hulley

Future Technology and Trends in the Travel and Transportation Industry: 

Future Technology and Trends in the Travel and Transportation Industry PECC International Roundtable September 2003 Mike Hulley President, Global Transportation Industry

Agenda: 

Agenda Travel & Transportation Industry Overview New technologies that re-shape our industry Segment Strategies (how the technology will be used) EDS and Air Services Airports Security Ports - Putting the Port in TransPort

Industry Overview: 

Industry Overview

The Winds of Change Can Be a Hurricane: 

The Winds of Change Can Be a Hurricane The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. - William Arthur Ward

September 11, 2001 created a steep decline in passenger traffic and yield, severely impacting industry profitability: 

September 11, 2001 created a steep decline in passenger traffic and yield, severely impacting industry profitability Decline in Traffic Decline in Yield Net Loss in Income September 11th impact equated to $4.5B loss-offset by U.S. Government grant of $5B Expected loss prior to September 11th $3B + + Example: U.S. Airline Industry Source: Air Transport Association of America: State of U.S. Airline Industry

Airlines responded immediately by reducing capacity, resulting in a return to breakeven load factors early in 2002: 

Airlines responded immediately by reducing capacity, resulting in a return to breakeven load factors early in 2002 Note: (1) A measure of capacity utilization, load factor is calculated as the percentage of revenue passenger miles over available seat miles Source: Credit Lyonnais Securities, Air Transport Association of America: State of US Airline Industry, Newsweek: “Don’t Rescue the Airlines” Nov 2001, Company Annual Reports, “The Global Airline Analyzer” UBS Warburg March 2002 Industry Average versus Breakeven Load Factor(1) (Percentage) of Seats Available 1998 1999 2000 2001 2002e 73% 72% 72.9% 70.9% 69.9% 66% 69% 70.9% 72.6% United 87% 68% Yields in 2001 were significantly below breakeven Average Load Factor Breakeven Load Factor

High fixed or uncontrollable cost constrained the airlines’ ability to respond to market conditions: 

High fixed or uncontrollable cost constrained the airlines’ ability to respond to market conditions Airlines Industry Controllable Costs Uncontrollable of Fixed Costs $0.30 $0.45 $0.60 $0.75 $0.90 $1.05 1/99 7/99 1/00 7/00 1/01 7/01 1/02 7/02 1/03 Forecast Jet Fuel Price ($) Note: (1) A.T. Kearney analysis Source: SEC 10Ks; DOT Form 41; Air Transportation Association of America

The events of September 11 accelerated existing trends, although some new issues were introduced: 

10 20 30 40 50 60 The events of September 11 accelerated existing trends, although some new issues were introduced Source: A.T. Kearney interviews % of Respondents September 11th permanently changed industry direction September 11th accelerated existing industry trends and introduced new issues permanently September 11th accelerated existing trends and introduced new issues temporarily September 11th accelerated existing trends The impact of September 11th was short term and had no lasting effect on the industry A.T. Kearney Global Survey Results — Overall Impact of 9/11 F) The impact of September 11th was short term and introduced new issues permanently 59% 31% 5% 5% The acceleration will affect the airline operator and global supply chain models differently None None

Today’s airline CEO agenda is focused on immediate survival and on shareholder value creation in the long-term… but the strategies differ: 

Today’s airline CEO agenda is focused on immediate survival and on shareholder value creation in the long-term… but the strategies differ

Slide10: 

Quote of the Year “People often ask me how to become a millionaire. The answer is to become a billionaire and then buy an airline.” - Richard Branson – founder of the Virgin Music label, Virgin Atlantic Airways and Virgin Cola

Slide11: 

The good news: the airline industry is a key component of the global economy and tied to GDP Trade/Commerce — Intra & Inter Regional Trade/Commerce — Intra & Inter Regional ($ U.S.) GDP per Capita ($ U.S.) GDP per Capita World GDP Growth & Scheduled Passenger Growth World GDP Growth & Scheduled Passenger Growth Sources: IMF World Economic Outlook, ICAO Traffic World GDP (% - Growth) (World) U.S.A. Canada Western Europe Mexico Brazil Asia Brazil Mexico Western Europe Asia Canada U.S. Brazil Mexico Western Europe Asia Canada U.S.

Air Transport Industry and World GDP : 

Air Transport Industry and World GDP *Sources: DRI-WEFA World Economic Outlook Vol. 1 (Lexington MA 3rd Quarter 2001); IATA Global Passenger Prospect 2003 – 2007 and IATA CEO Brief 2/2003, Airbus Global Market Forecast 2001-2020, Boeing Current Market Outlook 2002 Airbus[…] during the period 2001 - 2020, traffic will […] resume something close to its historical growth rate. […] the annual growth in revenue passenger-kilometres (RPKs) will progressively decline, but will still average a strong 4.7% during the next twenty years Boeing…Major predictions for the 20-year period 2002-2021 are as follows: World-wide economic growth will average 2.9% per year Passenger Traffic growth will average 4.9% per year […] In 2002 North American and European carriers faced passenger traffic losses of between 5 and 10% for most of the year, but Asia-Pacific carriers showed traffic growth around 2-3% and were able to increase capacity. Recovery is expected in late 2003, with a “bounce-back” increase of over 7% in scheduled international traffic. Thereafter, growth is projected to return to more traditional levels of 4-5% per annum….

Worldwide IT Industry Forecast: 

Worldwide IT Industry Forecast % Growth Source : IDC Black Book Version 1, 2003 Industry adjusts to growth of 6-7% Will we ever be here again?

Total air travel demand is driven by several factors : 

Total air travel demand is driven by several factors GDP Growth Trade Safety/ Security Perception Regulatory Technology Competitive Environment Regulatory Value of Mobility Corp. Profitability Financial Commercial Carrier Performance Infrastr- ucture Demand-Side Supply-Side Overall Corporate Barriers Total Demand Commercial Aviation Total Demand Business and General Aviation Total Demand Substitutions Perception Permissibility Availability Affordability Travel-Decision Process Total Air Travel Demand Key Market Drivers Modes of Transportation Pilots

Commercial air transportation is vital to the global economy: 

Commercial air transportation is vital to the global economy Estimated Direct Impact Estimated Real Impact US$903 Billion Intangible Value Induced Benefits: $305 Indirect Benefits: $255 Direct Benefits: $343 Induced Benefits Indirect Benefits Direct Benefits Note: (1) Civil Aviation includes: Scheduled and unscheduled commercial passenger and cargo operations (including cargo-only transportation) General aviation (including business aviation and air taxi) Their related manufacturers, servicing, and support (including pilot and maintenance technician training) (2) Includes tourism, travel arrangements and freight forwarding Source: DRI-WEFA, Inc 2002 Impediments to transportation can destroy value in today’s economy Economic Impact on GDP = Direct and Indirect Impact + Induced Economic Activity + Intangible Value (Value of Mobility, Productive Use of Time And Innovation Acceleration) Expenditures of civil aviation industry(1) and industries related to civil aviation (2) Expenditures in the supply chain for civil aviation The effect of income generated directly and indirectly in civil aviation

Commercial aviation is heavily dependent on: business travelers: 

Commercial aviation is heavily dependent on: business travelers Business Travelers Further Defined... Sources: ATA Annual Reports, OAG, TIA Business Traveler Survey 1999, AT Kearney, FAA Aviation Forecast 2001 19,948 23,135 25,832 51,296 56,641 60,275 $20,000-30,000 $70,000 $120,000 1996 1998 2000 Revenues From Business Passengers Revenues From Leisure Passengers Elite Business Travelers Frequent Business Travelers Corporate Soldiers Restricted Business Travelers

Industry complexity and types of value exchanges are evolving and growing: 

Industry complexity and types of value exchanges are evolving and growing ATC/Airport Infrastructure Airframe Manufacturers Engine/OEM Manufacturers MRO and Supply Chain Airport Retailers Hotels Car Rental Agencies Taxis Limos Suppliers (Examples Only) Aviation Industry Customers External Influencers New Entrants and Substitutes JAA & FAA Taxing Authorities Financial Markets Legislatures Public Wireless Services Video Conferencing Booking And Call Centers Travel Service Providers Other Modes of Transportation Primary Focus Areas Customers Business Traveler Corporation Supplier Leisure Traveler Corporate Travel Office Business Unit Extended Value Chain Goods, Services & Revenue Intangible Benefits Cargo Airlines Knowledge & Information Mobility Enabler Partnerships/ Alliances Business & General Aviation Passenger Airlines

In a deregulated environment airlines have many challenges that inhibit change: 

In a deregulated environment airlines have many challenges that inhibit change Airline Challenges — Deregulated Markets Globally Safety and Security More Competitors Volumes Technologies Complexities Higher Fixed and Variable Costs Business Cycle Sensitivity A direct result of the opening of what were once restricted markets dominated by national carriers, airlines must now compete with foreign carriers permitted to enter their traditional markets. Most under pressure are high yield city pair markets and FBTs September 11 has had a major impact upon operations, and risk management is now a major focus of boards of directors, and CXO level management. Global alliances pose significant risk management issues for airline boards. Airport costs are rising and customer service will remain a focus during transition to safer skies Relentless growth in air travel volumes. Development of the hub and spoke networks allow for airlines to increase frequencies and city pairs. Unfortunately this has locked multi-hub mega-airlines into costly, mean and inflexible service models. Alienation of the FBT has become a significant worry and challenge Fuel and labor costs outpacing market growth. High interest rates on asset purchases, including aircraft and terminal (large hub) facilities, have severely effected the bottom lines of airlines since deregulation. In an effort to reduce costs, airlines turn to franchises and fleet rationalization and outsourcing Downturns in local and international economies directly impinge airline profitability. Examples include the economic downturn in the early 1990’s, the Asian economic crisis of 1998 which adversely affected airline operating margins Globalization The airline industry is consolidating and building global networks. The initial trend is market-driven - toward large alliances with a regional or global reach, and similar service offerings. The second wave will seek operating synergies, delivering cost savings Ryanair AirTran Jet Blue United Airlines Delta Airlines American Airlines Star Alliance oneWorld Cordiem USAir American Airlines British Airways Large carriers Asian carriers Latin carriers All carriers

The traditional “integrated value chain” is evolving, and is driving massive strategic change: 

Stable Industry Structure The traditional “integrated value chain” is evolving, and is driving massive strategic change Market, Structural & Strategic Change Market & Structural Change Structural Change Integrated Value Chain Value Chain ‘Deconstruction’ Atomization Networked Services CB&TS Affinity A Supply Chain Affinity B Customer Booking and Travel Services Airline Passenger & Cargo Operations Airline Industry Supply Chain Internet bookings FBT/CTO segmentation 3rd package & new entrants Global alliances Outsourced support Buying groups Content in “context” services TSP fragmentation Fractionals Low cost core providers Specialized global services Parts consolidators Early 1990’s Structure Distinct Fluid Market Structure Unstable

We believe in the next 10-20 years there will be four clearly defined industry layers closely attuned to key customer segments: 

We believe in the next 10-20 years there will be four clearly defined industry layers closely attuned to key customer segments Status Quo is unsustainable New, emerging industry characteristics: Stratification of airline business models Horizontally attuned to customer segments Profitable and best able to manage cyclicality Structure: Four layers, each focusing upon the customer segment best served by their capabilities and needs Mega carriers providing low cost mass transit Customer: Focus on leisure and non-critical business travelers Right-sized hub operations Global alliances More dependent on regional feeders Regional feeders Customer: Mega-carrier Focus on short-haul Point-to-point carriers and scheduled charters Customer: FBT, Corporate soldier, leisure traveler Evolution to smaller airports Corporate shuttle services Low cost new-entrants Indigo-like small airport services Business aviation Customer: EBT, FBT, Fortune 1000 Flight departments with more services Fractional networks and operators

Case in point – Lufthansa (the majors fight back): 

Case in point – Lufthansa (the majors fight back) Lufthansa pampers customers on direct trans-Atlantic route Direct business-only service between Newark, N.J., and Dusseldorf, Germany, costs about $5,900 and offers personalized service including food, drinks, personal video players and laptop outlets. Privatair provides the planes and pilots for Lufthansa.  MSNBC (7/1/2003) It’s about the yield !!!

What Else is the Industry Doing?: 

What Else is the Industry Doing? Source: A T Kearney analysis A big effort is underway at major airlines freeing up data from legacy systems to drive e-commerce improvements and more. Changes may have to be deeper, though, including comprehensive business process outsourcing. Information Week April 21, 2003

Airline Solutions Focus – on reducing spend and improving quality through collaboration: 

Source: CMP Media, Inc.; SITA; EDS; A.T. Kearney analysis; ATW's World Airline Report 7/2000; ATK Airline Spend Data Base; OneSource - FactSet; Airline Annual Report; EDS; A.T. Kearney Analysis Airline Solutions Focus – on reducing spend and improving quality through collaboration Estimated Global Airline Industry IT Spend Estimated Global Airline BPO Spend Applications 32% Distribute 21% Compute 30% Network 15% Total - $9.8 billion Other 2% Freq. Flyer Call Center 14% Reservation Call Centers 41% Other 4% Back Office3 28% Total - $8.9 billion Ticket Fulfillment 5% Customer Care 5% Cargo Sales 3%

Airlines spend $3.3b annually on application solutions : 

Airlines spend $3.3b annually on application solutions Source: Published industry data 0% 20% 40% 60% 80% 100% In-house 587 567 100 200 19 85 Vendor 1183 333 73 50 26 85 Passenger process Airline Operations Cargo & Freight Aircraft Maintenance & engineering Airline Apps. @ Airports ERP- Back office systems Spend in $ Millions

New technologies position airlines for the future: 

New technologies position airlines for the future

Future technologies….: 

Future technologies….

Future technologies….: 

Future technologies….

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Future technologies….

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Future technologies….

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Future technologies….

Future technologies….: 

Future technologies….

Slide34: 

Model World Rules Business Strategy and Policy Objectives Our ability to understand, model, and affect the behavior of complex systems is enabling a new approach for real time analysis based decision making Better models and algorithms supported by faster hardware Universal connectivity for immediate decision communication Availability of real-time integrated data Continual Optimization

Slide35: 

Data Analysis Sense Revise Objectives Measure Success of Action Calibrate Model Against Real Business Strategy and Policy Objectives Real World Model World Data analytics: real time, online data analysis process Execution analytics: the sense-evaluate-respond loop Exception analytics: compare anticipated results to actual values, and deal with the exceptions Revision analytics: modify the process by changing the models Levels of Analytics Rules

Slide36: 

Direct-to-Digital GPS Receiver Complete digital radio chip

Slide37: 

Weather Simulation

Air Services: 

Air Services

Slide39: 

“Ultimately, if full service airlines don’t find a way to radically reduce cost and thereby sell seats to consumers for less, they are destined to shrink further and further…” “If these tough economic times have taught us anything, it is the need to use alliances as a tool to maximize efficiencies…” Robert Milton, President and CEO – Air Canada

EDS serves a global air transportation community…: 

EDS serves a global air transportation community… Flight Planning CRS Internet Booking Alliances CRM GDS Sales & Marketing Airport Operations Outsourcing Engineering Process Management FIDS Logistics Integrated Operations Operations Revenue Accounting Revenue Collection Electronic Ticketing Payment Processing Payroll Processing Finance and Administration Maintenance, Repair & Overhaul

EDS’ growth in the airline marketspace: 

EDS’ growth in the airline marketspace Source: EDS 1991 Acquired System One and Shares 1993 Continental Ops Deal 1999 Ben Gurion trusted traveler program 1998 British Airways Maintenance & Engineering deal December 2001 American renewal December 2001 Acquired Atraxis assets July 2001 Sabre deal (American & USAir contracts) 1995 AeroMexico ITO 2000 Continental renewal & expansion 1998 Las Vegas McCarran “shared use” airport EDS Growth in Airline Industry EDS 16% IBM 6% Internal 60% Other 13% Unisys 3% Amadeus 2% EDS is the No 1 IT services/product provider in the aviation industry

EDS is the leading global provider of IT and business solutions to the airline industry: 

EDS is the leading global provider of IT and business solutions to the airline industry

Leveraging operational capabilities and solution sets to the global airline community…: 

Leveraging operational capabilities and solution sets to the global airline community… Reconcile Maintain Operate Distribute EDS (Shares) Sabre Atraxis Reservations, Flight Planning, Operations, Revenue Acctg Plan Reservations, Airport/ DCS, Operations Travel Marketing & Distribution, Airline Decision Support Airline Enterprise Model Asia Pacific Atraxis Shares Sabre Leverage & Enhance Applications Portfolio Grow Americas & EMEA Build Asia Pacific Operating Tower

Leveraging solutions value propositions…..: 

Leveraging solutions value propositions….. IT Infrastructure Application Bundle 1 Application Bundle 1 Application Bundle 1 Application Bundle 1 Application Bundle 1 Business Processes Outsource to drive immediate cost reduction and move assets off balance sheet Outsource non-core business to drive immediate cost reduction and revenue growth Manage Business Support Functions Maintain Aircraft Conduct Flight Operations Process Cargo /Passengers Market & Sell Services Airline Value Chain Implement solutions to optimise current operations and grow revenue EDS Generic Value Propositions Value Creation Revenue Cost Capital Client Impact EDS Service Offerings Source: A T Kearney analysis

EDS globally supports over 200 airline applications : 

EDS globally supports over 200 airline applications North America: Data Centre Application Development Support, Maintenance Helpdesk Europe: Data Centre Application Development Support, Maintenance Helpdesk Asia: Application Development South Africa: Application Development Key Customers

EDS growth objectives may be achieved through a phased approach…: 

EDS growth objectives may be achieved through a phased approach… Phase I – Establish significant penetration in current market with strategic airlines Phase II – Further build share with next generation offerings Phase III – Portfolio expansion Existing markets New markets Encourage current customers to participate in Next Gen systems Attract additional carriers to participate Consider partnerships Expand scope to greater passenger processing Expand other markets (MRO, Ops, etc.) Existing products New products Product Development Strategy Market development strategy Market penetration strategy EDS Growth Matrix Develop Next Gen Develop different service options Develop alternative technologies Phase I Phase II Phase III Diversification strategy

EDS Airline Industry Objective: 

EDS Airline Industry Objective To be the world’s leading provider of airline IT solutions and services by: Levering our existing assets and resources --- including the industry’s largest community of clients ---to develop industry-leading solution platforms Creating innovative shared solutions by levering the industry’s largest pool of resources --- both human and technical --- backed by best-in-class infrastructure capabilities Collaborating with our clients to win in today’s global economy…repositioning key technologies and resources to exploit new and emerging technologies

Enabling on-line distribution channels…: 

Enabling on-line distribution channels… Mexicana Business issue: Need for web portal to help better satisfy customers, boost revenues, and trim costs. Our approach: Analyze industry trends and anticipate impact of changes on business processes Design and execute plans based on Mexicana’s business strategy Integrate multiple functional tools into a highly personalized, interactive site Streamline and automate business services. How it worked: Easy to use web portal with custom content keeps customers engaged and buying. Highly reliable, scalable infrastructure grows with market demand. Online sales exceed US $1.5 million annually, reducing costs of internal operations.

Improving operational performance…: 

Improving operational performance… Continental Airlines Business issue: Improve operational performance: on-time, irregular ops performance, passenger satisfaction Our approach: Re-examine the airline’s core business processes to identify ways to reduce cost and enhance customer service How it worked: Implemented electronic ticketing streamlining the flight experience for passengers and reducing the administrative paperwork and expense involved behind the scenes. Improved on-time performance through a new System Operations Coordination Center. Continental now flies as an acknowledged industry leader in operations performance.

Airports: 

Airports

Market Overview: 

Market Overview Approximately 2,100 airports are in commercial operation worldwide Top 142 airports (Tier 1 & Tier 2) account for over 80% of passenger traffic Tier 1 airports are those with total passengers exceeding 10mm Tier 2 airports handle between 5mm and 10 mm passengers Tier 3 handle between 1mm and 5mm passengers & Tier 4 handle less than 1mm passengers annually General Landscape

Market Overview: 

Market Overview While air traffic is projected to double in the next twenty years, the number of airports is expected to remain static Estimate $350 billion investment required through 2005 to upgrade airport infrastructure (now 2008), LAX just announced $9B upgrade. Public investments of this magnitude appear highly unlikely under current global economic climate and many projects are on hold because of 9/11 Governments are anticipated to address this issue through privatization of airports (particularly outside the U.S.) Djibouti – air and sea port investment anomaly General Landscape

Market Overview: 

Market Overview Increasing privatization of airports Emergence of global airport operators/developers Specialized airport management companies are acquiring and/or managing multiple airport networks BAA, YVR, Schiphol, Manchester, Copenhagen, Vienna, AENA Anticipated that majority of world’s international airports outside of US will be controlled by a handful of these operators within the next 10 years Increasing competition among airports for airline service Airports typically generate multi-billion economic impacts for community Primary basis for competition is low airline costs per passenger and airport efficiency Key Trends

Market Overview: 

Market Overview Evolution of airport “cities” Increasing focus on high yield, non-aviation revenues such as retailing, office complexes, etc. All trends indicate increased reliance on shared IT More efficient air operations to control costs and increase throughput Complex integration of air and non-air operations Added security considerations Key Trends

Market Overview Key Business Issues: 

Market Overview Key Business Issues Tomorrow Today

Market OverviewAirport IT Model: 

Market Overview Airport IT Model Air Side AODB/ AMS Terminal Retail Security Facilities Admin Data Voice Distributed Computing Wireless Current airport IT model is evolving to a central operational database integrating the 6 key functional areas of an airport EDS has a wide range of Airport applications available EDS, together with our business partners, provides end to end solutions for the airport industry

Improving real-time information flow…: 

Improving real-time information flow… McCarran International Airport Business issue: Address growth issues and reduce the impact of schedule delays, equipment failures and gate changes Our approach: Improve information access and sharing by replacing airline-specific equipment and implementing a common infrastructure and airport data base. How it worked: The EDS-powered network has reduced passenger time in lines, and increased the efficiency of the airport up to 20 percent. A seamless flow of operational and passenger information throughout the terminal buildings have improved efficiencies for the airport, airlines, and supporting organizations.

Security: 

Security

Airport Environment Security Overview: 

Airport Environment Security Overview Conduct rigorous background checks prior to hire and evaluate employees after hire Deploy a biometrically enabled smart card system Employ radio frequency (RF) technology Install scanning equipment Implement remote video inspection systems for airport perimeter Number of pilot programs (latest report at Logan Airport indicates that Facial Recognition not working: 156 identified, 93 missed) Secure airport terminals and tarmacs by identifying, verifying and authenticating personnel, equipment and shipments at critical points in the security process

State of the Union – US Airports* : 

State of the Union – US Airports* TSA Federal Security Directors (FSD) are responsible for the “overall security” of 429 US airports with a goal of 10 minutes throughput/flow control 8 – EDS machines 27 – ETD machines 27 – EDS Machines 229 – ETD Machines Additional lanes – inline changes Numerous pilots for biometrics, RF, FB scans, visual recognition, GPS, etc. Current Before Airport Screeners Airport Employees Equipment * A snapshot of a “big ten” airport in the United States – approximate numbers No badge controls No background checks “recruited by the truckload” Limited badge controls (46K) No background checks Vendor or airline responsibility Full badge control/move to Bio Full background checks Surveillance/Timed access Move to TSA governance US Citizenship Background/Drug/Physical check English Speaking/Intense training 600+ secondary screeners

CAPPSII and Registered Traveler: 

CAPPSII and Registered Traveler Key to safer skies, the Homeland Security initiatives and solving liability issues Confidence and convenience CAN increase hand in hand CAPPSII sets the new standard in background checks, but it must be: Accurate – NSA, INS, NCIC, FBI, CIA, Interpol, etc. Fast – Instantaneous, 7x24, like res systems… Secure – tamperproof data, network, hardware Used by ALL – throughout the entire travel process Registered Traveler opens the door for fast, safe, access to the sterile environment, it should utilize: CAPPSII/Multiple Biometrics/Encryption for card creation Airport/Airline Employee/Flight Crews as first wave Freq Flyers and “known” travelers as next wave for “blue lane” Standardization and TSA monitoring

Other Areas of Security: 

Other Areas of Security Cockpit Security (door bar, “fortress” door, biometrics, stun guns, Pilot training, CCD view of cabin) Cabin Security (Flight Attendant training, cabin overt/covert CCD video capability, online black box) Cargo/mail (Known Shipper, Bio-Chem sniffers, additional scanning, Hardened Unit Load Device) Airport Premise (External Perimeter Sensors, Concourse Visual Recognition System, timing access, employee tracking) Air Marshal Program – adding another 5000 (grown by 15x since inception) There are many other areas of security where confidence is being increased, some that the traveler can see, others that are behind the scenes

Enhancing security and passenger flow…: 

Enhancing security and passenger flow… Ben Gurion Airport Authority Business issue: Improve airport security while maintaining customer service Our approach: Express Entry, an automated biometrics-enabled inspection kiosk system How it worked: Improved airport and border security by allowing authorities to focus on “unknown” travelers

Ports – an example of collaboration: 

Ports – an example of collaboration

In the U.S., Efficiencies Have Been Made: 

In 1990, Transportation accounted for 14.9% of the GDP of the United States In 2000 Transportation accounted for 9.9% of the GDP of the United States The major savings was in the area of inventories held As each of the modes got more efficient, so did the IT systems supporting transport Transportation became more efficient, thus allowing inventories to be reduced In the U.S., Efficiencies Have Been Made

As We Look to the Future: 

As We Look to the Future "Railroads cannot any longer just think railroads, they must think highways and airways. Trucks cannot just think about highways, but must think about creating and maintaining deep water ports. We have the technology to bring our separate transportation infrastructure together to create true intermodalism". Norman Mineta Secretary of Transportation April, 2001

Transportation Systems for The Future: 

Transportation Systems for The Future Future transportation systems will provide: Efficient, seamless transport Multi-modal, end-to-end Movement of both people and freight Future transport systems will be: Innovative, secure Customer oriented, and performance-driven Transportation will be enabled by information from a fully integrated system of computing, communications and sensor technologies

A Bold New Vision…: 

" A new bold transportation vision is needed to set the direction of the next years. This new bold vision is based on information management and availability, on connectivity and on system control and optimization. In short, the creation of an integrated national network of transportation information." National Intelligent Transportation Systems Program Plan: A Ten Year Plan April, 2001 A Bold New Vision…

Supply Chain Creation and Analysis: 

Supply Chain Creation and Analysis Complete end-to-end supply chain capabilities Must play to get pay Across all modes / industries Requires electronic and automated BOL/WB and FOP processing Tight linkage to Track and Trace systems “Trusted shipper” and security enabled Supply chain analysis: systems that will evaluate the trade-offs between minimized inventory in a supply chain network and assuring on-time delivery in a manufacturing and distribution environment

The Future Starts Now – Alameda Corridor Opens: 

The Future Starts Now – Alameda Corridor Opens L.A. project connects ocean ports Improved rail service from ports to rail head in city, opened April 12, 2002 Total construction time: 5 years Total cost: $2.4 Billion Multi-stakeholder financing used $1 Billion in revenue bonds $ 400 Million direct from ports $ 460 Million from city of L.A. $ 400 million from the U.S. Department of Transportation

Alameda Corridor – Continued : 

Alameda Corridor – Continued What was built Elevated rail tracks over L.A. freeways Below ground rail tracks, 3 wide Bridges, overpasses, underpasses Over 200 at grade crossings eliminated in 20-mile stretch What has been accomplished Approximately 25% of all U.S. international waterborne trade moves through these ports Smooth flow of goods increases efficiency, safety Reduced traffic congestion for trucks, rail and passenger traffic Reduced air, noise pollution by eliminating an estimated 4,000-6,000 trucks per day off L.A. freeways

Closing: 

Closing

In Closing - Questions To Prepare For The Future: 

In Closing - Questions To Prepare For The Future Are you using technology wisely? Are your goals aligned to your driving forces (cost control, growth, speed to market, innovation, new models) ? Do you involve all stakeholders in the planning process for major projects to meet these goals (treating collaboration as key)? Are you planning for an integrated information system that can handle your transportation needs? Are you building your information system based upon secure open standards, open architectures, and designed to incorporate new technologies and change?