Passenger Trains > Will commuter rail ever come back?

The Wall Street Journal has an article today about rail and bus commuter services. Many have seen 70% drop in revenue.

Various authorities are quoted. Their dilemma is that they need to provide services for essential workers. Revenues plunge. Federal money has vanished.

Moody's has warned that the bonds issued by transit authorities are at risk of down grading.

Same issue that real estate developers are facing. Companies don't need as much office space.

https://www.wsj.com/articles/public-transit-agencies-slash-services-staff-as-coronavirus-keeps-ridership-low-11606582853?mod=hp_lead_pos7

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It was slowly increasing until September, when the 2nd wave started to hit, and has plateaued at 70% off. Off peak has done better. 

I think it will rebound to a degree, but I don't see it as being at the prime as it once was. 

And this is where Amtrak is also going to have problems - NJT, SEPTA, MARC, etc. are going to want to cutback on paying "access fees" to the NEC for less trains running. So that's NEC revenue that's not going to be coming in any more to help cover NEC train losses. Amtrak already warned Congress against this shortfall (but as a short term measure, not long term). Again, this is why I believe the NEC is in worse trouble than say the Corridor or even LD Trains. Amtrak also got paid a small fortune for NJT time slots at NY Penn Station, or to modify the signalling system, to allow more frequencies with less headway between trains from Newark and NYC. This "reimbursable NEC project revenue" that commuter agencies asked Amtrak do are not going to be coming in to help add to the NEC revenue stream. Same for the charge for "time slots" at NYP. Amtrak could UP the access fees even more than what they already are, but that's going to produce an outcry from the States. 

The revenue streams that the NEC produced - besides just trains - is going to be suffering big time. Even the real estate rentals or use will likely go down........If there's less traffic there might be less demand for the real estate infrastructure too.....harder to describe, but it's another revenue shortage that Amtrak has preliminary identified and they are seeking a bailout on for the NEC. Most of the extra money - this $10B - that Amtrak wants is to prop up the NEC due to the revenue shortfall and non-payments from commuter agencies or the States (for State operated trains). 

Meanwhile, one chart showed that Amtrak was doing pretty decently with LD trains - the drop in revenue wasn't as severe. Course less LD trains overall and less "auxiliary" revenue they pull in due to Amtrak constantly cutting cutting cutting rather than looking at other revenue streams for this line of revenue.  

In my opinion, absolutely not.  The pandemic has forced Corporate America to do what it wondered about but was afraid to try.  What we have found is that yes, at least well enough, a vast number of people can work productively from home.  The potential benefit to the corporation is significant.  CSX has a very nice 15-story GOB right on the river in downtown Jacksonville and in the past has also had people in a significant amount of additional leased space.  That's not cheap.  I know some people there who have been working from home have been told that they will be expected to continue doing so even after the pandemic is over.  It's a win for everyone -- people that live at the beach no longer drive 30-45 minutes each way to work, the company reduces its costs related to office space, and employees can take advantage of certain tax credits for a home office.  What's not to like if the productivity is maintained?   Which, of course, is the unanswered question.  (Yes, I know Jacksonville doesn't have commuter trains, but you get my point).  The folks that want the buzz and culture of the city will still live there, but they're not commuters anyway.

the long-term consequences  of having been forced by the pandemic to test the limits of working from home will be felt far beyond just commuter trains.

IMHO.
Gordon



Edited 1 time(s). Last edit at 11/28/20 16:29 by gbmott.

It will be interesting to see how the insurance industry responds to people working from "home offices" (how will Worker's Comp evolve or perhaps be excluded), and I wouldn't be surprised if the deduction for a home office gets disallowed. There's a lot of unknowns and things to figure out with people working from home in some industries. And some can't do a work from home - they still need to go in to the office in order to collaborate or use the equipment that's only found in the office or work site. So it's going to be less, just how much less, not sure. 

It will never come back, period... Thanks, China!

I think it will come back, but not to the top levels of before. As far as the working from home thing, it has been tried long term before by a few companies friends have worked at, after awhile productivity goes down compared to in the office. Productivity would not be where it is now if we were living in a normal world. 

gbmott Wrote:
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 The folks that want the
> buzz and culture of the city will still live
> there, but they're not commuters anyway.
>
I've lived in cities all of my adult life.  Until the pandemic, I have always commuted to and from work by walking, driving and riding buses, but not on commuter rail.


> the long-term consequences  of having been forced
> by the pandemic to test the limits of working from
> home will be felt far beyond just commuter
> trains.
>
> IMHO.
> Gordon



Edited 1 time(s). Last edit at 11/28/20 17:38 by RuleG.

I had a (socially distanced)  lunch with my sister today at her winter home in Florida.  She and her team of 12 have been working remotely from their homes in NY NJ and CT for seven months.  The CFO has designated company locations in NJ and CT as "places of work" for tax purposes for non-NY residents.  Right now she's trying to get a location in FL designated as her place of work since she plans on Zoom-ing from FL for the next six months.  She remarked that her saving on NJ Transit from is $450 a month, non deductible, and parking is additional.  And, she saves three hours every day.

The Wall Street Journal had an article yesterday about how many people in the lawyer, IT, marketing, executive, etc work class are abandoning their homes in places like NJ and moving to VT, FL, SC, etc. One woman has moved to the US Virgin Islands.  I'm sure there will be some return to offices in downtowns, and people will ride trains, but I doubt it will be the same as it was.

 

There's no doubt that companies with large office space in downtown metropolitan areas are looking to downsize and even leave that expensive space whether it's owned or leased. 

But also lost are all the 'support' businesses in metropolitan downtowns such as hotels, stores, and restaurants.  I know New York City has had both name-brand and unique-one-of-a-kind hotels permanently close this year.  Chicago has lost a couple that I know of as well.  Those large hotels need 500 rooms per night rented to break even in my opinion.  Nightly counts under 200 means they can't pay the staff, nor the mortgage, nor the lenders, so they have no choice to close.  Restaurants for downtown workers will take a big hit as well due to lack of business, if they're still open at all.  One of my favorite spots when I was in Chicago was the 'food truck lane' on Wacker Blvd.  I suspect most of them were 1 of a kind operations that hopefully have found someplace in the suburbs to make a living.  

So, not only will there be noticably fewer office workers coming downtown on the trains and subways, but there will be substantially more hourly workers in 'support' businesses that will be gone as well. 

Then throw in that most commuter agencies get a big chunk of their money from the city and state whose income is also dramatically taken a hit from lost sales taxes, lost gas taxes, companies and individuals unable to pay property taxes, and the list goes on.  In short, I would hope for the trains to be run with fewer cars and several runs gone from the schedules so they can balance their budget to income.  Hopefully, things will settle down at 50% or so and then start going up once Covid is behind us.
 

Eh.  Lots of arn chaiur quarterbacking , and filling of column inches here, IMHO.    SImple answer, obviously, is :we dont know"   Lots of variables.  And the covid isnt sudeenly going to be over in a day.   It will take time.

And "commuter travel come back"...to what level?    Its been impossible for me to find prior year NJT ridership levels, but 2018 was a record at 268M.   SO if it only comes back to 2010 levels, is that a problem?   

BRAtkinson Wrote:
-------------------------------------------------------
> There's no doubt that companies with large office
> space in downtown metropolitan areas are looking
> to downsize and even leave that expensive space
> whether it's owned or leased. 
>
> But also lost are all the 'support' businesses in
> metropolitan downtowns such as hotels, stores, and
> restaurants.  I know New York City has had both
> name-brand and unique-one-of-a-kind hotels
> permanently close this year.  Chicago has lost a
> couple that I know of as well.  Those large
> hotels need 500 rooms per night rented to break
> even in my opinion.  Nightly counts under 200
> means they can't pay the staff, nor the mortgage,
> nor the lenders, so they have no choice to
> close.  Restaurants for downtown workers will
> take a big hit as well due to lack of business, if
> they're still open at all.  One of my favorite
> spots when I was in Chicago was the 'food truck
> lane' on Wacker Blvd.  I suspect most of them
> were 1 of a kind operations that hopefully have
> found someplace in the suburbs to make a living.
>  
>
> So, not only will there be noticably fewer office
> workers coming downtown on the trains and subways,
> but there will be substantially more hourly
> workers in 'support' businesses that will be gone
> as well. 
>
> Then throw in that most commuter agencies get a
> big chunk of their money from the city and state
> whose income is also dramatically taken a hit from
> lost sales taxes, lost gas taxes, companies and
> individuals unable to pay property taxes, and the
> list goes on.  In short, I would hope for the
> trains to be run with fewer cars and several runs
> gone from the schedules so they can balance their
> budget to income.  Hopefully, things will settle
> down at 50% or so and then start going up once
> Covid is behind us.
>  

You hit the nail on the head! The breadth of the problem, and cycle of issues that have now been put in place, are mind bongling since commuter traffic has eroded. People do not want to go back into the cities and are moving away. Real Estate sales are HOT right now and you are not getting a bargain! 

"Eh.  Lots of arn chaiur quarterbacking , and filling of column inches here, IMHO. "

May be true, but I am finding it very interesting reading. Pointing out lots of issues of which, as not a city dweller, I was not aware of.  What is clear to me is how much we are all interconnected in so many ways.  A society seems to me to be more than a bunch of individuals each doing their own thing. Maybe the pandemic will help us come to the realization that we are indeed all in this together and we are not each other's enemy.

Interesting also that at least to some, the LD trains increasing show their value in the overall scheme. 

B&OBill

sure, remote working has played a part in decreased commuter rail/light rail/subway ridership.

the exodus of businesses and people from SOME large cities for OTHER reasons have also played a part in decreased commuter rail/light rail/subway ridership............

66







 

I think the pandemic will undoubtedly create an initial remote work fad where some firms may try to eliminate most or all on premises work. But I think over time you will see a correction where some firms will pull back to at least partial in person work. Remote work is working great for many offices, but don't forget that in many cases everyone already knows each other and knows how to work with each other so it was a seamless transition.

As time goes on companies will encounter more of the fallbacks of remote work (such as onboarding of new team members, trying to get team members to work together and collaborate without ever meeting in person or having any of the social aspects of working together in an office, etc.) Additionally productivity will slip as the pandemic ends and people return to a more normal and social life with their normal distractions.

I think you'll find the days of not allowing remote work are probably behind us - but I think not as many firms as we may think will take the leap into permanent 100% remote work and some may try to initially and later pull back to some sort of hybrid. It also all depends on the person some of us are likely shining working remotely while others are struggling.



Edited 2 time(s). Last edit at 11/29/20 07:13 by lordsigma.

Never is a long time. It will be back but the question is how long and how much damage will occur before it does. I’ll guess 3-5 years to get back to where if the commuter agencies don’t kill the capacity to make the growth possible. Humans have short memories.

IF MBTA follow though and kills most off-peak service, it will not come back even if passengers want it to. 

jp1822 Wrote:
-------------------------------------------------------

> You hit the nail on the head! The breadth of the
> problem, and cycle of issues that have now been
> put in place, are mind bongling since commuter
> traffic has eroded. People do not want to go back
> into the cities and are moving away.

Some people in some cities are moving away.  Other people (including myself, my partner, my neighbors and many other citizens in the city in which I live) are staying.

Real Estate
> sales are HOT right now and you are not getting a
> bargain! 

The price of real estate is determined by demand.  If enough people move out of some cities, the price of homes and rental apartments fall which will help to make city living a more appealing option for some people.

There's a considerable amount of class A quality office real estate on the sales and sub-let market right now.  That puts a lot of pressure on the real estate developers and business owners.

My guess is a lot of folks will do their taxes this April and realize they saved a ton of money by not traveling into (any) big city, taking the train, paying for parking, paying for lunch, paying for dry cleaning. And a lot of companies will already have realized that paying $300 a foot for real estate they lightly used could be reduced. By a lot.

goneon66 Wrote:
-------------------------------------------------------
> sure, remote working has played a part in
> decreased commuter rail/light rail/subway
> ridership.
>
> the exodus of businesses and people from SOME
> large cities for OTHER reasons have also played a
> part in decreased commuter rail/light rail/subway
> ridership............
>
> 66

Commuter rail and transit ridership has been declining for several years. COVID just accelerated the trend. Uncle Joe is not going to come to the rescue. There are other priorities.



Edited 1 time(s). Last edit at 11/29/20 20:38 by SanDiegan.