high-speed rail (hsr) in the united states — why isn't ...jrtr.net/jrtr03/pdf/f32_tho.pdf ·...

32 Japan Railway & Transport Review / October 1994

SPECIAL FEATURE – 30 YEARS OF HIGH-SPEED RAILWAYS

Copyright © 1994 EJRCF. All rights reserved.

High-Speed Rail (HSR) in the UnitedStates — Why Isn't There More?

IntroductionAmerican tourists and business travel-

ers often return from trips to Japan andEurope with favorable memories of theirtravel on the shinkansen, TGV or ICEtrains.1) Japanese and European visitorsto the USA often return wondering at theabsence of high-speed service in the USA.Suppliers of HSR equipment often dreamof the time when the American market fortheir equipment and expertise will de-velop— and they all wonder when....

This is not surprising. The shinkansenhas long been a point of Japanese pride,and the pictures of the shinkansen pass-ing in front of Mt. Fuji are almost as wellknown to western tourists as any otherJapanese attraction. The familiar pic-tures of the bright orange TGV trainsspeeding through the French countrysideare a similar French attraction. Germanywill no doubt soon develop travel postersof the ICE and the TR07 MAGLEV.2)

The USA certainly does not lack the ca-pability nor the resources to put theoryinto practice—as the NASA space pro-gram shows. In fact, work on HSR andMAGLEV actually began in the USA atthe same time as in other countries.Steam trains exceeded 160 km/h in theUSA at the turn of the century (picture ofNew York Central steam train) and theNew York Central Railroad was experi-menting with 300 km/h trains in 1966(picture of New York Central "jet train").Nor is the USA an "anti-rail" country. Railservice grew early and fast in the USA,and few countries have more links in songand myth. At least through the early1950s, most observers would haveguessed that the USA would remain aworld leader in HSR applications.

But there are no shinkansens, TGVsnor ICEs in the USA, and there are no im-

mediate prospects for any to be built. Thecase appears strong, and the opportunitylooks favorable, so why has nothing hap-pened, and what are the prospects thatsuch systems will eventually emerge?

Current Status and SomeInteresting History

A partial answer is that HSR andMAGLEV have never been totally ig-

nored. If HSR is 200 km/h or faster,3)there already is HSR between New YorkCity and Washington, DC—but it is lim-ited at best. There are historical reasonswhy.

As Figure 1 shows, rail was losing mar-ket share to cars well before World War II,but its share was artificially propped upby wartime restrictions on private-car us-age. Immediately after the war, rail's pas-senger role continued to plummet. Even

Louis S. Thompson

This article reflects solely the personalopinions of the author.It does notnessesarily reflect the positions, find-ings or policiesof the World Bank.

100

80

60

40

20

030 40 50 60

Year

70 80 90

75

70

65

60

55

50

45

40

3530 40 50 60

Year

70 80 90

AutoRailAir

Percent of passenger-km

Percent of ton-km

Figure 1 Modal Shares in US Passenger Market

Figure 2 Rail Share of US Freight Ton-km

Japan Railway & Transport Review / October 1994 33Copyright © 1994 EJRCF. All rights reserved.

more important in the overall story, be-cause of its impact on the financial healthof the privately-owned rail industry, wasthe parallel loss of rail share in the freightmarket (Figure 2). Rail simultaneouslylost both its passenger traffic and the abil-ity to finance the investment that mighthave defended that share.

Governments responded slowly to thegrowing crisis. In fact, misguided govern-ment regulation of the railways—politi-cally distorted rates and inability to ad-just services—was one of the primary rea-sons for the rail dilemma. The other rea-son was the assistance by government inthe growth of the highway and airline sys-tem. By the early 1970s, much of thenation's private rail network was effec-tively bankrupt. Worse, the Federal gov-ernment had no good ideas about how toresolve the crisis.

Fortunately, the crisis eventually gen-erated its own solutions. First, Amtrakwas created in 1970 as a way to get therail passenger service (planning, manage-ment and deficits) onto the agenda of theFederal and state governments. As a re-sult, passenger services no longer causethe freight carriers to lose money. Amtrakis operated (for the most part) as if it werea private company, and neither its ratesnor its service quality are regulated bygovernment. Although Amtrak is re-quired to operate a designated network,the government pays its deficits andmeets some of its capital needs. Next,many of the bankrupt freight carrierswere taken over by the Federal Govern-

ment, restructured, and subsequentlyprivatized,4) and they succeeded ratherwell. Finally, the rail freight and truckingindustries were substantially deregulatedin 1981/82. As a result, the overall USAfreight rail industry is probably in the bestshape in its history.

Although the primary focus was onfreight and conventional passenger ser-vice, HSR was not completely ignoredduring the mid-1960s and later; severalinitiatives were undertaken which subse-quently bore fruit. The first was the cre-ation of the Office of High Speed GroundTransportation (OHSGT) with the mis-sion of studying the possibility of HSR in anumber of areas in the USA. The atten-tion of OHSGT focused on the needs of the

market between Washington, New YorkCity, and Boston, Massachusetts—gener-ally known as the "Northeast Corridor"(NEC). OHSGT eventually producedwhat became the seminal report on HSRin the NEC.5)

At roughly the same time, the Pennsyl-vania Railroad (PRR) spent over $70 mil-lion upgrading track and buying new roll-ing stock (picture of original Metroliner) inorder to "test" the demand for higher-speed passenger service between Wash-ington and New York ("Metroliners") andNew York and Boston ("Turbotrains").6)

The experiments were an immediate suc-cess, and created significant public sup-port for sustained improvements in railpassenger service. As a result of theOHSGT planning and the PRR tests, Con-gress authorized the Northeast CorridorImprovement Project (NECIP), a $2.5-bil-lion project aimed at improving rail pas-senger service between Washington, NewYork City and Boston. The NECIP beganin 1976 with the bulk of the work finishedby 1988.

NECIP's accomplishments were consid-erable.7) Much of the track between NewYork and Washington was brought up to"high-speed" standards (205 km/h) andcertain of the present Metroliners8) (pic-ture of "new" Metroliner) actually travel asignificant distance at that speed. In addi-tion, signal systems were improved, sta-tions rehabilitated or built, bridges reha-bilitated, and new maintenance facilitiesbuilt. Trip times (2 hours and 50 minutesfrom DC to NYC, 3 hours and 40 minutesfrom NYC to Boston) and trip reliability

� The Empire State Express at 160 km/h (Trains Magazine)

� Jet-Powered Budd M-497 Test Run in 1966 (Trains Magazine)




were improved, as was initial ride qualityand rolling stock. Unfortunately, for fund-ing and other reasons, Amtrak has notmaintained the track at appropriate qual-ity levels, and continues to operate withsadly outdated rolling stock.

Two problems remained unresolved: 1.Major segments of the track betweenNYC and New Haven are not owned andcontrolled by Amtrak but are, insteadowned by a commuter passenger operator(Metro North), and 2. There is no electrictraction between New Haven and Boston,forcing a change of locomotives and use ofslower diesels over the section. Because ofthese problems, there is no HSR north ofNYC.

After completion of the first phase ofNECIP, work slowly continued in upgrad-ing the NEC. Minor improvements havebeen made in disentangling commuterfrom higher-speed intercity trains in theMetro North section, and money has beenauthorized to complete the electrificationbetween New Haven and Boston, savingabout 30 minutes on existing trip times.The DOT has outlined a series of addi-tional improvements for Congressionalconsideration which would lead to a fur-ther marginal improvement in trip timesand improve operational reliability at acost of several billion dollars. Follow-onstudies are now underway on new andbetter ways to operate the NEC services.9)

The NEC did not receive all the atten-tion for potential HSR service. Beginningin the early 1980s, the DOT and Amtrakbegan to study other potential corridors(called "Emerging Corridors").10) Thishighlighted several corridors, notably LosAngeles-San Diego, that deserved atten-tion. At the same time, the studiesshowed that some of the corridors hadlittle economic potential.

There have been three HSR corridorinitiatives that were not conducted by theFederal government. The first was LosAngeles-San Diego. In this case, Amtrakworked with Japanese investors to pro-pose a shinkansen-type service, essen-tially to be funded privately. Although theproposal received considerable attention,it did not succeed because: 1. There wastoo much local opposition; 2. There werepersistent questions about the demandforecasts which were never adequately re-solved; and, 3. When the ability of the pri-vate sector to carry out the project cameinto question, neither the Federal govern-

ment nor state governments came for-ward with the rescue support.

The second project was Tampa-Or-lando-Miami in Florida. The initiativecame from the State government whichcreated a commission that put the conces-sion for the service up for competitivebids. The terms of the concession wereessentially that private investors wouldbe responsible for building and operatingthe corridor, with the commission's rolerestricted to facilitating the acquisitionand enhanced development of the neces-sary real estate for operation and develop-ment of ancillary properties. The winnerof the competition was a group headed bya real-estate development firm proposingSwedish X-2000 technology. Despite sev-eral years of effort, the group was unableto bring the project to the constructionstage, again largely because the State andFederal government refused to partici-pate and the net income to be earned fromoperations and related real-estate devel-opment was clearly insufficient to supportthe enormous capital investment.

The third significant project was the"Texas Triangle" service between Dallas/Fort Worth-Houston-San Antonio. Thisproject was also based on the principlethat a private sector concession could suc-ceed without public money or active in-volvement. Despite the support of a major

private sponsor and access to TGV tech-nology, this project has also essentiallybeen halted. Despite assurances to thecontrary at the outset, the private sectoralone simply was not capable of bringingthe project to fruition.

Why Aren't The ResultsBetter?

There was no lack of either resources ortechnology in these cases, yet nothing hashappened, and there are only plans on thehorizon. Why? What are the differencesbetween Japan, Europe and the USA pre-venting "progress" in the USA?

Challenging Physical Constraintsand Demographics

One answer is that some of the USAcorridors are actually not particularlygood markets for HSR. To understandwhy this is so, we need to discuss the fun-damental characteristics of HSR— whatit can and cannot do.

HSR has certain advantages: 1. Abovea minimum trip length, it is faster thanthe car, and sometimes faster than air ifthe trip is short enough and the accesstime to the airports is long enough; 2. Itcan carry large volumes of people whileusing relatively limited land space; 3. Atcomparable speeds, HSR consumes less

Figure 3 Annual Added Public Expenditure (in $) For Rail Service

in Various Corridors

*A negative number indicates that fuel would actually be wasted if the corridor were constructed.


energy and causes less pollution than air-lines or cars; 4. HSR can operate in andout of the center of major cities; and, 5.Once built, the marginal operating cost ofeach passenger is quite small so that, ifvolumes are high enough, HSR can be thelowest cost and best service mode. Bal-anced against these advantages are sev-eral disadvantages: 1. HSR systems areexpensive to build (between $8 millionand $30 million per km11)—about twicethe cost of comparably-located highways);2. HSR systems are limited in coverage—they do not serve as well where the high-speed tracks do not go; 3. Unlike Europeand Japan, shinkansen or TGV-type HSRin the USA is unproven, making planning,design and finance difficult, especially inthe private sector; and 4. Many of the po-tential benefits—lower noise and cleanerair—are social not consumer benefits, sothe ticket price cannot pay for them.

So, HSR best serves large flows be-tween limited numbers of points, prefer-ably city-center to city-center, and in rela-tively flat territory. HSR does not performwell where population density is low orconstruction cost exceptionally high (un-less offset by unusually high demand).

It is thus important to emphasize thatthe USA is different from the well-knownmarkets in Europe and Japan. First, the

population density of many of the poten-tial American HSR markets is well belowthat prevailing near the successful ser-vices in France and Japan.12) The NewTokaido line alone carries more passen-gers in 1 month than the entire NEC doesannually. The South-East TGV (Paris toLyons) carries four times the passengersof Amtrak's NEC, and the NEC is by farthe most promising of the USA orridors.With the possible exception of Los Ange-les-San Diego, few other areas come closein potential passenger density, althoughsome corridors have shown populationgrowth rates high enough to make themreasonable candidates for the future.

In fact, because of the relatively lowpopulation density of the "Emerging Cor-ridors", another of the putative advan-tages of HSR, energy saving and lowerpollution, is questionable. The DOT hasstudied HSR in most of the potential corri-dors and concluded, as shown in Figure 3,that HSR in most of the corridors couldactually waste energy (that is, the trainswould not be full enough to take advan-tage of potential energy efficiency) orwould only save energy and reduce pollu-tion at a cost far above any reasonable es-timate of the true benefits. This conclu-sion could change with better technologyand demographics, but the underlying

caution should be kept in mind.The USA is also different in another

way; HSR faces much stiffer competitionfrom both cars and air. The full dimen-sions of the car advantage derive from thevery high rate of car ownership in theUSA (car ownership in the USA is 0.57per person, whereas in France it is 0.42per person, in Germany 0.43 per person,and in Japan 0.28 per person)13) combinedwith very low fuel prices (gasoline costsabout $0.30 per liter in the USA versus$0.80 to over $1.00 per liter in Europe andJapan). Again, unlike France and Japan,the highway user in the USA generallydoes not pay tolls,14) and certainly not highones, for using the Interstate Highwayslinking major urban areas. Given alsothat the USA taxes car sales lightly (moststates have sales taxes of about 6% versus14% or much higher levels in Europe andJapan), car usage really is cheap in theUSA. A less obvious but probably moreimportant car advantage is the fact mostmodern American cities were actually or-ganized around the capabilities and needsof the car and not mass transit as in Eu-rope and Japan. Cities based on masstransit have dense central business dis-tricts (CBDs), and are inherently goodsources of rail traffic; cities based on thecar essentially have no CBDs, and do not

Vancouver

Seattle

Portland

SacramentoOakland

San FranciscoLas Vegas

Los Angeles

San Diego

Phoenix

Tucson

Albuquerque

El Paso

Sait Lake CityCheyenne-Borie

DenverKansas City

St. Louis

Chicago

Indianapolis

Detroit

Cincinnati

Memphis

Milwaukee

St. Paul-Minneapolis

Buffalo

New York

Tampa

Ft. Worth

Montreal

Norfolk

Jacksonville

Miami

MobileNew Orieans

Houston

Dallas Atlanta

San Antonio

Washington, D.C.Baltimore

Philadelphia

Boston

Map 1 Amtrak's National Rail Passenger System




readily generate rail traffic. Becausemuch of the USA grew around the car, it isprobably condemned to stay bound to thecar, at least for the near future and untilsociety is prepared to spend the enormousamounts of capital required to change thestructure of the major cities.15)

As with the car, which is HSRs competi-tor for shorter trips (less than about 300km), so it is with air, the prime competitorfor longer trips (longer than about 500km) in the USA. As Figure 1 shows, airhas decimated the rail position in longer-haul travel. While some of this shift has todo with the relatively greater distances inthe USA (the average air haul is 1,300km), the air share is also large even forquite short distances such as the 360-kmtrip from NYC to Washington, DC. Thereason for air's large share is simple—thelow fares resulting from stiff competitionin the larger air markets, especially afterthe deregulation of airline entry and tar-iffs in 1978. As a result, air fares in themajor short haul markets in the USA (ex-cept NYC to DC, where fares approachEuropean and Japanese levels) are 20% to50% below those in the typical French,German and Japanese markets.

Interestingly, while it can be arguedthat USA fuel taxes and car sales taxesare too low, and that car travel is therebyunfairly supported (and that, if worldprices eventually do prevail in the Ameri-can market and if environmental exter-nalities are more accurately reflected inthe prices of cars and gasoline, user costsfor car travel will rise), it seems equally

clear that air fares in Europe and Japanare too high. If, as appears likely, the re-cent changes in EC competition ruleseventually make their way into air tariffs,European HSR will face much more effec-tive air competition, as in the USA.

To summarize the economic reasoning,the demographics of the USA are oftennot as favorable to HSR as in Europe andJapan. And, even those markets in theUSA appearing to have potential facemuch more severe competition from carsand air than in other countries. But this isnot the whole problem.

Institutions Not Suited to CentralSolutions

Amtrak is not a single-purpose actorIn addition to challenging demograph-

ics, HSR in the USA will have to sur-mount a governmental and managerialstructure that is not well suited to fundingand operating a highly-centralized trans-port mode like HSR. This issue has sev-eral dimensions.

First, Amtrak does not play the samerole as the national railways in most Eu-ropean countries and Japan. AlthoughAmtrak appears to be an integrated, na-tional carrier, it actually performs threequite different, and not well connectedfunctions: 1. It operates high-density ser-vices in the NEC (some higher speed,some low speed) which clearly have atransport efficiency rationale; 2. It alsooperates a disconnected series of low-den-sity, short-haul corridors, of which only

some (notably Los Angeles-San Diego)have more than one train per day in eachdirection, and only a few currently have areal transport efficiency justification; and,3. It operates a series of very long haul(2,000 to 3,000 km), sleeper/diner orientedtrains, mostly on a one train per dayschedule, except for a few routes that havethree trains per week. The Amtrak sys-tem map clarifies these distinct routegroupings.

Amtrak's divided function has a cost;Amtrak's support comes from a politicalcoalition requiring the agreement of sup-porters of all three types of service. Any-thing leading Amtrak too much in one di-rection comes at the potential cost of one ofthe others, and Amtrak's annual strugglefor funding is usually too serious to permitoffending any of its supporters. As a re-sult, Amtrak has found it hard to postureitself as a dedicated HSR supporter, andAmtrak's divided focus has caused manypotential HSR promoters (as in Florida orTexas) to plan on operating their corridorswithout Amtrak. Amtrak would have dif-ficulty being a financial supporter of amajor HSR program without stretchingits resources beyond breaking point. Thisis not to be critical of Amtrak, but is in-stead just an observation of the pressuresat play in the American HSR scene.

It also stresses how different the USA isfrom Japan, Germany and France wherethere is an effective national carrier thatcan afford to be a champion of HSR.

The role of the public and private sectorsis different in the USA

It is also important to realize that theprivate sector plays a different role in theUSA than elsewhere, especially in rail ac-tivities. In general, if an activity is trulyprofitable, USA government looks to theprivate sector to take the risk and reapthe rewards. Only those activities that areunprofitable commercially, but that offerlarge and agreed public benefits (reducingcongestion or pollution, for example) areconceded to be in the realm of the publicsector, at whatever level. HSR does not fitwell into this context and, in fact, HSRsupporters have created a conundrum; ifHSR is profitable, why can't the privatesector handle the whole problem? And, ifHSR is not profitable, how can a case bemade for public support? This is the di-lemma that hindered the Florida andTexas proposals.

� Original Metroliner (Amtrak)


But the private sector approaches pas-senger rail from quite a different perspec-tive to that of governments. The privatesector asks whether revenues (passengertickets, other passenger service revenuesand ancillary revenues such as real-estatedevelopment) from the project are largeand certain enough, to cover operatingcosts and permit the project to be financedat a reasonable cost. The private sectoralso wants to know whether the projectwill be so socially, environmentally or po-litically controversial as to threaten thecapital budget or project schedule. Whenprivate investments are at risk, hardquestions are asked, and real answers de-manded.

Governmental roles are differentBecause of the greater distances and

large sizes of states in the USA, most po-tential HSR markets lie within one stateor, at most, two or three states. Even theNEC only covered 8 states and DC al-though, because of the high populationdensity, it represented about 30% of theAmerican population. HSR is thereforenot an effective competitor for Federalfunding where it has to compete withtruly national transport priorities such asthe Interstate Highway System or Air-ports and Airways spending. This is par-ticularly true in an era of Federal budgetdeficits where the pressure is heavilyagainst taking on new and large spendingommitments with geographically-re-stricted benefits. In addition, there hasbeen no readily available tax which looksenough like a "user charge" to make itsaleable at the Federal level.16) As a re-sult, there has been no reliable national

funding or planning program to fund orcoordinate HSR projects.

Potential two-or-three state HSRprojects (for example, Chicago-Milwau-kee, Chicago-Detroit, or Seattle-Portland)face yet another hurdle because the USAhas no well established system of regional(but sub-national) governments. Ad hocauthorities can be created, but in practiceit is time-consuming to do so. Most re-gional authorities need Federal authori-zation and, when established, must thenconvince two or more independent stategovernments to agree on a common pro-gram of planning, design, constructionand taxation. Finally, the authority socreated must then serve two or more mas-ters for a period of years—also not easy.Such authorities have been created (theWashington Metro serving DC, Marylandand Virginia) and they can work reason-ably well, but they are rarely decisive orinnovative in management or concept de-sign.

In practice, most "Emerging Corridor"projects are actually focused on servingonly one state (Miami-Tampa or Los An-geles-San Diego), even if, as sometimeshappens, they have a short section in an-other state (like Chicago- Detroit). How-ever, HSR projects purely at the statelevel are difficult because: 1. The requiredinvestment and subsidies are huge com-pared with typical state budgets (the costof the Florida project would be 3 to 4 timeslarger than the entire annual budget ofthe Florida DOT); 2. Many state govern-ments are not used to dealing with thekind of financial, commercial and inte-grated planning issues that HSR raises(New York, Massachusetts, New Jersey,

Illinois and California may be partial ex-ceptions); 3. Although many of the envi-ronmental and developmental benefitsaccrue at the state or local communitylevel, much of the expertise and authorityto deal with such issues lies at the Federallevel (For example, the proposed Florida,California and Texas projects needed amyriad of Federal permits and approvals,although there was supposed to be no Fed-eral money involved.); and, 4. The abilityof the states and the private sector to worktogether can actually be hindered (or fos-tered) by Federal policies, especially taxand labor policies.

An example of problems at the statelevel is the experience in Ohio where astate authority (the Ohio High-Speed RailAuthority) was established to plan andconstruct an HSR between Cleveland, Co-lumbus and Cincinnati. Although the au-thority struggled valiantly for years to getthe project started, it was never able to doso. Part of the problem was unclear eco-nomics; however, even with arguably-fa-vorable financial prospects, the projectwas not politically feasible because theOhio electorate was unwilling to pass thebond issue, supported by a proposed salestax, needed to implement the project.

ProspectsHere, a variant of Murphy's famous

law, "Pessimists are usually right." is rel-evant. Much of the publicity about Ameri-can HSR projects has been sound withoutsubstance, the result of promotion by spe-cific interests. The seasoned observerquickly learns to check the source, and thesource's banker, before believing glowingpromises. And yet, after all the hot-air hasbeen factored out, there are corridorswhere the current mix of car and air prob-ably will not suffice in the future, andsomething better is needed.

However, in dealing with the issue, weshould probably distinguish betweenhigher speed, meaning incremental im-provements in existing services leading toshorter trip times, and high speed, mean-ing new lines built and operated toshinkansen, ICE or TGV equivalent (300km/h) standards.

Improved, Higher-Speed ServicesWhen everything is compared, the origi-

nal NEC from Washington to Boston is farand away the most promising opportunity

� New Metroliner (Amtrak)




for further investment in higher-speedrail (as well as HSR). It was clear from theinception of NECIP that not all the prob-lems were going to be solved by the origi-nal program, especially north of NYC. Infact, before the original NECIP budgetwas established by Congress at $1.75 bil-lion (later raised to over $2.6 billion), in-ternal studies at the DOT had consideredprograms costing as much as $4.5 billionin 1976 dollars (equivalent to as much as$10 billion in 1994 dollars) and, as laterbecame clear, it would have actually costmore than $10 billion to complete thescope included within the comprehensiveestimate. Also, the northern part of theNECIP bore the brunt of the Reagan-erabudget cuts which, among other things,eliminated the planned completion of theelectric traction from New Haven to Bos-ton. The result was that the trip timesfrom Boston to New York remained muchslower than Washington to New York al-though the distance is about the same.

The DOT has announced that it is pre-paring a new Master Plan for a program offurther improvements in the NEC. Al-though no definitive projects have beenannounced, and no total budget set, itseems safe to conclude that there will be acontinuing and significant program to im-prove the NEC, with a special focus on ser-vice at the north end. There will also beimprovements in cruising speed overparts of the distance at both ends to asmuch as 240 km/hour, but this will notcover the entire distance at either end.The eventual result is likely to be slightlyimproved trip times at the south end (15minutes better), and north-end trip timesequivalent to those at the south end today(2 hours and 50 minutes, an improvementof 1 hour or more). In addition, schedulereliability and ride quality will be muchimproved from today's levels.

The prospects for higher speeds in othercorridors are less clear. Of the 19 Emerg-ing Corridors studied in 1981 by theDOT,17) only two were found to be evenmarginally break-even on an operatingcost basis, and only one was found to saveenergy at a net cost less than the worldprice. The report did not attempt to studyincremental improvements in existingcorridors, however, and it is quite likelythat there is a set of incremental improve-ments in several of the corridors thatwould have a reasonable payoff. Both theDOT and Congress have been considering

the possibility of a program whereby theDOT and the states would identify a set ofcorridors and incremental improvementprograms that would qualify for partialFederal funding. States wishing to pro-vide their share would be free to start theupgrading programs. Under various legis-lative mandates, the DOT is alreadyevaluating the financial feasibility of vari-ous levels of improvements in some of themore-promising corridors.

New High-Speed ServicesWhile the prospects for partial upgrad-

ing programs for higher-speed rail appearfavorable in certain corridors, the odds infavor of a new high-speed corridor beingbuilt are lower. First, as discussed, thereare not many corridors where the funda-mental economics are strong enough. Ofthese, New York-Washington, New York-Boston, Los Angeles-San Diego, and Mi-ami-Tampa seem to be the strongest can-didates. Other possible candidates mightbe Houston-Dallas and several Chicago-based corridors. Each possibility offers adifferent mix of transport demand, com-petition from other modes, and congestionand environmental benefits.

What does appear certain is that thecurrent mix of institutions and authoritieswill not work. The Federal government isnot going to do the job by itself, both be-cause of a shortage of funds and becausemany of the benefits are rightly-seen to beat the state or local level. The private sec-tor is not going to do the job by itself, ei-ther; projects of the size of an HSR systemare too large and risky for private inves-tors acting alone. Also, many of the poten-tial benefits of HSR are economic exter-nalities and can never be included in theticket price. Nor can state and local gov-ernments do the job alone, although theyare significant beneficiaries, again be-cause there is a mismatch between theirresources and authority and the needs ofHSR projects. A new approach is needed.

A New SynthesisIf no one agency can do the job alone,

then they are all going to have to work to-gether. In doing so, the respective rolesneed to be based on the benefits each real-izes, and on the expertise and authorityeach possesses.

There is an existing model for the po-tential Federal role—the Federal TransitAdministration (FTA) within the DOT,

which funds part of the capital cost of localtransit projects. The rationale is thatthere is at least a partial Federal interestin resolving local problems, as long as thelocal agencies carry their fair share (30%to 50% of capital costs), and as long as theFederal role is confined to capital costswith a very limited or no Federal share inoperating subsidy. Exactly the same argu-ment could be made for HSR or incremen-tal rail improvement projects. In addition,the Federal government would have toexercise its responsibilities and authori-ties for: 1. Safety specification and regula-tion; 2. Ensuring fair and workable tax,labor, economic regulatory and modal pro-motional regimes; 3. Ensuring that envi-ronmental issues are handled in a wayconsistent with national policies; and, 4.Ensuring that the Amtrak role in theproject, if any, is consistent with other na-tional transport priorities.

There must likewise be a financial roleto be played by state and local govern-ments. For example, the State of Floridarightly viewed HSR as a way of funnelingeconomic development into areas wherethe ecological impact could be minimized,and as a way of reducing the investmentthey would otherwise have to make inhighways or airports. Similar argumentswere made in Texas and, indeed, along theNEC. To the extent these arguments arevalid, neither the Federal government northe private sector should be expected topay. In addition, states and local govern-ments are uniquely situated to designaterights-of-way and acquire the necessaryproperties; paying at least part of thesecosts could easily form their share of thetotal cost of the project.

Finally, the private sector must bearthe primary responsibility for getting thedemand forecasts, service levels, fares andinvestment and operating costs right.This, combined with control over the de-velopment of the properties adjacent tothe stations, ought to determine whetherthe project really has merit. State andFederal shares, as appropriate, should en-sure that the project truly receives thecredit for its real environmental and socialbenefits.

This suggests a mixture of formula andindividuality for each project. Federal andstate roles would be fixed as general proce-dures and shares of costs; the private sectorrole would focus on seeing if the project couldbe made to work within these general sup-


Louis S. Thompson

Mr Louis S. Thompson was born in 1941 in Florida. After graduating with an MBA from Harvard

University, he worked as a consultant engineer and economist in Cambridge, MA, and Washing-

ton DC. He has also worked for a number of years at various posts within the US Department of

Transportation. He has been Railway Adviser to the World Bank since 1986 where his responsi-

bilities include consultation about all the Bank's railway lending activities and developing reports

and policy positions. He has published articles on railways statistics and restructuring and is

researching energy use in transport.

port levels. Only by this sort of teamwork,not now in evidence, will new HSRprojects in the USA become reality. �

Notes:1) "Shinkansen" means the high-speed,

standard-gauge trains in Japan operat-ing between Tokyo and Hakata, Niigataand Sendai (and being extended else-where). "TGV" refers to the French highspeed trains operating between Parisand Lyons, Le Mans, and Lille (and alsoin the process of extension). ICE refersto the German Inter City Express trainsoperating, for example, between Ham-burg, Frankfurt and Munich.

2) "MAGLEV" includes both the Japaneseversions, one attracting and one repel-ling, as well as the German version(which is attracting). It also includeswhatever MAGLEV might emerge fromUS experimentation or development.These systems, while technically dis-tinct, are more alike than different intheir costs and performance, and nonehas a particular advantage in solvingmost of the issues discussed below. Seesource 9 for further discussion.

3) A better definition might be the capabil-ity to provide downtown to downtowntrips in a time equivalent to air.

4) See source 1.5) See source 7.6) The Turbotrains actually began under

the New Haven Railroad before thePenn Central merger.

7) See source 5.8) Today's electric-locomotive-hauled

Metroliners with 6 to 8 cars are entirelydifferent to the originals, which wereEMUs.

9) See source 8.10) See source 6.11) See sources 3, 4 and 9.12) It deserves emphasis here that not all of

the Japanese and French services areequally successful in economic terms.While the Tokaido (Tokyo to Osaka) ser-vices are profitable from any point ofview, and the Sanyo (Osaka to Hakata)services not far behind, neither theJoetsu (Tokyo to Niigata) nor theTohoku (Tokyo to Sendai) services havedone nearly as well in economic terms.The same is true in France; the originalTGV from Paris to Lyons has been suc-cessful by almost any measure, but thenewer lines are less clearly so. This isnot to say that any of these lines shouldnot have been built: it is clear, though,

that some are far less successful thanothers for the same reasons that manyUS markets probably fall in the less fa-vorable category: lack of population, andthus ridership, density. Some US mar-kets, though, do have densities whichmatch those in Europe.

13) Ownership is important because, once aperson is an auto owner, whatever theoriginal reason for purchase, he or shesees individual trip decisions as an in-cremental cost. US DOT studies havesuggested that the average auto owneroften perceives (incorrectly, but signifi-cantly) the incremental cost as being es-sentially the fuel cost alone. This bit ofconsumer psychology makes the autolook very cheap to use!

14) The highway tolls from New York toWashington are about $7.00 (no tollsfrom New York to Boston), comparedwith about $25.00 from Paris to Lyonsand about $100.00 from Tokyo to Osaka.

15) Only the much older cities, like Chicago,Boston, New York City, Philadelphiaand Washington, are mass transit de-pendent and highly urbanized like mostEuropean and Japanese cities.

16) The US does have highway fuel taxes atthe national and state levels, the pro-ceeds of which are generally allocateddirectly to highway construction ormaintenance. There is also an air pas-senger ticket tax at the national level,and an airport passenger tax at the air-port level (usually owned by local orstate authorities) which are also plowedback into the airports and airways sys-tems. These taxes were fiercely resistedby highway and air interests: needlessto say the same interests do not want tosee any of "their" trust funds divertedto rail passenger use. While there hasbeen some success in making transportfunding more flexible for mass transituse, and possibly for rail use (in theIntermodal Surface Transportation Ef-ficiency Act (ISTEA) of 1991), there isnot yet enough flexibility to accommo-date the needs of an HSR project.Amtrak has long tried, without success,to tap the Highway Trust Fund throughits "Penny for Amtrak" proposal, a pro-

posal to let Amtrak have a one-cent taxon each gallon of gasoline which wouldraise about $1 billion annually.

17) See sources 6 and 9.

Sources:1. Beshers, Eric W., "Conrail: Government

Creation and Privatization of an Ameri-can Railroad", World Bank, Infrastruc-ture and Urban Development Depart-ment, INU 38, Washington, DC, March1989

2. Thompson, Louis S., "Trapped in theForecast: An Economic Field ofDreams," in TR News, TransportationResearch Board, Washington DC,March/April 1993

3. Ibid., "High Speed Rail," in TechnologyReview, Massachusetts Institute ofTechnology, Cambridge, Massachu-setts, April 1986

4. Transportation Research Board, "InPursuit of Speed: New Options for Inter-city Transport," Special Report 233,Washington, DC, 1991

5. U.S. Department of Transportation,"Northeast Corridor: Achievement andPotential,"Washington, DC, November1986

6. Ibid., "Rail Passenger Corridors, FinalEvaluation," Washington, DC, 1986

7. Ibid., "Northeast Corridor TransportationProject, Report NECTP-209," Washington,DC, April 1970

8. Ibid., "Northeast Corridor High SpeedRail Passenger Service ImprovementProjects, Interim Report," Washington,DC, July 993

9. U.S. Army Corps of Engineers, U.S. De-partment of Transportation, and U.S.Department of Energy, "Final Report onthe National Maglev Initiative," Wash-ington, DC, September 1993

10. Japan Automobile Research InstituteInc., "Global Environmental Problems",No. 6, Tokyo, Japan, May 1994

high-speed rail (hsr) in the united states — why isn't ...jrtr.net/jrtr03/pdf/f32_tho.pdf ·...

Documents