Passenger Trains > Passenger Rail in the U.S. - And the Other Rail

A Tale of Two Railroad Systems
Cabot Wealth Advisory
by Chloe Lutts
August 16, 2011

Passenger Rail in the U.S.
And the Other Rail

> I’ve been traveling between New York and Boston frequently for over three years. The transportation options between the two have
> definitely improved since I moved here; now I can choose the Bolt Bus or the Megabus, both of which have WiFi and electrical outlets. But
> I’ve also taken the Fung Wah and the Lucky Star buses, which leave from Chinatown and seat passengers on a first-come-first-served
> basis. They all get pretty cramped, especially on weekends and holidays. Yet, my absolute worst trips have been the ones I’ve paid
> the most for—when I’ve tried to take Amtrak.
>
> Amtrak tickets usually cost about five times as much as bus tickets, which is theoretically worth it for the roomy cars, on-board food and
> drink and faster travel time. Unfortunately, the reality of Amtrak is quite different. After spending hours in Penn Station one winter, I
> resolved never again to take Amtrak when there was snow on the ground. The next summer, a train I was on slowed to a crawl due to
> flooding—it was not raining at the time. The final straw was last year, when I arrived at New York’s Penn Station in absolutely perfect
> weather to find my train’s arrival was delayed by at least an hour. Savvier—or at least more cynical—than before, I went outside, walked
> a block, and got on a Megabus for Boston. I called Amtrak from the bus to cancel my ticket, and I was halfway to Boston before that
> train even arrived in New York. I haven’t even tried to take the train since.
>
> Obviously, anecdotal evidence is just that—but my experience with America’s passenger train system seems to jibe with its reputation.
> Amtrak—which is a government-owned corporation—has been a target of derision ever since it was created in 1971.
>
> Why is passenger rail in the U.S. so lousy? For the answer, we have to look at Amtrak’s origins—the “company” was founded under Richard
> Nixon in 1971 to more-or-less save passenger rail in the U.S. by nationalizing it. Existing passenger rail companies were struggling
> with declining ridership and increased competition from airlines and the burgeoning highway system. (Depending on whom you believe, they
> may have also been burdened by more government regulation then and given less government support than other transportation modes.)
> Amtrak was formed by absorbing most of the existing passenger rail lines in the U.S.—in exchange for Amtrak stock, the U.S. government
> gave the new company train cars, equipment and capital. The one thing the rail companies didn’t give the government was their rail tracks
> or right-of-ways—any of them. And with the exception of most of its Northeast Corridor route, Amtrak still doesn’t own any of the rails
> it uses. Freight railroads do.
>
> This is where it gets interesting: because while American passenger rail is among the worst in the world, our freight rail system is,
> without argument, the best. Last year, in July, The Economist wrote: “America’s freight railways are one of the unsung transport successes
> of the past 30 years. They are universally recognized in the industry as the best in the world. Their good run started with deregulation at
> the end of Jimmy Carter’s administration. Two years after the liberalization of aviation gave rise to budget carriers and cheap
> fares, the freeing of rail freight, under the Staggers Rail Act of 1980, started a wave of consolidation and improvement. Staggers gave
> railways freedom to charge market rates, enter confidential contracts with shippers and run trains as they liked. They could close
> passenger and branch lines, as long as they preserved access for Amtrak services. They were allowed to sell loss-making lines to new
> short-haul railroads. Regulation of freight rates by the Interstate Commerce Commission was removed for most cargoes, provided they could
> go by road.”
>
> It’s practically the mirror image of the history of passenger rail in the U.S. And it has produced almost exactly the opposite result:
> While Amtrak hobbles along dependent on debt and government funding, American freight railroads are thriving...

http://www.cabot.net/Issues/CWA/Archives/2011/08/Railroad-Systems.aspx


The remainder of the article diverges into issues regarding PTC and its impact on freight railroads, the impact of a few Amtrak trains on
heavy freight traffic..."Amtrak pays only about a fifth of the real cost of this access. Some railmen calculate that this is equivalent to a
subsidy of about $240m a year, on top of what Amtrak gets from the government"...and other forces affecting the freight railroads. As a
publication for investors, it concludes with recommendations for two railroad stocks: Norfolk Southern, and GATX.

GenePoon Wrote:
-------------------------------------------------------
> The remainder of the article diverges into issues
> regarding PTC and its impact on freight railroads,
> the impact of a few Amtrak trains on
> heavy freight traffic..."Amtrak pays only about a
> fifth of the real cost of this access. Some
> railmen calculate that this is equivalent to a
> subsidy of about $240m a year, on top of what
> Amtrak gets from the government"...and other
> forces affecting the freight railroads. As a
> publication for investors, it concludes with
> recommendations for two railroad stocks: Norfolk
> Southern, and GATX.

The last part is the most interesting part. Regarding PTC, I would say that it is not just a passenger thing. PTC could have prevented many disastrous freight only wrecks. But do the benefits exceed its huge costs? None the less, when you start adding on the implementation costs of PTC to the already huge indirect subsidy that many railroads provide Amtrak, the losses of LDT's become even more staggering to the economy.

This may sound counter-intuitive, but I think the first step to saving the LDT is to pay the host railroads a fair price for their services. The second step would require a complete revamping of the network, but if you do the first step, it won't take years, if ever, to do this reorganization or to get a new route added.



Edited 1 time(s). Last edit at 08/16/11 08:35 by ts1457.

ts1457 Wrote:
-------------------------------------------------------

> This may sound counter-intuitive, but I think the first step to saving the LDT is to pay the host
> railroads a fair price for their services.


Not farfetched at all. Remember when Southern Pacific was in its worst doldrums, having been isolated by
owner Santa Fe Pacific, and with its real estate, mineral and pipeline businesses sending their profits to the Santa Fe
part of the company? Rob Krebs, president of SP before he was taken to become CEO of Santa Fe Pacific, actually said that
Amtrak was SP's best customer. That status showed; Amtrak trains ran largely on time on SP during those years; even
the much-maligned Sunset Limited.

ts1457 Wrote:
-------------------------------------------------------
>(snip)
>
> This may sound counter-intuitive, but I think the
> first step to saving the LDT is to pay the host
> railroads a fair price for their services. The
> second step would require a complete revamping of
> the network, but if you do the first step, it
> won't take years, if ever, to do this
> reorganization or to get a new route added.

A comparison to UPS and its premium trains is probably in order. UPS pays BNSF a premium price for guaranteed delivery, and their are penalties for failure. Just as UPS pays penalties for Amazon for failure to deliver on second day etc promises. BNSF analyzes its route, timetables, what would have to be diverted or slowed down, etc and quotes a price.

BNSF provides good engines, inspects the cars, and accepts delivery at the appointed moment.

Delivering a train to BNSF hours late, with power that breaks down on route, paying a much lower fee than the "premium service" fee, etc isn't typical of UPS.

I'd be interested in knowing Amtrak's mean time between failures on its long distance train engines. I'd suspect it's much lower than the class 1 lines. I'm sure BNSF, UPS, etc are aware of it, too.

As somebody who does transportation policy for a living, I'll have to concede Ms. Lutts' article is a pretty balanced presentation. I've posted here about my own experience with Amtrak vs. Megabus between Philadelphia and Washington -- both the huge price differential and the frequent unreliability of Amtrak.

Her comments on PTC display a certain lack of understanding. By statute, PTC will cover essentially the entire Class I route network, with some minor exceptions. I personally believe it has the potential to produce benefits in excess of its costs, as well as improve safety, but we'll have to see about that.

As for what Amtrak pays, they are guaranteed access by statute at "avoidable cost", which is substantially less than the amount railroads pay each other for trackage rights and also less than what UPS pays for high-quality service. And as some wag said many years ago, you get what you pay for.

High speed rail is largely dead, so is likely to be a non-issue going forward. However, should government funding ever be revived, the concern about HSR interference with the freight railroad network is real, not imaginary. But we won't have to deal with that until and unless funding again becomes available. That won't happen soon.

As one who spends a lot of time in France between stints working in Africa I have to say that France has some if not all the answers. Passenger traffic rules and SNCF really isn't interested in freight - therein lies a fundamental difference. As far as passenger travel, assuming there are no strikes (haven't had one for 11 month!) the system works as advertised - 186 mph TGVs on schedule most of the time, good service on board, pleasant stations, 220v points at seats. etc. The airlines run scared, prices are reasonable, discounts available. No Megabus can compete!

Another useless article by someone not interested in re-building America via passenger rail.

I'm sure most of us have never heard of Chloe Lutts, who builds herself as an independent investment adviser. We rail supporters could give Miss Lutts some "independent advise" of our own. We all know the reason passenger rail is "bad" compared to other countries, is because in America it is grossly underfunded. My advise to Miss Lutts: Write your next article calling for more Amtrak funding so we can correct the situation mentioned in your boring article.

Regarding her remarks about Amtrak costing 5 times as much as the bus: Great! Amtrak frequently sells out with these high fares; and has the lyon's share of this market to boot. This is Amtrak "acting like a business", and succeeding with a business model that Corporate America should love--A popular product that's priced high and sells out. Miss Lutts should be congratulating Amtrak.

It would be great if all these negative "talking heads", and those that follow them, would move over to those cheep buses where they would all be much happier; then we rail supporters would never have to read another of their un-helpful articles.

Joe

many people on this site have taken Amtrak trips on the NEC in the recent past, and been pleased with the results. I did, two weeks ago, and posted on it here.

Chloe Lutts apparently took a number of trips and didn't like the service. People who have choices generally choose not to take NEC trips on Friday afternoons, or Sunday afternoon and evening, in particular. If I had consistent experiences like these, two or three would have been enough:

>>>Amtrak tickets usually cost about five times as much as bus tickets, which is theoretically worth it for the roomy cars, on-board food and
> drink and faster travel time. Unfortunately, the reality of Amtrak is quite different. After spending hours in Penn Station one winter, I
> resolved never again to take Amtrak when there was snow on the ground. The next summer, a train I was on slowed to a crawl due to
> flooding—it was not raining at the time. The final straw was last year, when I arrived at New York’s Penn Station in absolutely perfect
> weather to find my train’s arrival was delayed by at least an hour. Savvier—or at least more cynical—than before, I went outside, walked
> a block, and got on a Megabus for Boston. I called Amtrak from the bus to cancel my ticket, and I was halfway to Boston before that
> train even arrived in New York. I haven’t even tried to take the train since.

--------------------------------

Cabot is pretty well regarded as an investment letter service for advisors to high net worth people. Good research, they dig in for facts, and they're not afraid to put a SELL order on stocks they think are overpriced.

> ts1457 Wrote:
> --------------------------------------------------
>
> > This may sound counter-intuitive, but I think
> the first step to saving the LDT is to pay the host
> > railroads a fair price for their services.
>
>
> GenePoon Wrote:
-------------------------------------------------------
> Not farfetched at all. Remember when Southern
> Pacific was in its worst doldrums, Rob Krebs, president of SP
> before he was taken to become CEO of Santa Fe
> Pacific, actually said that
> Amtrak was SP's best customer. That status
> showed; Amtrak trains ran largely on time on SP
> during those years; even the much-maligned Sunset Limited.

It is unfortunately not just an economic issue. It is also a serious engineering issue.

One can run passenger trains on time on a freight line with low freight traffic and track in good repair (like the Kreb's era SP). Once the line has moderate freight traffic volume, service becomes somewhat more unreliable, but perhaps tolerable. Once the line has high freight traffic levels, forget it.

The harsh reality of contemporary North American railroading is that rail freight technology has diverged to become pretty incompatible with passenger trains using the same tracks. Freight trains have become much heavier, much longer, much slower-moving and much more troublesome so stop and re-start. There are two guys on the head end and no one on the rear. When a 12,000-ft train has to stop for mechanical trouble, the track will be tied up for hours, not minutes.

The other harsh reality is that the transcontinental rail main lines are so busy that tracks get backed up with parked trains across multiple subdivisions. As an extreme example, the UP freight operations on the way into Chicago go into curfew during Chicago commute hours. Trains get backed up past Clinton, IA. Try running passenger service under those conditions.

The only way a line with high freight traffic functions effectively is if all the trains using the same track move in a similar fashion. Which usually means all the trains move down to the lowest common denominator. For example, on a line with lots of coal traffic, all the trains end up moving like coal trains. Like on the UP between O'Fallons, NE and Illinois and between Gibbon and KC.

On the BNSF Transcon, all the trains are run like intermodal trains. The few carload and bulk unit trains on the line are powered up with very high HPT in order to run like intermodal trains. On this line, UPS can get the kind of service an intermodal railroad can offer. Amtrak could get that service too, but their trains would have to run like intermodal trains. And intermodal trains get piled up and wait in places like Belen (to re-fuel) or Clovis (to block-swap). Considering the stops they need to make, they don't run like the Super Chief did.

On the BNSF High Line, until this year UPS barely got the service they needed, considering all the single track operation and all the grain trains (and, in the Funnel, the increasing number of coal trains). But this year, partially because of the flooding but evidently more because BNSF could not offer a fluid railroad for many weeks after the waters receded, UPS is very unhappy with rail service in that corridor. Amtrak's Empire Builder has probably fared even worse.

To find American railroads that successfully ran very high volumes of freight and passenger on the same lines, you have to go back to the Pennsy and NYC during WWII and earlier. The only way those railroads could do it was with four-track main lines, two for passenger and two for freight. Given the evolution of freight technology, the need for separate tracks is much more pressing nowadays than it was then.

Face it: Amtrak is technologically incompatible with modern American rail freight technology on single and two-main-track railroads accommodating high levels of freight traffic. If additional tracks are not built, the service cannot be any better than the freight cars get. The only "fair price" in such a situation is one high enough to buy off enough rail freight traffic and force it into trucks to make room for Amtrak. I for one strongly oppose paying that price. I'd much rather see the freight traffic off the highways.

Best regards,

Rob L.

Lackawanna484 Wrote:
-------------------------------------------------------
> Cabot is pretty well regarded as an investment
> letter service for advisors to high net worth
> people. Good research, they dig in for facts, and
> they're not afraid to put a SELL order on stocks
> they think are overpriced.

If they are well-regarded, why are they 10-15 years too late to the rail party?

The time to buy NS and CSX was in 2001.

The time to buy CN was in 1995 at the IPO.

Heck, Conrail was a great buy at its IPO.

Its hilarious that "well regarded" investment letters have just figured out what is going on in the rail industry.

rob_l Wrote:
-------------------------------------------------------
> Face it: Amtrak is technologically incompatible
> with modern American rail freight technology on
> single and two-main-track railroads accommodating
> high levels of freight traffic. If additional
> tracks are not built, the service cannot be any
> better than the freight cars get. The only "fair
> price" in such a situation is one high enough to
> buy off enough rail freight traffic and force it
> into trucks to make room for Amtrak. I for one
> strongly oppose paying that price. I'd much rather
> see the freight traffic off the highways.

It sounds like we need a national program of untangling bottlenecks (CREATE and TIGER) and double or triple tracking key rail lines ("High" Speed Rail) to undo the 40 years of capacity rationalization undertaken from 1960 to 2000.

How hard can this be? Just put the tracks back where they were and watch the network become fluid again with more capacity for passenger and freight.

abyler Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Cabot is pretty well regarded as an investment
> > letter service for advisors to high net worth
> > people. Good research, they dig in for facts,
> and
> > they're not afraid to put a SELL order on
> stocks
> > they think are overpriced.
>
> If they are well-regarded, why are they 10-15
> years too late to the rail party?
>
> The time to buy NS and CSX was in 2001.
>
> The time to buy CN was in 1995 at the IPO.
>
> Heck, Conrail was a great buy at its IPO.
>
> Its hilarious that "well regarded" investment
> letters have just figured out what is going on in
> the rail industry.


I'm not aware they didn't have buy recommends on rail stocks in the 1990s or early 2000s.

Where did you determine they put new BUY recs on these stocks recently? (I'm not saying that UP, NS, etc aren't good buys now, just curious as to where you discovered the Cabot rec changes to BUY. Given Cabot's bias toward income, I'd expect the railroads were already on their list.)

abyler Wrote:
-------------------------------------------------------
>
> It sounds like we need a national program of
> untangling bottlenecks (CREATE and TIGER) and
> double or triple tracking key rail lines ("High"
> Speed Rail) to undo the 40 years of capacity
> rationalization undertaken from 1960 to 2000.
>
> How hard can this be? Just put the tracks back
> where they were and watch the network become fluid
> again with more capacity for passenger and
> freight.

East of Chicago, perhaps this can be done on many lines, as the tracks were indeed once there and they could be put back. However, modern-day design standards for track centers are a problem; the FRA-mandated clearance envelope does not exist at many points. Either an exception must be secured or expensive property-taking would be required, if legally and politically feasible. Could be prohibitive or politically impossible.

West of Chicago, by and large there are no tracks to put back on existing lines. The lines were always just single or just double track. Yet that is where freight traffic has grown the most and where freight trains are the biggest. The transcontinental rail lines nowadays have radically more volume than they did historically. Adding new tracks through the western mountains is of course profoundly more expensive than adding them back to where they once ran through the cornfields. Probably prohibitive.

It can be very hard.

Best regards,

Rob L.

rob_l Wrote:
-------------------------------------------------------
> abyler Wrote:
> --------------------------------------------------
> -----
> >
> > It sounds like we need a national program of
> > untangling bottlenecks (CREATE and TIGER) and
> > double or triple tracking key rail lines
> ("High"
> > Speed Rail) to undo the 40 years of capacity
> > rationalization undertaken from 1960 to 2000.
> >
> > How hard can this be? Just put the tracks back
> > where they were and watch the network become
> fluid
> > again with more capacity for passenger and
> > freight.
>
> East of Chicago, perhaps this can be done on many
> lines, as the tracks were indeed once there and
> they could be put back. However, modern-day design
> standards for track centers are a problem; the
> FRA-mandated clearance envelope does not exist at
> many points. Either an exception must be secured
> or expensive property-taking would be required, if
> legally and politically feasible. Could be
> prohibitive or politically impossible.
>
> West of Chicago, by and large there are no tracks
> to put back on existing lines. The lines were
> always just single or just double track. Yet that
> is where freight traffic has grown the most and
> where freight trains are the biggest. The
> transcontinental rail lines nowadays have
> radically more volume than they did historically.
> Adding new tracks through the western mountains is
> of course profoundly more expensive than adding
> them back to where they once ran through the
> cornfields. Probably prohibitive.
>
> It can be very hard.
>
> Best regards,
>
> Rob L.


Depending on where the congestion occurs, it may be that selective expansions, with a few miles of second and third tracks, will resolve much of the congestion. But lines through downtown and city centers are always going to be a problem.

It took a decade to get the OKs for a small amount of property taking, cross street closures, and building two bridges in Lebanon PA. Small city, already double track

"Face it: Amtrak is technologically incompatible with modern American rail freight technology on single and two-main-track railroads accommodating high levels of freight traffic. If additional tracks are not built, the service cannot be any better than the freight cars get. The only "fair price" in such a situation is one high enough to buy off enough rail freight traffic and force it into trucks to make room for Amtrak. I for one strongly oppose paying that price. I'd much rather see the freight traffic off the highways. "


The other option is to slow Amtrak down to the speed of intermodal traffic, which really wouldn't be that hard. I'd guess doing so would add 6-12 hours between the west coast and Chicago, and since folks don't choose Amtrak for speed anyway it might not affect ridership that much.

I've proposed elsewhere that if the LD trains ever lose funding, I'd like to see small blocks of passenger cars (with a diesel generator car for power) swapped onto hotshot intermodals in major terminals (Portland, Seattle, St. Paul, Chicago, Denver, Oakland, and LA, among others). Amtrak would be responsible for delivering the blocks to intermodal yards ahead of scheduled departure times. Travel time would be greatly increased (probably by about 24 hours on the western LD routes) and there would be no intermediate stops, but it would still provide an alternative means to cross the country. Added cost to the freight RRs in this scheme should be relatively minimal.

anir_dendroica Wrote:
-------------------------------------------------------
>
> The other option is to slow Amtrak down to the
> speed of intermodal traffic, which really wouldn't
> be that hard. I'd guess doing so would add 6-12
> hours between the west coast and Chicago, and
> since folks don't choose Amtrak for speed anyway
> it might not affect ridership that much.

Perhaps this could work in the Chicago - LA BNSF Transcon Corridor. But that is the only real intermodal corridor out west. All the rest are, in effect, grain or coal corridors. So Amtrak would have to slow down to be a grain train in the other western corridors.

>
> I've proposed elsewhere that if the LD trains ever
> lose funding, I'd like to see small blocks of
> passenger cars (with a diesel generator car for
> power) swapped onto hotshot intermodals in major
> terminals (Portland, Seattle, St. Paul, Chicago,
> Denver, Oakland, and LA, among others). Amtrak
> would be responsible for delivering the blocks to
> intermodal yards ahead of scheduled departure
> times. Travel time would be greatly increased
> (probably by about 24 hours on the western LD
> routes) and there would be no intermediate stops,
> but it would still provide an alternative means to
> cross the country. Added cost to the freight RRs
> in this scheme should be relatively minimal.

Liability insurance and liability risks would be out of sight.

Best regards,

Rob L.

rob_l Wrote:
-------------------------------------------------------
> anir_dendroica Wrote:
> --------------------------------------------------
> (snip)
>
> >
> >
> > I've proposed elsewhere that if the LD trains
> ever
> > lose funding, I'd like to see small blocks of
> > passenger cars (with a diesel generator car for
> > power) swapped onto hotshot intermodals in
> major
> > terminals (Portland, Seattle, St. Paul,
> Chicago,
> > Denver, Oakland, and LA, among others). Amtrak
> > would be responsible for delivering the blocks
> to
> > intermodal yards ahead of scheduled departure
> > times. Travel time would be greatly increased
> > (probably by about 24 hours on the western LD
> > routes) and there would be no intermediate
> stops,
> > but it would still provide an alternative means
> to
> > cross the country. Added cost to the freight
> RRs
> > in this scheme should be relatively minimal.
>
> Liability insurance and liability risks would be
> out of sight.
>
> Best regards,
>
> Rob L.

I can't imagine trying to market this service to customers. "Hey. we're gonna put you in a boxcar, and hang it onto the back of a freight train. It will take you three days, but we'll have a port a potty and a vending machine for food."

If you wanted to be jammed in like cattle, use a filthy rest room, and eat slop, you could fly any number of airlines, and get there faster...