve
performance.
 Integrating unstructured data not associated with a
single system. For example, Web 2.0 communities,
Google searches, etc.

19 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Systems, processes, and the way we work

are becoming more INTELLIGENT…

Responding to changes quickly and

accurately, and getting better results by
predicting and optimizing for future events.

 Sophisticated analytic systems enable patterns

to be recognized, relationships to be drawn
and decision making to be continuous and in
near-real time.
 Using advanced analytics to drive smarter outcomes.

20 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

The transformation to smart is enabling us to become

more efficient, productive and responsive.

Traditional approach Smarter approach

Instinct and intuition Fact-driven

Corrective Directive

Years, months, weeks Hours, minutes, seconds

Decision support Action support

Efficient Optimized

21 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

+ + =
An opportunity to think and act in new ways.

Predict demand Dramatically improve Improve operational Assure safety

and optimize the end-to-end traveler efficiency while reducing and security.
capacity and assets. or customer experience. environmental impact.

22 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

Smart transportation:
Predict demand and optimize transportation capacity and assets.
SMART IS SMART IS
Understanding and modeling a holistic view Modeling scenarios and better planning routes,
of demand—across the transportation network. schedules and maintenance by optimizing
assets, infrastructure and capacity.

SMART IS SMART IS
Creating dynamic multimodal plans and Gaining deeper insights into the utilization
models, and executing real-time operations of transportation assets and infrastructure.
based on real-time data.

23 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation
Smart transportation:
Predict demand and optimize transportation capacity and assets.
Netherlands Railways uses ILOG software to weigh
56,000 variables including passenger demand and
available assets to assemble and schedule over 5,000
trains per day, realizing a 6% savings in operating
efficiency and saving $28.5M per year. Also improved
on-time performance by 2%, helping capture an
additional $57M in fares.
Queensland Motorways reduced road congestion
during peak hours, improved Brisbane commuter
experience and supports local economic prosperity
by avoiding traffic snarls in commercial areas.
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Stockholm—IBM solutions improved congestion and
quality of life reducing peak period traffic by 18%. Use
of public transit increased by 80,000 passengers per
day. CO2 emissions from vehicles were reduced
by 14%. Increased revenue is channeled back into
improving public transportation.
A large railway in Asia uses an automated crew
scheduling system that evaluates the skills and location
of available employees in real time to assign staff to
scheduled trains. Employees receive their
assignments via cell phone text messages, and log in
to work using biometric scanners, ensuring positive
identification and access control. The system provides
management with real time information about available
staff and forward-looking intelligence to optimize
resource allocation, reducing staff shortages and
© 2009 IBM Corporation
overtime expense.
Let’s build a smarter planet: Transportation

Smart transportation:
Dramatically improve the end-to-end traveler or customer experience.
SMART IS SMART IS
Increasing revenue and share by developing Reducing cost and differentiating customer service.
more loyal customers who become advocates.

SMART IS SMART IS
Optimizing capacity to meet demand and Better serving customers by anticipating
reduce delays. and catering to their needs throughout the
journey and by collaborating with adjacent
service providers.

25 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation
Smart transportation:
Dramatically improve the end-to-end traveler or customer experience.
A European airport, in partnership with an international
airline, reduced mishandled baggage by 60% with an
RFID-based baggage handling system. Reduced
transfer time by 22% and operational cost by 40%.
Singapore Land Transport Authority provides a unified
payment system using smart cards for public transit,
tolls and parking, improving the commuter experience.
Planners use data from the system to develop optimal
routes and schedules, reducing congestion and
increasing the appeal of public transit. Reduced fare
leakage by 80% and cost of fare processing by 2%.
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A leading global logistics firm uses ILOG Optimization
software to route and consolidate shipments for their
customers, lowering supply chain transportation costs
by up to 25%.
IBM developed an application for Air Canada using the Apple
iPhone, iPod Touch, and Blackberry allowing passengers to
book flights, download electronic boarding passes, check-in,
get flight status and book rental cars and other services.
There were over 30k downloads of the app from 47 countries
in the first 6 days and a 13.5% increase in mobile check-ins.
93% of Air Canada passengers say multichannel self service
has improved their travel experience. Canadian New Media
Award for Best Mobile App of 2009.
© 2009 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation:
Improve operational efficiency while reducing environmental impact.
SMART IS
Increasing the extended transportation
network capacity using current infrastructure
and assets without increasing spend,
including collaborating with adjacent service
and infrastructure providers.
SMART IS
Saving money and time by knowing the
location, status and availability of your
assets—reducing total resource use and
carbon footprint enterprise-wide.
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SMART IS
Increasing the ability to deal with irregular
operations across the transportation network
and modes.
SMART IS
Modeling the financial impact of business
decisions, streamlining planning, and
monitoring performance to maximize
revenue, margins and cash flow.
© 2009 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation:
Improve operational efficiency while reducing environmental impact.
A U.S. state department of transportation used Cognos
to improve their operational reporting and financial
management, which had a direct positive effect on
their bond rating and interest rates available to them.
A major European railroad reduces maintenance cost
by 30% by moving from curative and preventative
maintenance to predictive maintenance using Maximo.
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Taiwan High Speed Rail Corporation uses IBM Maximo
for advanced maintenance management which uses
condition-based monitoring to predict and act on
maintenance requirements and manage over 320k
asset elements. They have improved asset life and
availability. 99.15% of trains arrive or depart within 6
seconds of schedule.
COSCO, a global shipping firm, engaged IBM to help
optimize their supply chain using the Supply Chain
Network Optimization Workbench (SNOW). As a result
of the engagement, COSCO consolidated from 100 to
40 distribution centers, lowered logistics cost by 23%
and reduced CO2 emissions by 15%.
© 2009 IBM Corporation
Let’s build a smarter planet: Transportation

Smart transportation:
Assure safety and security.
SMART IS
Predicting and avoiding vehicle failure.
SMART IS
Reducing congestion and accidents by
balancing traffic across routes or modes.

SMART IS
Better managing security uniformly across
the transportation network with reduced
cost, while protecting the privacy of
individuals.
SMART IS
Improving reliability and uptime by optimizing
the supply chain and MRO processes.

29 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation
Smart transportation:
Assure safety and security.
A U.S. hub airport implemented a digital video
surveillance solution and a security command and
control center. The system also uses information from
biometric handprints and badge readers. The system
is more effective at recognizing risks and alerting the
command center. The effective labor cost savings is
US $2.2m per year.
Using RFID tags on parts and containers, IBM has
helped a major aircraft manufacturer track aircraft
parts through the entire life cycle including all
maintenance and the plane in which it is used. The
solution has allowed them to be more responsive to
customers, and reduced fleet down-time without
compromising safety.
30
A national rail system in Europe monitors its rail
infrastructure in real time and resolves more than
50% of issues before they affect train operation
using a service management solution built with
IBM Tivoli software.
An Italian parcel delivery service reduced their
security staff and increased the level of security
for their 10 hub facilities using an IBM solution
that centrally monitors intrusion, access control
readers, digital video and smoke detection.
© 2009 IBM Corporation
Let’s build a smarter planet: Transportation

The smarter transportation system is an interdependent ecosystem—

integrated around standard information, processes and technology.

Transportation
Governments
providers Participants aggregate, analyze
and act upon data to:
Terminal
Regulators
operators 1. Predict demand and
Information optimize transportation
assets and infrastructure.
Processes Freight and
Travel 2. Dramatically improve the
logistics
service
Technology
providers
service end-to-end traveler or
providers customer experience.
Passenger and 3. Improve operational
journey information
Passengers Freight efficiency while reducing
Freight shipment and drivers customers environmental impact.
information
Location, status and Vehicle and Influencers:
4. Assure safety and security.
condition of assets and infrastructure Associations
infrastructure manufacturers and universities
Usage patterns across
all modes of transportation

31 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation
IBM’s solution strategy is aligned with the needs of
transportation providers.
STRATEGIC IMPERATIVES
Predict demand and optimize
transportation capacity, assets and
infrastructure.
Dramatically improve the end-to-
end traveler/customer
experience.
Improve operational efficiency
while reducing environmental
impact.
Assure safety and security.
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HOW IBM HELPS MEET THE NEED
 Demand and revenue management  Road user charging
 Enterprise asset management and MRO  Fleet optimization
 Route and schedule optimization  Integrated fare
 Traffic modeling and prediction management
 Irregular operations management
 Reservation system modernization  Loyalty management
 Multi-channel self-service  Cargo management
 Ticketing and payment systems  Risk management
 One view of the customer  CRM
 Customer analytics
 Enterprise asset management  Resource optimization
 Enterprise infrastructure management  Carbon management
 Enterprise application systems  Condition monitoring
 Green supply chain optimization  Systems virtualization
 Identity and access management  Biometric identification
 Condition based monitoring  Risk analytics
using wireless sensors  Digital video
 Data and application security surveillance
 Server and endpoint security  Network security
© 2009 IBM Corporation
Let’s build a smarter planet: Transportation

What makes IBM different?

 IBM’s breadth of experience working with transportation providers

worldwide across all modes of transportation is unparalleled.

 IBM has strong analytical tools to aggregate, analyze and act upon
data gathered from disparate sources—providing solutions for
planning, scheduling, routing, CRM, pricing, revenue management,
intelligent traffic and infrastructure management.

 IBM has practical experience implementing innovative solutions to

help clients become smarter—more instrumented, interconnected
and intelligent.

 IBM is the market leader in collaborating with transportation clients

to deliver: the fastest time to value with minimum risk through
innovative solutions; the most comprehensive portfolio of hardware,
software and services; and deep domain experience and expertise.

 IBM Centers of Excellence, IBM research, proofs of concept and

first-of-a-kind projects demonstrate innovation and competence in
solution implementation.

33 © 2009 IBM Corporation

Let’s build a smarter planet: Transportation

We’ve only just begun to uncover

what is possible on a smarter planet.
The infrastructures, systems and processes that underpin how business and society function are
becoming digitally aware, interconnected and
infused with intelligence.

The new intelligence applies to how services are delivered; to the movement of people, freight, money,
information and electricity; and to how billions of people live and work. Each represents a chance to
do something better, faster and more productively.

This is a new frame of reference with enormous promise for economic growth, with opportunities
to think and act in new ways.
476 cities with >1 mil population
http://www.citypopulation.de/world/Agglomerations.html

UN – 2008 over half live in cities

http://www.un.org/esa/population/publications/wup2007/2007WUP_Highlights_web.pdf

1950 – 8 cities over 1 mil population

http://en.wikipedia.org/wiki/Megacity

Globalization of trade
http://news.bbc.co.uk/2/hi/business/6279679.stm
http://en.wikipedia.org/wiki/Globalization

Traffic congestion costs the EU over 1% of GDP

http://ec.europa.eu/research/growth/gcc/projects/in-action-airships.html
http://www.computing.co.uk/computing/analysis/2244382/europe-split-best-way-forward-4723503

US flight delays
http://www.transtats.bts.gov/HomeDrillChart.asp

London to Paris rail share

http://en.wikipedia.org/wiki/Eurostar#cite_note-103

4.6 billion cell phones by end of 2009

http://en.wikipedia.org/wiki/Mobile_phone

Traffic congestion costs the US $87.2B, 2.8 gallons of fuel, 4.2 billion hours according to Texas Transportation Institute in 2009
http://mobility.tamu.edu/ums/media_information/press_release.stm
http://mobility.tamu.edu/ums/

Airlines spend $5.9B per year insecurity (IATA), while airports spend 60-80% of operation costs on safety and security (ACI)

Let’s work together to drive

http://www.iata.org/pressroom/pr/2009-11-10-01.htm
http://www.airports.org/cda/aci_common/display/main/aci_content07_banners.jsp?zn=aci&cp=1-7-3475^33442_725_2__

41,000 US road deaths in 2007

real progress.
http://www.bts.gov/publications/transportation_statistics_annual_report/2008/html/chapter_02/table_02_02_01.html

34 © 2009 IBM Corporation