Derailments have been a persistent problem for trains since their inception, and they continue to be a concern today. In response to a recent derailment and toxic spill in Ohio, Transportation Secretary Pete Buttigieg has called for various reforms, including safer tank cars, higher train staffing levels, and the deployment of electronically controlled pneumatic brakes (ECP). ECP is a technology that can significantly improve braking and reduce stopping distances by over 50%, according to Wells Fargo analyst Allison Poliniak-Cusic. Despite objections based on cost and reliability, Poliniak-Cusic believes that the recent accident and others like it will spur increased support for ECP.
The history of train safety is marked by a pattern of accidents leading to technological advancements. In 1869, George Westinghouse invented the air brake, which allowed for more efficient stopping of trains using compressed air. This invention led to the creation of Westinghouse Air Brake, a company that ultimately merged with GE Locomotive to become Westinghouse Air Brake Technologies (Wabtec). Wabtec is now a leading producer of train technologies, including ECP. The rise of ECP as a safety measure was catalyzed by the 2013 Lac-Mégantic disaster, which killed 47 people. Although the technology was initially mandated under a 2015 rail safety law, the Trump administration later dropped the requirement due to concerns about cost.Despite these challenges, the recent calls for reform and the history of train safety suggest that the demand for ECP may grow. This is good news for Wabtec, which has seen its stock rise by over 11% in the past year. Poliniak-Cusic rates Wabtec a Buy, with a target of $125. As the train industry continues to grapple with safety concerns and the need for technological innovation, companies like Wabtec are well-positioned to benefit from the demand for new solutions.
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