Congress Passes PTC Implementation Deadline Extension
The U.S. Congress has since passed legislation to delay the impending PTC implementation deadline (Congress Delays Train Safety Technology Mandate 3 to 5 Years). According to a New York Times article, “the Senate passed the bill by a voice vote. The House passed the measure the previous day. It now goes to the White House, where President Barack Obama is expected to sign it into law.” A story in the Chicago Tribune also reports that President Obama is expected to sign the PTC implementation deadline extension. However, other reports suggest that President Obama might not accept a delay in implementation (Obama Won't Support Extending Deadline for Rail Safety Equipment and (Obama Backs Dec. 31 Deadline for Rail Safety Requirement) so we are currently in a “wait and see” mode to see whether the President signs the measure or not. Most observers are optimistic that the extension will be signed into law and the possible major PTC related supply chain disruption can be avoided.
The rationale for PTC seems reasonable, improving safety on the nation’s railroads. According to the New York Times article, “the National Transportation Safety Board has urged railroads to install positive train control or earlier train control technologies for more than four decades. The board has said that over that time it has investigated at least 145 PTC-preventable accidents in which about 300 people were killed and 6,700 injured.”
PTC and Rail Safety
The Congressional Research Service completed a comprehensive analysis of the costs and benefits of PTC and published their 2012 report containing their conclusions. According to the Federal Railroad Administration (FRA), an average of 2,000 derailments and 205 train collisions, resulting in 422 injuries and 12 fatalities, occurred annually from 1998 to 2009, excluding accidents at highway-rail crossings. The number of incidents may increase in coming years as operations in both freight and passenger rail expand, despite a reduction in total track length. However, the majority of train-related fatalities are due to interactions with vehicular traffic at highway-grade crossings or trespassing on railroad property rather than train collisions or derailments. In 2009, 4 fatalities occurred from train collisions or derailments, 247 fatalities occurred at highway-rail grade crossings, and 417 fatalities resulted from trespassing on railroad property or right-of-way.
The 2012 CRS report argued that based on analysis of past PTC preventable accidents, FRA estimates $90 million in annual safety benefits will be realized after full implementation of PTC. Safety benefits are calculated by estimating the cost of accidents that are likely to be prevented by PTC, including fatalities and injuries, equipment damage, track damage, off-track damage, hazardous material cleanup, evacuations, wreck cleanup, loss of freight, and freight delay. According to a 1999 FRA estimate, between 1987 and 1997 an annual average of 7 fatalities, 22 injuries, $20 million in property damages, and evacuations of 150 people due to potential hazardous material release could have been prevented by PTC.
Although PTC could prevent many serious incidents due to error by train engineers or dispatchers, PTC may only prevent less than 2% of the approximately 2,000 railroad collisions and derailments that occur annually. The majority of these 2,000 incidents occur in rail yards and are generally less severe than PTC-preventable accidents according to the CRS report.
While PTC promises benefits in terms of safety, the CRS report warns that its implementation entails substantial costs and presents a variety of other policy-related issues. These include the interoperability of individual railroads’ systems, sufficient radio spectrum to support PTC, and the possibility that PTC could be a barrier to market entry.
As I discussed in the previous post freight and commuter railroads have raised concerns about their ability to meet the original December 31, 2015 PTC deadline imposed by Congress which in turn creates a significant supply chain and infrastructure risk for businesses, agencies, schools, hospitals and the public sector.
Supply Chain Risk Assessment and Continuity Planning
While the nation may (or may not) have dodged a this potential supply chain disruption, the close call should at least serve as a reminder of the vulnerabilities with many aspects of the complex supply chains upon which businesses are dependent.
Supply chains are the mechanisms by which products, and the raw materials from which products are made, move from their source to the consumer. In recent decades, supply chains have become much more sophisticated and complicated. In part, this is because they are often longer: raw materials, components and finished products now often move between continents before reaching the consumer. Disruptions can directly affect a business distribution channels or affect those of their suppliers, vendors, and customers. In addition, supply chain risks can also threaten vital infrastructure as the recent national rail shut down threatened both the continuity of electrical power and the nation’s drinking water supplies.
Is your Business Ready for Supply Chain Risks?
There are things you can do to improve your preparedness for supply chain disruptions. Every business should periodically formally assess their supply chain risks as part of a business impact analysis. Even if you have regularly conducted periodic assessments (and especially important if you have not), it is imperative that you conduct a new supply chain formal risk assessment in light of the national rail shut down threat. What are your unique risks? Do you have a clear understanding of how such a disruption would affect your operations? Give thought to your plan(s) for supply chain disruption consequence management.
The keys for increasing resilience of your supply chain and managing a supply chain disruption crisis are planning and preparation. Follow up with the many supply chain disruption-planning resources to enhance your readiness. It is important to get your supply chain risk assessment completed and being your preparedness planning.
What steps can you take now to mitigate or reduce these risks? Can you take steps now to add resilience to your supply chain(s)? Can you get everyone in your business on board in this assessment and planning effort?
Do you have a supply chain disruption crisis management process in place? What is your plan? What alternative backups do you have prepared to utilize or adjustments to make in your business processes if there were a major supply chain hiccup?