With Railway Age since 1992, Bill Vantuono has broadened and deepened the magazine's coverage of the technological revolution that is so swiftly changing the industry. He has also strengthened Railway Age's leadership position in industry affairs with the conferences he conducts on operating passenger trains on freight railroads and communications-based train control.
By Mike Ogborn
The Surface Transportation Board is about to embark on a series of hearings that could result in major changes in the railroad industry, including the way railroads compete, price their service, and make capital investment decisions.
The first hearing will be held in February and will review the long-standing exemptions for boxcars, commodities, and TOFC/COFC rate and commodity exemptions. The second hearing will be held in May and will “explore the current state of competitiveness in the railroad industry and possible policy alternatives to facilitate more competition,” including competitive access, bottleneck rates, terminal access, and reciprocal switching.
This announcement comes on the heels of an unsuccessful attempt by the Senate Commerce Committee to draft compromise legislation on these subjects in the 2010 Congress. While we do not know what the end product of these hearings will be, we do know that they will be wide-ranging and deal with issues that go to the heart of the railroad industry’s ability to compete for business and to adequately invest in its infrastructure.
The short line railroad industry will be full participants in these hearings. We have put together an internal process for developing and presenting our position on each issue so as to do everything we can to protect the interests of all short line railroads.
Most important, we will make a substantial effort explaining to the STB how short line ratemaking and service practices work, and how those things are weaved into the fabric of our relationship with the Class I’s.
These are very complex subjects, but a number of simple principles will guide our response to these hearings.
If we are not the problem, do not make us part of the solution. Short line railroad pricing and service practices are not the reason this debate is taking place. Applying blanket solutions to short line railroads will have virtually no impact on the outcome, but will have significant impact on the financial viability of our small businesses.
Short line railroads contribute to competition. The vast majority of short lines were created to preserve or enhance rail service where it otherwise was going to be abandoned or severely restricted. More than 300 of the nation’s 545 short lines connect to two or more Class I carriers, and this provides a significant competitive advantage to short line-served shippers. Enacting regulations that reduce our revenues will severely restrict our ability to maintain and rehabilitate these competitive alternatives.
Short line railroad transactions were predicated on established economics. Short line buyers purchased a given amount of traffic and a presumed rate. The goal is always to earn enough to improve and grow that service, and virtually all of today’s short lines have done so. Many of the ideas being discussed in the debate could destroy the economics of our transactions.
For instance, mandated terminal access would allow another carrier to service our best customers for a trackage rights fee. A typical trackage rights fee is no more than the direct cost associated with maintaining a particular segment of track. That is not what the short line owner paid for in the first instance, and allowing that to occur will turn these transactions upside down to the detriment of all the remaining shippers on the line.
A reduction in Class I investment and service will hit short lines hard. To the extent regulatory changes result in reduced Class I investment and service, those reductions will occur first on those line segments with the least traffic—where most short lines operate. This will reduce our traffic and our revenues, and we will in turn be forced to reduce investment and curtail service.
It is no secret that the impetus for these hearings is the unsuccessful effort of Sen. Jay Rockefeller (D-W.Va.) to craft a compromise piece of legislation during the 2010 Congress. While the short line railroad industry had serious concerns with portions of that legislation, it needs to be noted that Sen. Rockefeller was attentive to those concerns.
Sen. Rockefeller and the Commerce Committee devoted substantial time listening to and understanding short line positions. In many instances portions, of the proposed legislation were altered to address those concerns. In every instance, they did their very best to understand the intricate financial and operating relationships between the big and small railroads.
We sincerely appreciate that effort and we hope the STB will give us that same consideration.
Mike Ogborn is Managing Director of OmniTRAX, Inc., a transportation management company that provides management services to 17 short line railroads and other transportation companies in Canada and the United States.
Woody Allen once said, “I took a speed-reading course and read War and Peace in twenty minutes. It involves Russia.” Speed is compelling. From restaurant service to medical treatment, we use speed to define quality. Transportation is no exception. But as Allen illustrates, by focusing solely on speed you can miss other essential elements. U.S. passenger rail is a case in point.
Headlines often blare about the speed of European or Asian high speed trains. But those vaunted speeds are rarely sustained in practice, due to operating costs, logistic constraints, and maintenance requirements. The unspoken story is overall performance—efficient, reliable, and comfortable ways of getting passengers to their destinations, using rail as one well-integrated component of an overall journey. But performance can be hard to define and even harder to quantify. Speed becomes the defining principle by default. Unfortunately, U.S. passenger rail cannot afford to live by that definition. To advance passenger rail here, advocates should focus on high-performance rail (HPR).
Things are different on this continent, and headlong implementation of European or Asian-style HSR may not be the best strategic choice for us. Different transportation corridors have unique needs and constraints. Choosing appropriate rail solutions by corridor is the key to our successful implementation of passenger rail. Appropriate phasing is critical to deliver early, visible gains and long-term potential. Credit the Obama Administration and the FRA for embracing that principle. Modifying the original High Speed Rail Strategic Plan, the FRA now recognizes three corridor categories: Core Express, 125 mph or faster; Regional, 90–125 mph;, and Emerging, below 90 mph.
This refocus is practical. Passenger rail is not a one-size-fits-all business. From political realities to legislative and budget constraints to market-capture issues, unique corridor conditions prevail throughout the U.S. Recognizing these complexities, the FRA has endorsed HPR for passenger rail. What exactly is HPR?
HPR is an approach that delivers an appropriate rail system for each market, and measures that system in terms of ride quality, frequency, reliability, safety, ontime performance, amenities, station environments, local transit and airport connectivity, and yes, speed. Using these criteria collectively puts rail in a new light. Rather than being a foreign, elitist, or extravagant expense, it becomes an attractive, effective, and affordable transportation alternative. Passenger rail can thus be transformed from an abstract indulgence to an urgent local priority.
HPR optimizes solutions by addressing the needs and constraints of individual corridors. In one corridor, 90–110 mph on a shared freight asset may be best. In the Northeast Corridor (where the existing system already operates at capacity), a separate, dedicated HSR system is preferable. In other corridors, new commuter service on existing freight assets might be the optimal solution (and HSR could develop later, once ridership is established).
HPR is also cost-effective—an important consideration since infrastructure funding is limited and the competition for funds is intense. Money is especially tight for major capital projects like HSR, for obvious reasons. For most Americans, HSR is a distant, theoretical construct. At full build-out, it would only capture a small share of the overall travel market. Taxpayers are reluctant to fund a system they perceive as “fast trains for businesspeople and tourists.”
Such perceptions have unfairly damaged the case for HSR; that small overall share is a critical, large share in key corridors, and HSR would free up capacity in other elements of the larger multimodal transportation network. HPR mitigates the perception problem by focusing on performance, efficiency, and corridor-appropriate solutions that benefit everyone. We need passenger rail travel to become a reality again for many taxpayers. And once the country accepts HPR, the step up to HSR will be easier.
Speed is compelling. But it is not always the best criterion. In truth, most transportation modes actually “sell” performance. Airlines never talk about how fast their planes fly, but they are expert at selling performance—legroom, in-flight movies, airport lounges, and so forth. We must bring that perspective to passenger rail by promoting HPR. By taking a holistic approach to rail, by shrewdly and fairly apportioning limited funds, the FRA is, in effect, advocating high-performance rail.
Chris Taylor is the New York–based deputy director for high speed rail at AECOM.
By William C. Vantuono, Editor
Dire and unintended consequences could ensue if this legislation becomes law. Every stakeholder in the industry, freight and passenger, will suffer—shippers included.
This special edition of Railway Age is designed to reacquaint Congress and other opinion leaders with why the Staggers Act of 1980 was passed in the first place, and what it has accomplished—particularly, the capital investments that have enabled growth, productivity, and reliable, high-quality service. The reality is that most of the legislators who were present for the signing of Staggers are no longer around. And, almost no one in Congress remembers the dark days of the 1960s and 1970s, when America’s railroads were on the brink of collapse, and nationalization was seriously considered.
Railway Age is not new to this fight. More than a half-century ago—Oct. 7, 1957, to be exact—we published our landmark “Outrage” edition, which spelled out how the combined effects of government regulation and government-funded competition had seriously weakened the railroads.
Masterminded by Executive Editor Joe W. Kizzia, “Outrage” went into more than one million reprints and is widely credited with jump-starting the movement within the industry and on Capitol Hill that resulted in Staggers 23 years later. The similarity between our two magazine covers is intentional, only this time, we’re trying to stop history from repeating itself.
“By stripping away needless and costly regulation in favor of marketplace forces wherever possible, this act will help assure a strong and healthy future for our nation’s railroads and the men and women who work for them,” President Jimmy Carter said when he signed Staggers in one of his last acts as chief executive. “It will benefit shippers throughout the country by encouraging railroads to improve their equipment and better tailor their service to shipper needs. America’s consumers will benefit, for rather than face the prospect of continuing deterioration of rail freight service, consumers can be assured of improved railroads delivering their goods with dispatch.”
Staggers, as we well know, did exactly that.
There is no sensible reason to turn back the clock—especially now, when America’s economic recovery requires investment in efficient transportation. Why destroy nearly 30 years of steady, hard-fought progress?
Our special report, “Renaissance—or Retreat?”, represents an industry that speaks with one voice.
Good design, which evokes feelings of excitement, interest, and admiration, is something that entices people to purchase a certain automobile, or a piece of furniture, as much as price and quality.
Good design will also encourage people to use and appreciate rail, mainly passenger, but also freight.
With railways, the caveat of “form follows function” is especially important. A vehicle or facility should be attractive and ergonomically sound. Equally important, it cannot be difficult or expensive to maintain. Also, it must be safe. It’s not easy to to blend all these requirements into a single package like a railcar or locomotive or a station. That’s where an industrial designer comes in.
My good friend and colleague, industrial designer Cesar Vergara (above right), in the grand tradition of legendary railway industrial designers like Raymond Loewy, Henry Dreyfuss, Otto Kuhler, and Paul Philippe Cret, has been contributing his designs to this industry for the better part of 30 years. Among his more notable designs are Amtrak’s Genesis locomotive and Cascades Talgo train, NJ Transit’s PL42AC locomotive, and Metro-North’s new M8 (pictured). These are just a few of the “Vergaras” (my word, not Cesar’s) out there. “If it costs a million, it should look like a million,” Cesar likes to say. “It doesn’t cost any more to design a railway vehicle or structure that is aesthetically appealing than it does to design one that’s unattractive or uncomfortable.”
Since he graduated from Konstfack University College of Arts, Crafts, and Design in Sweden, Cesar Vergara has been plying his craft for others—National Railways of Mexico, Amtrak, Walter Dorwin Teague Associates, NJ Transit, Jacobs. Blessed with a personality as engaging as his creative spirit, he has (finally!) formed his own industrial design studio, Vergarastudio. With the railway industry in the midst of a renaissance, and passenger rail—including high speed—the priority of an enlightened (finally!) Administration in Washington, Cesar’s timing couldn’t be better.
Functioning in an advisory capacity to Vergarastudio are highly respected industry veterans like Jeffrey Warsh, Donald Nelson, and Peter Cannito. Like Cesar, they believe strongly in the importance of good design.
Access to great design by one of this industry’s most talented practitioners is a mouse click away at www.vergarastudio.com, an email to email@example.com, or a phone call to (203) 241-5264.
Most catastrophes don’t happen as the result of a single failure. There’s usually a series of oversights or smaller failures that eventually lead to a much larger, more awful occurrence.
Last month’s tragic wreck on the Washington Metro’s Red Line, a rush-hour rear-end collision at speed that claimed nine lives and caused numerous serious injuries, resulted from a combination of factors. While it will take several months for the National Transportation Safety Board to issue an official report on the crash, we can piece together a few parts of the puzzle.
The crash itself, NTSB investigators said the next day, resulted from a failure of the Metro’s automatic train control system to detect the presence of the train that was hit. That train had come to a full stop just north of the Red Line’s Fort Totten station. This condition is known by signal engineers as a blackout.
Train operator Jeanice McMillan, 42, had no chance to stop the following train as it rounded a curve at speed. She hit the emergency brake button, but it was too late. She and eight passengers perished as her train, equipped with the Metro’s oldest, original 1000 Series railcars, slammed into the stopped consist, telescoped, and tore open like an aluminum soda can. Both trains were operating in automatic mode.
While the train control system failure apparently caused the wreck, the dead and the injured may have had a much better chance had the train been equipped not with 1970s-vintage 1000 Series cars, but with the Washington Metropolitan Transit Authority’s newer railcars, which are built to recent, much stronger crashworthiness standards. In 2006, the NTSB recommended that WMATA accelerate retirement of its 1000 Series cars, but the agency said it could not. Why? As WMATA wrote to NTSB three years ago, it was “constrained by tax advantage leases, which require [us] to keep the 1000 Series cars in service at least until the end of 2014.”
Those tax advantage leases, better known as sale-in/lease-out or lease-in/lease-out, were, until outlawed in 2004, a method of financing that enabled funding-constrained public transit agencies to acquire new equipment that they otherwise would not have been able to afford and sorely needed funds for operations and maintenance.
As the Wall Street Journal reported on June 26, “Such agreements . . . typically involved banks buying or leasing municipal assets such as railcars and leasing them back to their original owners. They enabled the banks to claim tax deductions on the depreciation. Those deductions were otherwise worthless to the [transit agencies], since they don’t owe taxes. In return, the agencies got large slugs of cash. [WMATA] estimates it netted around $100 million from its deals. . . If the agency had wanted to break the leases . . . it would have had to pay penalties and fees on top of the cost of buying newer railcars.”
What we have here is an extreme case of unintended consequences. Money doesn’t necessarily buy safety, but it will pay for things like new transit cars and communications-based train control technology that could lessen the effects of a wreck or even prevent its occurrence.
One could forcefully argue that if WMATA, like most transit agencies, didn’t have such a hard time acquiring operating and capital support from its political masters, it may not have had to depend upon complex financing mechanisms to acquire new and better equipment.
Those of you who have been involved in the high speed rail business for a while may recall, with acid reflux, Herb Kelleher, the man who, with some creative legal shenanigans, single-handedly succeeded in killing the Texas TGV in the early 1990s. Let’s go back to Don Itzkoff’s “High Speed Currents” column in the July 1991 issue of Railway Age (p. 14) for some perspective:
“[Its] emergence into the national spotlight parallels a new, broader acceptance of high speed ground transportation as a significant future travel option for Americans. But recent events in Austin . . . teach a lesson in reality as well—that changing the entrenched domestic, political, economic, and institutional order to accommodate new high speed ground transportation systems will not be easy.
“In Texas, the opposition came from Southwest Airlines. Southwest, which itself was an upstart carrier when it challenged the established majors two decades ago, tried to prevent both high speed rail franchise applicants, Texas TGV and FasTrac, and the Texas High Speed Rail Authority from continuing the application process (in part on the terms that the Authority’s directors were improperly staggered) and succeeded in postponing hearings for a week. Southwest attorneys also interposed literally hundreds of objections to evidence introduced by both applicants and other parties, creating such disruptions that FasTrac moved that Southwest be fined for abuse of process. At the Authority’s hearing that commenced on March 25, a small army of Southwest lawyers assaulted the applications of both prospective franchises on every conceivable front.”
It gets better: “Not content to leave the battle solely to his lawyers, Southwest Chairman Herb Kelleher waded into the fray, too. Kelleher derided high speed trains as ‘gussied-up prairie schooners,’ called the concept a ‘somersault backward into the 19th century,’ and threatened to move Southwest’s corporate headquarters out of the state of Texas entirely. The Texas High Speed Rail Authority ultimately rejected the arguments of Kelleher and his lawyers, voting unanimously to award the franchise to Texas TGV. But Southwest drew blood through its campaign of attrition, and the battle may only be beginning.”
Kelleher proved quite shrewd. He probably knew that, just like the TGV’s effect on French domestic air service, 200-mph trains streaking across the Texas prairies would send his airline, which at that time was still a mostly regional carrier, crashing and burning. His tenacity paid off for him. The Texas TGV died, as did other high speed rail projects, such as Florida Overland eXpress (killed by another Texan).
It has taken nearly 20 years to overcome the entrenched order that Don Itzkoff so eloquently talked about in these pages. We now have an enlightened Administration in Washington (thank you, Mr. President, for this month’s “leaner-meaner-cleaner” cover line), and a supportive Congress. It’s going to take a lot more money than Obama’s initial $13 billion to build a high speed network in this country, but it’s a good start, $13 billion more than we’ve ever had.
Favorable opinions on high speed rail are coming from unexpected places. Commenting on the state of America’s automotive industry in the July 2009 issue of Car & Driver Magazine, David E. Davis Jr.—the dean of automotive journalists—said: “If I were [Obama’s] car czar, I would strongly suggest that we can have no national automotive policy until we have fully comprehensive transportation and energy policies. This is serious business. We desperately need high speed transcontinental trains based on the European and Japanese models, just as we need some modern version of the old interurban rail systems.”
I had to take off my bifocals and hold Car & Driver up to my nose to make sure I wasn’t imagining things, especially since I’d gotten used to reading silly anti-passenger-rail rants from (thankfully) now-retired columnist Patrick Bedard, who once called the New York City subway the “electric sewer.”
Then there’s this from Association of American Railroads President and CEO Ed Hamberger: “America’s freight railroads support the goal of increased passenger rail investment. It’s good for our economy and the environment when more people and goods move faster by rail.” Our privately owned freight rail network, he said, “is the literal foundation for high speed rail in America.” And of course (and we agree): “We are critical stakeholders that need to be engaged from the very beginning of project planning and development. Passenger and freight efforts to grow and expand must complement, not compromise, one another.”
Be sure to attend our 16th Annual Passenger Trains on Freight Railroads Conference, Oct. 19-20 in Washington D.C. Click here for more information.
One of the best ways to compare the performance of the railroads against the economy is to examine some of the data that economists—those people that practice “the dismal science”—crunch for a living.
The Association of American Railroads Policy & Economics Department now makes much of this information readily available monthly on its website (www.aar.org) through Rail Time Indicators, described as “a non-technical summary of many of the key economic indicators potentially of interest to U.S. freight railroads.”
One indicator is of particular significance, and we offer examples in the charts at right. This is the Purchasing Managers Index (PMI), released by the Institute for Supply Management (ISM, formerly the National Association of Purchasing Managers).
The PMI, says AAR, “is a compilation of data on new orders, inventory, production, supplier deliveries, and employment, based on a survey of several hundred supply managers at manufacturers throughout the U.S. It is considered a key indicator both of actual ‘on-the-ground’ conditions as well as sentiment for what the near- to medium-term will hold.”
A PMI greater than 50 indicates that overall manufacturing is expanding. AAR points out that the PMI in July 2009 was up to 48.9 from 44.8 in June—the seventh straight monthly increase and the highest since August 2008. The “new orders” component of the PMI rose to 55.3 in July 2009 from 49.2 in June 2009. That’s the highest it has been since August 2007.
“Of all the economic indicators tracked in this report, right now the PMI might be the most optimistic,” AAR notes. “It’s now about at the level it was for much of 2007 and 2008. As such, it might be accurately foretelling a brisk upcoming turnaround—or it might be an unreliable outlier signifying nothing.”
(Of course, we all know it’s the former—right?)
Quoting ISM: “The . . . more leading components of the PMI—the New Orders and Production Indexes—rose significantly above 50%, thus setting an expectation for future growth in the sector. . . . Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue.”
What’s the PMI’s correlation to freight rail traffic? Says AAR: “Since January 2005, the PMI has corresponded reasonably closely with the following month’s rail carloads, excluding coal and grain. (Due to seasonality issues such as harvests, the role of exports, and other factors, carloads of coal and grain are more volatile and less closely tied to manufacturing than other commodity categories. And since the PMI focuses on manufacturing, it makes sense to exclude coal and grain when comparing rail traffic to it.) This close relationship has not always held in the past and may not hold in future. If it does continue to hold, rail carloads should swing more strongly upward to match the big recent increases in the PMI.”
Not too dismal, eh?
Russia. China. Japan. France. Britain. Belgium. Germany. Spain. Italy. Taiwan. South Korea. The first two countries are the newest additions to the high speed rail club, which many in the U.S. have been wanting to join. Yes, we’ve got our own version of a high speed train, Amtrak’s Acela Express. But compared to the 200-mph-plus trains that rocket across other corners of the globe, our present service is, well, a beginning.
“The United States is a developing country in terms of rail,” Siemens Transportation Systems senior official Ansgar Brockmeyer told The New York Times last month, while riding Russia’s first true high speed train, the Sapsan. Developing country? Us, the United States of America, the nation that went, in the space of about a decade, from catapulting one astronaut into a 15-minute suborbital flight on top of a modified ballistic missile to landing 12 of them on the moon using purpose-built spacecraft during six missions and returning them safely to the earth?
I well remember the days, in the 1990s, when the major suppliers of high speed technology—Siemens, Alstom, Bombardier, and a few other companies that have since been absorbed by the “Big Three”—began declaring that high speed rail was dead here. With the exception of Acela, there was nothing to show for their time, efforts, and money except a trail of canceled projects, political opposition (or worse, apathy), and broken dreams. Opportunity lay elsewhere, they said, and they were right (see first paragraph).
But opportunity knocks once again in our third-world-of-passenger-rail nation. (Remember, we have the world’s finest freight rail system.) I’m sure the Big Three, and a few other potential players, haven’t forgotten the good old days of high hopes and nothing else, but I get the impression that this time, it’s serious business. The President of the United States is dangling an $8 billion high speed carrot, and while it won’t buy much more than a handful of upgraded freight rail corridors handling passenger trains not much faster than 110 mph, it’s a start.
High speed rail in the U.S.? I used to say, with a touch of sarcasm, “Not in my lifetime.” Perhaps I was wrong. I’d love to be wrong.
By William C. Vantuono, Editor
The Federal Railroad Administration is now evaluating a tall stack of applications for high speed passenger rail projects—roughly $100 billion worth for an $8 billion ARRA (American Recovery and Reinvestment Act of 2009) grant program. Federal Railroad Administrator Joseph Szabo, based on his staff’s recommendations, will be the one to sign off on which projects are funded, and for how much. Given that demand far exceeds supply, he’s going to have to make some tough choices.
The selection process, says FRA, is “merit-based,” an approach Administrator Szabo reiterated during his luncheon address at Railway Age’s “Passenger Trains on Freight Railroads” conference last month. It’s in official documents, as well. From the Federal Register: “The evaluation and selection criteria are intended to prioritize projects that deliver transportation, economic recovery, and other public benefits, including energy independence, environmental quality, and livable communities; ensure project success through effective project management, financial planning, and stakeholder commitments; and emphasize a balanced approach to project types, locations, innovation, and timing.”
The selection process, as published in the FRA’s High Speed Rail Strategic Plan and in the Federal Register, spells out the requirements. A given project either meets the criteria, or it doesn’t. So it follows that the selection process is fairly cut and dried.
Or is it?
Let’s assume two things. First, Administrator Szabo has every intention of sticking to the letter of the law, and to the intent of the program, by awarding project grants based on merit. Second, any program involving government dollars is going to involve politics. That’s just the way it is. Anyone who doesn’t believe this needs a serious reality check.
In the case of HSR—actually, “HrSR” (“higher speed” rail, incremental improvements to existing freight rail corridors to enable 90-125 mph passenger trains)—the political game-playing will mostly come from the states. Case in point: A project in one Midwest state, we’re told, does not meet all the FRA’s criteria, in terms of project management, environmental and ridership studies, financial plan, technical score, etc. The state agency in charge of submitting the grant application asked the FRA for guidance. The FRA basically said, “You don’t meet the criteria; don’t submit the application.” We’re told, however, that this state’s Republican governor ordered the agency to submit the application anyway. Why? Because if it’s rejected, the governor can go to his constituents and claim that the Democrats running Washington won’t give his state the funds for a project that will create jobs.
Partisan politics as usual? Of course. Did you expect anything different?
Another disturbing thought: Will states that are worse off economically (i.e., high unemployment level) have their projects approved over those from other, less-beleaguered states, even if their applications don’t fully meet the FRA’s criteria? Put another way, will there be pressure from the White House to make exceptions for political reasons, thereby funneling money away from projects that are more deserving?
We’re not saying that one project may be better than another, and we have no firm evidence to suggest that the process will be tainted by political considerations. But there are examples of this happening with projects of national interest or significance.
Recall that, following President John F. Kennedy’s bold directive in 1961 that the United States land a man on the moon and return him safely to the earth by 1969, NASA built its massive Mission Control facility outside of Houston, Tex.—900 miles away from Cape Canaveral, Fla., where the Apollo spacecraft were assembled and launched. Why? Because Vice President Lyndon Johnson, whom Kennedy placed in charge of the space program, wanted the facility in his home state. Talk about bringing home the bacon!
President Obama has said the $8 billion grant program is a “down payment” on HSR. Let’s hope the down payment isn’t on a sub-prime railroad.
Comments? Email me at firstname.lastname@example.org.
So, it looks like we’re going to have at least some form of high speed rail in this country, after all these years. Some of my European and Canadian supplier colleagues—you know, the people who build those really fast passenger trains, and who have been banging their heads against the wall for a very long time—are still pinching themselves. No, you don’t have to wake up. You’re not dreaming.
In October, when introducing the keynote speaker at Railway Age’s 16th “Passenger Trains on Freight Railroads” Conference in Washington, D.C., I looked out over a sea of about 180 people—nearly 50% more than what our conference usually draws. What recession? There’s opportunity to be grasped!
But how much? Are the freight railroads on board? After all, it’s their tracks these “higher speed” passenger trains will be using, with significant improvements, of course.
BNSF chief executive Matt Rose (left), our keynoter, and one of the driving forces behind the industry’s OneRail Coalition, effectively spoke for the freight rail industry when he said that BNSF does indeed support higher speed passenger services. BNSF, he said, “is proud of its relationship” with the passenger services it either hosts or operates, and believes that new and expanded passenger rail, including high speed, is essential for economic, mobility, safety, and environmental reasons.
Great. So, how far will $8 billion go?
No amount of money will go very far if it’s not spent wisely, Rose said. Carefully targeted investments in our national freight rail infrastructure will be absolutely needed if higher speed passenger rail services are to be realized.
“It all comes down to the money,” Rose stressed. “If it’s not spent effectively, there is more risk of doing damage than the opportunity to help. We must invest at levels that will make rail better than the best alternative.”
In particular, Rose referred to Positive Train Control, which at present represents a $10 billion price tag for the federally mandated implementation, by 2015, of PTC on shared-use and hazmat-traffic rights-of-way. He said that the requirement, essentially an unfunded mandate, could siphon capital funding away from other capital investments in the railroads’ infrastructure.
The real foundation of railroad safety, Rose said, is “good ties, track, and ballast,” investment in which has typically produced a good return. The ROIC (return on invested capital) for PTC remains to be seen, but it’s generally believed to be about $600 million, based on a $10 billion investment.
That’s not a very favorable return.
Should the feds shoulder much of the cost of PTC on freight lines hosting passenger trains? Yes, if it means that hard-earned capital dollars are going to be siphoned away from track, ties, ballast, new locomotives, new freight cars—all those things our railroads need to stay viable and keep growing, and which private investment dollars pay for.
Make no mistake: The industry, as Rose stated, will meet the PTC mandate by 2015. (Well, it is the law.) But there is good reason to be concerned. Let’s hope that those making the decisions and doling out the dollars on Capitol Hill have enough foresight to realize that our freight rail system must remain healthy and strong. If it doesn’t, you may as well forget about those fast passenger trains.