Smart Transportation for a Smarter Planet: Innovation with Today's Challenges

© 2009 IBM Corporation

Let’s build a smarter planet: Transportation

© 2009 IBM CorporationV12

Let’s Build a Smarter Planet:Transportation



22

Transportation: The big picture.

Passengers and freight Local and long distance Commercial or publicly owned Vehicle and infrastructure manufacturers Supporting service providers for travel and freight

Mode of transportation

Infrastructure

Automobiles Trucks Buses Railroads Metro transit

Roads Parking Tolls Rails Terminals Bridges Tunnels Signals and

communications

Airlines Passenger terminals

Air cargo terminals

Ships and ferries

Ports Cargo

terminals

Air

Land Sea



3

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



4

Assure safety and security.

Improve operational efficiency while reducing environmental impact.

Dramatically improvethe end-to-end customer experience.

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 explosionWorld population is growing and transportation providers will need to expand capacity to keep up.

UrbanizationAs the number and size of cities grows, pressure on transportation systems to move people and materials between and within those cities grows.

GlobalizationThe growing interconnectedness of the world is driving inter-city and international growth in demand, withan expectation of improved service.

TechnologyTechnology now enables the capture and analysis of real-time information about the status, location and condition of everything.

Capacity and congestionMeet the growing, changing demand efficiently, consistently and profitably?

Empowered customersDeliver transportation choices and information in the way that end customers value.

Efficient, green operationsReduce cost and dependency on scarce resources while reducing environmental impact.

Safety and securityUnobtrusively reduce exposure to security risks and increase the safety of operations, with less cost and impact on customers.

Predict demand and optimize capacity and assets.



5

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

It took all of history for human population to reach 2 billion, and only one generation to more than triple to nearly 7 billion.

2 billion / 7 billion

5

International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years following 1955.

>100x growth

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.

476 cities over 1 million

Today, there are over 4 billion mobile phone users, and over 1 billion internet users, growing rapidly to 2 billion.




6

The need for progress is clear.

Traffic congestion costs the European Union over 1% of GDP, or over 100 billion Euros per year.

100 billion Euros

Capacity and congestion

By 2020 there may be global demand for 7 billion air passenger trips. Yet airports and airlines will only have capacity for 6 billion.(Organization for Economic Cooperation and Development)


The world will spend about $30 trillion over the next two decades on new roads and similar projects according to CIBC economist Benjamin Tal.

$30 trillion

30,000 people from 47 countries downloaded an airline’s new smartphone application in the first 6 days.

30,000 in 6 days

Empowered customers

60% of consumer sentiment around the U.S. air travel industry is negative, and there are 19% fewer brand-loyal travelers in 2008 than in 2006—a recipe for commoditization.

60% and -19%

59% of on-line consumer purchases in China are influenced by user generated content.

59% purchase influence



7

The need for progress is clear.

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.

2.8 billion gallons4.2 billion hours

Efficient, green operations

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.

3% or 13%

The U.S. Department of Transportation reports over 41,000 road fatalities every year from 1995 to 2007.

>41 thousand lives

Safety and security

Airlines spend $5.9 billion per year on security (IATA). Airports spend >60% of their operating cost on safety and security (ACI).

$5.9 billion>60% of operating cost



8

The opportunity for progress is clear.

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.

18% less traffic

Airline industry environmental targets:1.5% average annual improvement infuel 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.

1.5% per year50% by 2050

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.

423 miles using 1 gallon

A container port in the UK reduced equipment breakdowns by 10%.

10% fewer breakdowns

A European airport reduced mishandled baggage by 60% using an innovative RFID-based solution.

60% fewer delayed bags

An Asian high-speed railway achieves 99.15% on-time performance.

99.15% on time



9

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.

9

The world is connected:economically, socially and technically.



1010

The world is becoming smaller and flatter,and also smarter.



1111

This mandate for change is a mandate for smart.

The infrastructures, systems and processes that underpinhow 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.



12

Success will depend on deeper, more holistic and informed planning, collaboration and execution. Transportation providers will need to become smarter.

PREDICT DEMAND AND OPTIMIZE CAPACITY AND ASSETS

Predict demand, align transportation assets and infrastructure deployment

and continuously adapt operations.

DRAMATICALLY IMPROVE THE END-TO-END TRAVELER OR CUSTOMER EXPERIENCE

Understand customer needs and provide information and services to meet those needs in the manner preferred.

12

TRANSPORTATION PROVIDERS

IMPROVE OPERATIONAL EFFICIENCY WHILE REDUCING

ENVIRONMENTAL IMPACT

Continuously balance cost and environmental impact of scarce

resource use while exploring new operational alternatives.

ASSURE SAFETY AND SECURITY

Leverage new sources of information and new ways of using that information to improve security and safety.



1313

They will do so by becoming instrumented, interconnected and intelligent.



14

The transistor was invented 60 years ago…

Today, there are 1 billion transistors for each person on earth.

1 billion people are connected to the internet…

Soon growing to 2 billion people.

Over 4 billion mobile phone subscribers by the end of 2009… By 2010, there will

be 30 billion RFID tags embedded into our world.



15

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).



16

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.



17

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.



18

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



19

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.



20

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.



21

The transformation to smart is enabling us to becomemore efficient, productive and responsive.

Traditional approach Smarter approach

Instinct and intuition

Corrective

Years, months, weeks

Decision support

Efficient

Fact-driven

Directive

Hours, minutes, seconds

Action support

Optimized



22

An opportunity to think and act in new ways.


Dramatically improve the end-to-end traveler or customer experience.

Predict demand and optimize capacity and assets.

+ + =

22




23

Smart transportation:Predict demand and optimize transportation capacity and assets.SMART IS

Understanding and modeling a holistic view of demand—across the transportation network.

SMART IS

Creating dynamic multimodal plans and models, and executing real-time operations based on real-time data.

SMART IS

Modeling scenarios and better planning routes, schedules and maintenance by optimizing assets, infrastructure and capacity.

SMART IS

Gaining deeper insights into the utilization of transportation assets and infrastructure.



24

Smart transportation:Predict demand and optimize transportation capacity and assets.

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.

Queensland Motorways reduced road congestion during peak hours, improved Brisbane commuter experience and supports local economic prosperity by avoiding traffic snarls in commercial areas.

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 overtime expense.

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.



25

Smart transportation:Dramatically improve the end-to-end traveler or customer experience.SMART IS

Increasing revenue and share by developing more loyal customers who become advocates.

SMART IS

Optimizing capacity to meet demand and reduce delays.

SMART IS

Reducing cost and differentiating customer service.

SMART IS

Better serving customers by anticipating and catering to their needs throughout the journey and by collaborating with adjacent service providers.



26

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%.

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%.

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%.

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.



27

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.

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.



28

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.

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%.

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.



29

Smart transportation:Assure safety and security.SMART IS

Predicting and avoiding vehicle failure.

SMART IS

Better managing security uniformly across the transportation network with reduced cost, while protecting the privacy of individuals.

SMART IS

Reducing congestion and accidents by balancing traffic across routes or modes.

SMART IS

Improving reliability and uptime by optimizing the supply chain and MRO processes.



30

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.

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.

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.

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.



31

The smarter transportation system is an interdependent ecosystem— integrated around standard information, processes and technology.

Participants aggregate, analyze and act upon data to:

1. Predict demand and optimize transportation assets and infrastructure.

2. Dramatically improve the end-to-end traveler or customer experience.

3. Improve operational efficiency while reducing environmental impact.

4. Assure safety and security.

Information

Processes

Technology

Passenger and journey information

Freight shipment information

Location, status and condition of assets and infrastructure

Usage patterns across all modes of transportation

GovernmentsTransportation providers

Terminaloperators

Freight and logisticsservice providers

Freightcustomers

Influencers:Associations and universities

Vehicle andinfrastructure

manufacturers

Passengersand drivers

Travelservice

providers

Regulators



32

IBM’s solution strategy is aligned with the needs of transportation providers.

Predict demand and optimize transportation capacity, assets and infrastructure.

Dramatically improve the end-to-end traveler/customer experience.



Demand and revenue management Enterprise asset management and MRO Route and schedule optimization Traffic modeling and prediction Irregular operations management

Road user charging Fleet optimization Integrated fare

management

Reservation system modernization Multi-channel self-service Ticketing and payment systems One view of the customer Customer analytics

Loyalty management Cargo management Risk management CRM

Enterprise asset management Enterprise infrastructure management Enterprise application systems Green supply chain optimization

Resource optimization Carbon management Condition monitoring Systems virtualization

Identity and access management Condition based monitoring

using wireless sensors Data and application security Server and endpoint security

Biometric identification Risk analytics Digital video

surveillance Network security

STRATEGIC IMPERATIVES HOW IBM HELPS MEET THE NEED



33

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.



34

Let’s work together to drive real progress.

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 populationhttp://www.citypopulation.de/world/Agglomerations.html

UN – 2008 over half live in citieshttp://www.un.org/esa/population/publications/wup2007/2007WUP_Highlights_web.pdf

1950 – 8 cities over 1 mil populationhttp://en.wikipedia.org/wiki/Megacity

Globalization of tradehttp://news.bbc.co.uk/2/hi/business/6279679.stmhttp://en.wikipedia.org/wiki/Globalization

Traffic congestion costs the EU over 1% of GDPhttp://ec.europa.eu/research/growth/gcc/projects/in-action-airships.htmlhttp://www.computing.co.uk/computing/analysis/2244382/europe-split-best-way-forward-4723503

US flight delayshttp://www.transtats.bts.gov/HomeDrillChart.asp

London to Paris rail sharehttp://en.wikipedia.org/wiki/Eurostar#cite_note-103

4.6 billion cell phones by end of 2009http://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 2009http://mobility.tamu.edu/ums/media_information/press_release.stmhttp://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)http://www.iata.org/pressroom/pr/2009-11-10-01.htmhttp://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 2007http://www.bts.gov/publications/transportation_statistics_annual_report/2008/html/chapter_02/table_02_02_01.html

34

Smart Transportation for a Smarter Planet: Innovation with Today's Challenges

Education

transportation providers

transportation of goods

quality of transportation

transportation choices

transportation systems

transportation v12

availability of transportation

security airlines