On the cards

Cubic Transportation Systems is planning to implement a new technology that will revolutionise the use of the Oyster Card system in London

Cubic Transportation Systems is part of Cubic Corporation, a worldwide defence and transport services group founded in 1951 by Walter J Zable who, at 94 years of age, is still actively involved in CTS AM 09 bthe company. As the transportation arm of the group, Cubic Transportation Systems specialises in designing, manufacturing and integrating automatic fare collection systems for public transit and is the global leader in its field.

The industries that Cubic Transportation Systems covers are bus, bus rapid transit, commuter rail, light rail, heavy rail, parking and ferries. The company operates across the world, supplying ticketing systems, magnetic stripe cards, contactless smart cards, device software and transit hardware in over 400 projects. On 5th March this year, the company also had the honour of celebrating its 50th anniversary of being publicly-traded by ringing the opening bell at the New York Stock Exchange.

The company’s strong presence is evident in its country of origin, the US, where its major clients include Washington Metro, Los Angeles Metro, Chicago Transportation Authority, New Jersey Transit, New York City Transportation Authority, Metropolitan Atlanta Rapid Transit Authority (MARTA), Bay Area Rapid Transit (BART) in San Francisco, and Miami-Dade Transit in Florida. Additionally, it is prominent in the UK, and its customers consist of the likes of South West Trains, Southeastern Trains, and many other TOC, and, of course, Transport for London. Cubic Transport Systems’ influence also stretches further afield to Australia, where it has active contracts with Railcorp in Sydney, Londonand Translink in Brisbane. It also has several contracts with companies in Canada and in the past has worked in places such as China, Singapore, Hong Kong, Bangkok and Malaysia.

Steve Shewmaker, President of Cubic Transportation Systems worldwide, explains the reasons behind the company’s large-scale success: “We’ve been in this business longer than the majority of our competitors, and we have a vast installed base of $3.7 billion worth of equipment. We are also the only company in this industry to provide the full degree of services and operations relating to our equipment. Everything is provided by us, from helping the transport authorities figuring out what systems to install, to designing, manufacturing, installing and commissioning that system. We also have a large customer service organisation that can support every aspect of a major smart card ticketing system.” The company’s range of services also covers all back office functions such as financial settlement and reconciliation, management reports, fraud management, smart card management, Point of Sale management, business rules implementation and management. It also has a complete service organisation.

The company differs from its competition in that it runs three centres of excellence around the world in its major markets – these are Cubic Transportation Systems Limited in London, Cubic Transportation Systems Inc in San Diego and Cubic Transportation Systems Australia, in Queensland. Steve describes the purpose of these facilities: “We use these centres for delivering systems support, with program management and engineering staff and services that are geared towards providing the best services to the client.”CTS AM 09 c

Cubic Transportation Systems’ innovative projects are another cause for it standing out amongst its competitors, and one such example is its current contract with the Oyster cards system in London. The aim is to have a system in place by 2011 whereby travellers will be able to use an all-in-one reader that can process ITSO cards as well as the current Oyster Card and can be expanded to read bank cards, and even smart-card enabled mobile phones to pay transit fares.

Steve elaborates on the merits of such a system: “This will be a completely integrated system that will add a great deal of convenience to the whole transit process, and will be particularly useful to people who are travelling into the capital from outside of the greater London area.

Cubic Transportation Systems works very closely with both its rail partners and rail operators, and one example dates back to the early 1970s, shortly after it bought a company called Western Data Products. This company was producing magnetic striped tickets for automatic fare collection, which was a new technology at the time. After buying this company, Cubic Transportation Systems gained several new contracts – one with BART in San Francisco and another with Washington Metro – and working closely with these partners, it still supports these contracts today.

The company is always looking to expand and Steve discusses instances where the company has looked towards aggressive growth: “We are always on the lookout for potential acquisitions to fill a technical or geographical gap in the company, and we are always willing to experiment with new means of increasing our market presence. For instance, in the 1990s we acquired a toll business called Automatic Toll Systems, which flourished under our ownership. This was a departure into a new territory for us and our willingness to give this idea a chance is an example of our philosophy of constantly seeking out potential investments for the future.” The company was later sold by Cubic but was a financial success for the corporation. He adds: “We also had a great deal of success with a UK acquisition, called Thorn Transit Systems. We integrated this company into Cubic Transportation Systems, and it has since been an excellent acquisition for us over the years by continually increasing our business volume with the train operators in the UK.”

Cubic Transportation Systems is also currently exploring the possibilities of increasing its presence in India, where it sees a great deal of potential within the country’s emerging markets. Operations at Cubic Transportation Systems India will commence within the coming months, and the facilities will be staffed with both engineers and marketing personnel. The company will also take advantage of the lower business set-up costs in the country, by integrating a software development facility into the sites there.

There are several other plans for development in the pipeline for Cubic Transportation Systems, as Steve explains: “We are very strong in the UK market at the moment, although our presence in mainland Europe is not as established yet. Our plan is to expand here, primarily in the German and the Nordic markets, with Sweden as our main focus. We already have an existing company in Sweden, through the acquisition of a company called Scanpoint a few years ago, which really gives us a strong presence inside Scandinavia.”

In addition to the expansion plans for both India and Scandinavia, there are plans for Cubic Transportation Systems to grow its foothold within Australia. Steve goes into more detail: “Our business plan for the next five years is not only focused on expanding our influence in India and mainland Europe, but also in Australia. In Sydney, we are competing for a new smart card ticketing system, and are optimistic about our prospects. Another goal of ours for the next few years is to look towards doing more business related to the service industry. Currently, approximately 55 per cent of our business operates within capital supply and the remaining 45 per cent in service. It is our goal is to even these proportions out, and possibly even increase the services aspect of our business further.”

As the current financial crisis sweeps through industries all across the globe, Cubic Transportation Systems remains strong, according to Steve: “What others are seeing as a challenge, we are looking at as an opportunity. The economic stimulus plans that are currently underway in America under President Obama, for example, have the potential to bring us large benefits. As the government channels more money into the infrastructure of the country, there will be more and more options available to us both long term and short term. It also seems highly likely that similar measures will soon be active in the UK, meaning similar benefits in our market there as well.” He concludes: “So far we have seen very little impact from the recession, and ridership has not declined at all in recent times. In fact, the US market is coming off the biggest year for ridership since the American Public Transportation Association began taking records so it is clear that we are in a strong position regardless of the recession.”