There is little doubt that Amtrak’s Acela represents a very attractive way to travel between Washington D.C. and New York City. Leaving Washington D.C. a short distance from the United States Capitol, one can arrive at Penn Station in midtown Manhattan in roughly two hours and forty five minutes. While catching a flight between Washington and New York is a viable alternative, it is necessary to leave the city center to reach the airport. Combined with security procedures, it can easily take longer to travel between central locations in the two cities by air compared to the speed offered by America’s version of “high speed rail”.
High speed passenger rail service has been a hallmark of the transportation systems in Europe and Japan for many years. More recently, China has rapidly expanded its high speed passenger rail system. Compared to America’s relatively slow Acela service, which shares tracks with freight carriers, China’s high speed rail system has lines that regularly run at 217 miles per hour on dedicated passenger tracks.
Can High Speed Passenger Rail Work in America?
America is a vast country and rail travel will never be a feasible alternative to air travel for trips longer than 800 miles even with trains capable of 200 mile per hour operating speeds. Except for a subset of travelers who especially dislike air travel, most consumers will select the mode of transportation that offers an attractive balance between cost and time requirements. Air travel is relatively inexpensive within the continental United States. For a hypothetical 800 mile trip, state of the art high speed rail running on a dedicated track at 200 miles per hour with four stops lasting five minutes each would require roughly four and half hours compared to less than two hours in the air. Even adding the time required to commute from city centers to the airport, air travel likely wins.
High speed rail has the best possibility for success in short haul trips within parts of the country where roads are congested and the majority of travelers are going from one city center to another. The Northeast is an obvious example where better high speed rail could make sense. The California corridor between Los Angeles and San Francisco is another example where efforts are already underway to build such a line.
Conflicts Between Freight and Passenger Rail Persist
American passenger trains generally operate on rails owned by freight railroads. While Amtrak Acela trains normally are given preference, those who travel on the regular “regional” trains have experienced the frustration of being delayed due to freight movements. Commuter rail systems in the Washington D.C. area have long been plagued by delays caused by freight railroads.
Two interesting articles appeared last week regarding the conflicts between freight and passenger rail in America. The Economist published a lengthy article on American railways and warned that the country’s high performing system of rail freight could be in jeopardy if high speed rail initiatives are not pursued with caution. An article in The Washington Post covering stimulus funds for high speed rail covered many of the same topics.
America’s Freight Rail Renaissance
The Economist points out that freight rail performance in America has dramatically improved since the industry was deregulated in 1980. In terms of productivity and prices charged to customers, freight rails have never performed at a higher level. As the interstate highway system degrades due to lack of funding for maintenance and the pressures of steadily increasing traffic loads, freight rail has become a very attractive form of transportation compared to trucks. Rail is also a much “greener” method of transportation since it is possible to transport one ton of freight over 400 miles on a single gallon of diesel fuel.
Intermodal traffic has increased significantly in recent years as companies have shifted to rail for long haul routes and restricted trucking to shorter trips at each end of the line. Trade with China has significantly increased incoming shipments of goods to West Coast ports resulting in higher levels of freight traffic for intermodal containers. Traffic in coal from the Powder River Basin in Wyoming has also generated more use of the freight rail system as the fuel is transported greater distances due to demand for the region’s low sulfur coal.
Impact of Passenger Rail on Freight Lines
Railroads are concerned about the pressures that would exist if high speed passenger rail shares the existing freight railways. True high speed rail, such as the systems deployed in China in recent years, require dedicated track to meet the precise requirements of trains operating at extremely high speeds. Even lower speed trains such as the Acela require major upgrades to existing freight rail systems in order to operate safely. Freight railroads are concerned about the impact of giving such trains the right of way on their lines. According to The Economist, most of the plans for high speed rail boils down to running intercity passenger trains at speeds of up to 110 miles per hour on existing freight tracks.
When Warren Buffett decided to acquire Burlington Northern Santa Fe (BNI), he stated that railroads provide Berkshire Hathaway (BRK.A) with an ideal opportunity to invest funds at reasonable rates of return. Indeed, many observers believe that Berkshire may increase capital expenditures at Burlington Northern in the coming years. In late April, Burlington Northern CEO Matthew Rose clearly stated that he plans to make significant investments in the railroad. Such investments should further improve the capability of America’s rail system to move more freight at lower cost in the future.
Proceed with Caution …
America is at an important juncture with respect to the development of a high speed rail network. To achieve true high speed rail, it is necessary to invest in dedicated passenger rail systems specially designed to support very high speeds. This will require massive capital investments as well as the right of way through some very congested parts of the country. It is doubtful whether high speed rail will command fares high enough to justify the investment. As a result, policymakers are attempting a “hybrid” approach in which the existing freight rail system is modified to meet the needs of high speed rail. Without careful planning, this hybrid approach may represent a setback for America’s excellent freight rail system while failing to provide a true high speed form of transportation for passengers.
Disclosure: The author of this article owns shares of Berkshire Hathaway.