GE Transportation will run the digital management systems for 250 Deutsche Bahn locomotives.
As appeared first in Handelsblatt: US engineering giant General Electric will run the digital management systems for 250 Deutsche Bahn locomotives, in a major coup over arch-rival Siemens for whom Deutsche Bahn is an important customer.
IT was on top of Jamie Miller’s list: For almost two years, the head of GE Transportation courted. The managers of the German logistics giant were touring through fabrics of General Electric in Erie in Pennsylvania and visited the headquarters of GE Digital in San Ramon, California.
Now, Miller’s efforts are paying off: Deutsche Bahn lets GE run the digital management systems for 250 locomotives, according to Handelsblatt sources at both companies. The deal represents a major coup for the US multi-industry company – for two reasons. Deutsche Bahn is traditionally a major customer of Siemens. And it is a model contract for digital solutions. “It is our first engagement”, says Seth Bodnar, head of digital at GE Transportation.
The contract runs for five years and covers Germany, France, Britain and Poland. The companies declined to discuss the size of the deal, but sources told Handelsblatt that it’s in the two-figure million range with both fixed and performance-based components. “General Electric is a good partner with extensive experience in data analysis”, says Steffen Bobsien, the head of vehicles and technology at Deutsche Bahn’s freight unit, DB Cargo.
Deutsche Bahn plans to invest EURO 500 million ($530 million) through 2019 in switching its rails to digital system, with 30 projects already under way. Mr. Bobsien wouldn’t rule out extending General Electric’s contract to additional diesel locomotives in the future. Up to 2019, the cargo daughter of Deutsche Bahn wants to equip 2000 locomotives, so far half of them are so called “Tech Loks”.
Water gauges in the cooling system, thermometers in the brakes and other sensors will give information on the “health condition” of the locomotive, according to Mr. Bodnar. These will be collected in a data box in the train and transmitted to the cloud, where GE software analyzes it. A team of GE and GE engineers then interprets these results to prediction on future malfunctions.
In a pilot project, predictions were precise enough. Deutsche Bahn tested the “Asset Performance Management” (APM) of GE for three months, which lead to a decrease by a quarter in malfunctions. This is an important number, as deficit locomotives often lead to expensive delays in cargo and passenger services. “Locomotives only make money if their wheels are turning”, Mr. Bobsien says.
What convinced DB was the extensive experience of GE in digitization and diesel locomotives. GE’s system is applicable to all locomotives, which is important as DB Cargo uses 24 locomotives series of nine different manufacturers.
The deal comes at the right time for GE Transportation. In their core market US, their turnover is decreasing. Due to low prices of resources like oil, less trains are used in the US for their transportation. The revenue sank from 5.9 in 2015 to 4.7 bn dollars. Compared to last year, GE was only able to sell 749 instead of 985 locomotives. However, according to Mr. Bodnar, the division could increase their digital business in the “difficult market environment” and states that it will become even more important. Previously, GE Transportation’s turn over on the digital transformation of railways was a little less than $500 m. By 2020, this amount is supposed to double and is to become the heart of an international expansion.