Rail is Booming: Where is America?
There’s a worldwide boom in rail transport underway, and the United States is completely missing out, despite a pressing need for rail infrastructure revitalization at home and massive earning potential abroad.
How much money are we talking about? The global boom in rail is massive in scope; last year there was nearly US$200 billion in rail investment, of which about US$110 billion was in China, US$43 billion in the EU, US$10.3 billion in India, and US$9.3 billion in Japan. For comparison, in the US public investment totaled US$13.3 billion, in a country much larger than Europe, Japan, or India, and with much greater infrastructure needs than the first two.
But investment only tells half the story; Europe, Japan, and China have all parlayed domestic investment in rail, especially high-speed rail, into multibillion-dollar industries manufacturing rolling stock and building railways and employing tens of thousands (or in China’s case hundreds of thousands) at home and abroad. The United States once did the same, using military and aerospace spending to gain a commanding lead in the production of jet engines, aircraft, and microprocessors, to the benefit of GE, Boeing, Intel, and the hundreds of thousands who work for them, not to mention the millions who indirectly benefit from the economic activity they generate. Even in the rail sector, US firms once built lines and sold rolling stock abroad, building their reputations on the backs of the American rail network, which was once among the world’s best for both passengers and freight.
Where do we stand today?
Even today, the United States has an excellent freight network, maintained and run by engineers and planners who are among the best in the world at working with insufficient resources. Even Japan’s and China’s (rightfully) well-regarded rail networks are not the equal of the United States’ or Canada’s when it comes to moving freight rather than people, and American engineers and firms routinely consult abroad on management and maintenance of freight rail networks. Despite this, our underinvestment in rail has already made it extremely difficult for American construction firms and train manufacturers to compete anywhere else; their muscles have atrophied, if you will. There are few American companies with modern expertise who can go toe-to-toe with Siemens, Alstom, Bombardier, Kawasaki, or CRRC (China Rail and Rolling Stock), and none in the HSR sector.
We’ve sacrificed the lead we once held in this industry, but it is not too late to restore some of our engineering prowess and become a major player, if we are willing to invest in a true revitalization of our own infrastructure. The state of freight rail in the US offers some clues as to how we could move forward in other sectors; America’s freight rail network is still among the world’s best. In 2015, privately-owned rail operators invested more than US$27 billion in maintaining and upgrading more than 140,000 miles of freight track. Driven by the rise of intermodal freight transport, declines in shipments of coal, and projections that show total rail freight volumes rising by 40% before 2040, private rail companies have worked to ensure their future and that of America’s logistics backbone for future generations. They have invested in tying rail into ports and truck hubs, improving load-breaking facilities, and increasing capacity with smart management of existing infrastructure. Freight rail faces challenges, most especially in the form of aged and degraded bridges, tunnels, and railbeds, but it is on the path to correcting its deficiencies.
Passenger rail in America, however, is in a sorry state. In 1962, America’s modern passenger rail network connected virtually every city in America with more than 100,000 people, and many more beyond. Today, a little-used, slow network connects a few dozen cities with more than a million people.
What the heck happened?
There are those who say that rail became obsolete, and non-competitive, with the rise of the Interstate Highway System and civil aviation; this is not true, or at least not the whole truth. We chose to invest in highways and airports, but not rail, which is why the US today has excellent highways, decent airports, and a world-beating civil aviation and air traffic control system, and decrepit passenger rail. At the time, and with some justification, policymakers viewed air travel as the wave of the future, a way of traveling between far-away cities that would ensure no one would ever want to set foot on a passenger train. With the benefit of hindsight, and looking at the nations of Europe, China, and Japan, it has become clear that this was a mistake.
How do we move forward?
A million half-baked plans are floating around talking about a national high-speed rail network. If you don’t believe me, just look at the results of a Google search for “US high-speed rail map”. Most of them are completely detached from reality, because there is no appetite for spending seven hundred billion dollars to build a nation-spanning HSR network from scratch. Trying to build such a network in one push would also ensure that we need to rely on foreign expertise and buy foreign technology, as no domestic engineering and rolling stock firms have the expertise to bring such a project to a successful conclusion.Rather than spending, and quite possibly wasting, a few hundred billion dollars, the Federal government should look very closely at modernizing several existing routes in the US until they meet the standards for high-speed rail. Amtrak’s Acela service is pitiful compared to Japan’s Shinkansen or China’s CRH, taking nearly 7 hours to travel the 500 miles between Boston and Washington, D.C., but even this 90-mph train service was sufficient to drive prices of NYC-D.C. flights down by 60% and air travel’s market share down to 7%. The existing NE Corridor also provides about 65% of the necessary right of way to upgrade to a 200-mph service, which would reduce Boston-D.C. travel times to around 3 hours and force airlines to lower travel prices across the Northeast. The total cost of upgrading the whole corridor to 200-mph would be on the order of US$100 billion over twenty years.
Why should we spend US$100 billion on Acela?
One direct impact of building a true HSR line between Boston and Washington would be to lower travel times and costs throughout the Northeastern US; airfares would fall and congested airports would see some relief as people flock to a fast and convenient rail service. The other would be to create a passenger rail company that can stand on its own two feet without subsidies, as a fast Acela service would be as profitable as air travel within the NEC today, and would bring Amtrak into the black.
These benefits are small compared to the indirect effects, though. Quick transport from satellite cities such as Trenton, Wilmington, or New Haven to hubs like Philadelphia, NYC, and DC will lower upward pressure on their populations and real estate prices while increasing economic opportunity across the whole of the Northeast. While only a few Chinese high-speed rail projects have shown a direct profit (so far), they have measurably and significantly increased business travel and tourism, aided regional economic integration, and increased tax receipts from local economic activity significantly. Such effects have occurred not just in China, but also in Japan and Europe, and would happen in the US as well.
Spreading the Acela project out over 20 years would give US firms the time to acquire and institutionalize expertise. While the initial stages of the project would require foreign expertise to work alongside American firms, later stages and future projects could use more American engineers and technology as their capabilities are rebuilt. Eventually they would be able to compete for future projects at home and abroad, just as Chinese and Japanese firms have gotten contracts for high-speed rail projects in Malaysia, Argentina, and Saudi Arabia.
What do we do after Acela?
Starting with Acela also lets us evaluate the benefits of high-speed rail before diving in to other projects. If Acela’s upgrade proceeds smoothly and has the expected benefits, follow-on projects could be quickly approved and implemented.
We know that high-speed rail is most competitive along mid-haul routes under 700 miles, on which its slower speed (compared to air travel) is offset by streamlined security and centrally-located stations. In China, the 700 mile Beijing-Shanghai route is dominated by high-speed rail travel, which takes about the same time as air travel door-to-door, is less aggravating, and costs less overall.
Building on an Acela project, spur lines from New York to Buffalo via Albany and Syracuse and Philadelphia to Chicago via Pittsburgh would integrate the whole of the Northeastern US. In the Western US, a San Diego-San Francisco line might already have been completed by that time. The Texas Triangle project also makes economic sense, and might be extended to Chicago through Oklahoma City and St. Louis to link up with the Northeastern network. Florida's large and closely-spaced cities make it an ideal candidate to begin building a Southeastern HSR network.
At the end of the century, the US would have an HSR network that looks a lot like the ones in those insane maps I mentioned, at less expense, and employing a much greater number of American firms, American engineers, and American manufacturers. The benefits for all of us would be immense.