Fatal Train Crash Puts Spotlight on Value of Networked Transport
An Amtrak passenger train headed southbound from Seattle to Portland derailed earlier this week. Traveling at 80 mph on a stretch of track designated for 30 mph traffic, the commuter train careened off a bridge, killing three and injuring 100.
With modern technologies, this kind of accident should be entirely preventable. However, tragedies like these can ultimately push new policies, and changes for the better.
Since 2008, lawmakers have been urging the rail industry to install Positive Train Control. It is a combination of GPS, radio and computer software. It automatically monitors trains, and slows them if they are traveling unsafely.
The industry objects that the technology is too costly.
In 2015, several rail companies threatened to close key sections of track if Congress did not extend the deadline. The closure would have impaired the regional economy. The transport of most raw materials, and many tractor trailers later moved by trucks, depend on rail. The deadline was pushed back to Dec. 31, 2018.
In the interim, rail derailments have been piling up. In 2013, a commuter derailed in the Bronx, New York when the engineer fell asleep. Four people were killed, 63 were injured. In 2015, an Amtrak train bound for Philadelphia, sailed through a curve at 106 mph. Eight people were killed, 200 were injured. The National Transportation Safety Board concluded both accidents would not have occurred with PTC.
Sensors and software improve safety.
We know this from data. By far, the safest mode of transportation is also the least dependent on humans. Commercial airliners have been largely automated for decades. Given the number of passengers, and miles flown, accidents are very few. Forbes
reports that statistically you are far more likely to die by being run over by a car than flying in a U.S. commercial airliner.
The government knows this, too.
Sensors are coming to many parts of the U.S. economy. They will improve productivity, and they will enhance safety.
I have been telling my newsletter members to begin looking for investments now. One of the truths about this era is that winners are being crowned early. When a company finds a niche, it behooves managers to quickly build a moat around core strengths. They then pull every lever to build greater economies of scale to keep competitors out of the market.
It’s a strange time. Undoubtedly, industrialized economies are headed to an era where sensors will become ubiquitous. Scale is already driving prices lower. The common conclusion is there is no money to be made. On the contrary, it means there are very few competitors. The companies that remain are making a fortune, with a steady stream of income from entrenched clients.
I’ll give you an example. Today, Sony (SNE) makes most of the camera sensors found in smartphones. Because prices have fallen so dramatically, and Sony holds most of the intellectual property, there are very few competitors. Sony’s sensor business is now the jewel of the company.
And Sony is not alone. There are several other companies that have cornered the market for specific sensors. These parts will power the next generation of smart machines.
One of my favorite firms is Cognex (CGNX), which makes the scanners and software that help industrial machines see. As factories become smart, all machines must move from blindness. This is a big opportunity. The company is growing rapidly in a marketplace bereft of competitors.
Another company on my buy list makes solid state memory modules used in surveillance and other cameras. As wireless and GPS networks prevail, more processing will take place at the point where the data is being collected.
These memory modules are essential. The best part is only a handful of these companies now exist. Blame the demise of PCs as a platform, in a networked world.
Regardless, the opportunity for astute investors is huge.
Very often, heavy machinery and humans do not mix well. And unfortunately, the Amtrak crash won’t be the last tragedy we will hear about. But we can focus on the positive changes that often come after events like these. And, in many cases, we can anticipate them … and be prepared when they come about.