The Association of American Railroads calls U.S. freight rails “the envy of the world.” This is no vain chest thumping. Just three decades ago, America’s railroads were on the brink of ruin. Rail operators were broke, could not properly maintain tracks and provide reliable service. Their prospects turned with the passage of the Staggers Rail Act of 1980, which deregulated the industry. Since then, rail companies have invested $480 billion into their systems, dramatically improved services, lowered accident rates, doubled traffic, and slashed costs so much that U.S. freight rates are now the lowest in the world.
This is an impressive record. However, freight volume is expected to double again over the next 25 years. In order to maintain this growth, railroads will have to invest beyond new locomotives, tunnels and bridges and other equipment and infrastructure. They will need to make their rails smarter.
GE can help. GE Transportation’s Software and Optimization Solutions unit already offers a powerful suite of digital tools such as the ecomagination-qualified RailEdge Movement Planner. It helps clients like Norfolk Southern to optimize hundreds of train schedules and train velocities so that more locomotives can use the same rail, move faster and save fuel all at the same time. For example, the system allows GE customer Norfolk Southern run more trains at higher speeds and increase the effective capacity of its network. The railroad operator estimates that an increase in velocity in its network by just one mile per hour will save it over $200 million in annual capital and operating expenses.
This week, GE’s rail software portfolio got even stronger when the company acquired the software provider RMI. In North America, RMI serves smaller railroad networks and short lines. GE plans to integrate RMI technology with its products like the Movement Planner and also use the company’s solutions and expertise to enter global markets. “A lot of the global railroads are smaller, mining-type railroads,” said Peter Thomas, who runs the GE Transportation software unit. “RMI’s products and Software as a Service model are a great fit.”
The acquisition is part of GE’s broad push into software and big data management. Thomas said that his business will work closely with GE’s new Global Software Center in San Ramon, California, to tap its talent and integrate GE and RMI software solutions.
The San Ramon center will open in 2012 and employ 400 software engineers and support staff. GE currently has 5,000 software engineers on staff and its annual software revenues are about $2.5 billion. GE expects a double-digit growth in the segment from now until 2015.