The Poor Economic Model of Passenger Rail

Posted by PITHOCRATES - November 25th, 2013

Economics 101

The Amtrak Crescent is about a 1,300 Mile 30 Hour Trip between New Orleans and New York City

An Amtrak train derailed this morning west of Spartanburg, South Carolina.  Thankfully, the cars remained upright.  And no one was seriously injured (see Amtrak Crescent with 218 aboard derails in SC by AP posted 11/25/2013 on Yahoo! News).

There were no serious injuries, Amtrak said of the 207 passengers and 11 crew members aboard when the cars derailed shortly after midnight in the countryside on a frosty night with 20-degree readings from a cold front sweeping the Southeast.

This is the Amtrak Crescent.  About a 30 hour trip one way.  It runs between New Orleans and New York City.  Approximately 1,300 miles of track.  Not Amtrak track.  They just lease track rights from other railroads.  Freight railroads.  Railroads that can make a profit.  Which is hard to do on a train traveling 1,300 miles with only 207 revenue-paying passengers.

People may board and leave the train throughout this route.  But if we assume the average for this whole trip was 207 and they were onboard from New Orleans to New York City we can get some revenue numbers from the Amtrak website.   We’ll assume a roundtrip.  They each have to pay for a seat which runs approximately $294.  Being that this is a long trip we’ll assume 20 of these people also paid an additional $572 for a room with a bed and a private toilet.  Bringing the total revenue for this train to approximately $72,298.  Not too shabby.  Now let’s look at the costs of this train.

Diesel Trains consume about 3-4 Gallons of Fuel per Mile

If you search online for track costs you will find a few figures.  All of them very costly.  We’ll assume new track costs approximately $1.3 million per mile of track.  This includes land.  Rights of way.  Grading.  Bridges.  Ballast.  Ties.  Rail.  Switches.  Signals.  Etc.  So for 1,300 miles that comes to $1.69 billion.  Track and ties take a beating and have to be replaced often.  Let’s say they replace this track every 7 years.  So that’s an annual depreciation cost of $241 million.  Or $663,265 per day.  Assuming 12 trains travel this rail each day that comes to about $55,272 per train.

Once built they have to maintain it.  Which includes replacing worn out rail and ties.  Repairing washouts.  Repairing track, switches and signals vandalized or damaged in train derailments and accidents.  This work is ongoing every day.  For there are always sections of the road under repair.  It’s not as costly as building new track but it is costly.  And comes to approximately $300,000 per mile.  For the 1,300 miles of track between New Orleans and New York City the annual maintenance costs come to $390 million.  Or $1 million per day.  Assuming 12 trains travel this rail each day that comes to about $89,286 per train.

Diesel trains consume about 3-4 gallons of fuel per mile.  Because passenger trains are lighter than freight trains we’ll assume a fuel consumption of 3 gallons per mile.  For a 1,300 mile trip that comes to 3,900 gallons of diesel.  Assuming a diesel price of $3 per gallon the fuel costs for this trip comes to $11,700.  The train had a crew of 11.  Assuming an annual payroll for engineer, conductor, porter, food service, etc., the crew costs are approximately $705,000.  Or approximately $1,937 per day.  Finally, trains don’t have steering wheels.  They are carefully dispatched through blocks from New Orleans all the way to New York.  Safely keeping one train in one block at a time.  Assuming the annual payroll for all the people along the way that safely route traffic comes to about $1 million.  Adding another $2,967 per day.

Politicians love High-Speed Rail because it’s like National Health Care on Wheels

If you add all of this up the cost of the Amtrak Crescent one way is approximately $161,162.  If we subtract this from half of the roundtrip revenue (to match the one-way costs) we get a loss of $88,864.  So the losses are greater than the fare charged the travelling public.  And this with the freight railroads picking up the bulk of the overhead.  Which is why Amtrak cannot survive without government subsidies.  Too few trains are travelling with too few people aboard.  If Amtrak charged enough just to break even on the Crescent they would raise the single seat price from $294 to $723.  An increase of 146%.

Of course Amtrak can’t charge these prices.  Traveling by train is a great and unique experience.  But is it worth paying 80% more for a trip that takes over 7 times as long as flying?  That is a steep premium to pay.  And one only the most avid and rich train enthusiast will likely pay.  Which begs the question why are we subsidizing passenger rail when it’s such a poor economic model that there is no private passenger rail?  Because of all those costs.  Congress loves spending money.  And they love making a lot of costly jobs.  And that’s one thing railroads offer.  Lots of costly jobs.  For it takes a lot of people to build, maintain and operate a railroad.

Which is why all politicians want to build high-speed rail.  For it doesn’t get more costly than that.  These are dedicated roads.  And they’re electric.  Which makes the infrastructure the most costly of all rail.  Because of the high speeds there are no grade crossings.  Crossing traffic goes under.  Or over.  But never across.  And they don’t share the road with anyone.  There are no profitable freight trains running on high-speed lines to share the costs.  No.  Fewer trains must cover greater costs.  Making the losses greater.  And the subsidies higher.  Which is why politicians love high-speed rail.  It’s like national health care on wheels.

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Moving Big Things in Small Spaces

Posted by PITHOCRATES - September 11th, 2013

Technology 101

Ships once used Tugs to Maneuver around in Small Spaces but Today they use Tunnel Thrusters

As technology progressed the more things we needed to make other things.  Small factories grew into large manufacturing plants.  Which consumed vast quantities of material to produce vast quantities of goods.  Requiring ever larger means of transportation.  And we have built some behemoths of transportation.

Water transport has been the preferred method for heavy transport.  Which is why most early cities were on rivers.  As time passed our cities got bigger.  Our industry got bigger.  And our ships got bigger.  Huge bulk freighters bring iron ore, coal, limestone, etc., from northern ports across the Great Lakes to docks on small rivers and harbors further south.  On the open lakes these ships can put the pedal to the metal.  Roaring across these lakes at breakneck speeds of 15 mph.  If you’ve ever seen a Great Lakes freighter at full throttle you probably noticed something.  They push a lot of water out of their way.  Something they can’t do in those small rivers and harbors.  As their wake would push the river over its banks.  So they slow down to a non-wake speed of something slower than a person walking.

Lakes are huge bodies of deep water.  But these Great Lakes freighters, or lakers, often enter narrow and shallow rivers.  Some rivers even too shallow.  So they dredge a channel in them.  So these lakers don’t bottom out.  Some lakers have to travel upriver to offload.  Then turn around.  Which isn’t easy in a shallow river when your ship is 700-1,000 feet long.  They once used tugs to push these ships around.  But today they use tunnel thrusters.  An impeller inside a tunnel through the ship at the bow and stern perpendicular to the beam and below the water line.  Which can turn a ship without the forward motion a rudder requires.  Allowing it to move as if a tug is pushing it.  Only without a tug.

Interesting thing about Trains is that they don’t have a Steering Wheel

With the introduction of the railroad cities moved away from rivers and coastlines.  But the railroads only became a part of the heavy transport system.  Cities grew up along the railroads.  Where farmers in a region brought their harvests to grain elevators.  Trains took their harvests from these elevators to ports on rivers and coastlines.  Where they could offload to ships or barges.  And it would take a large ship or a barge.  Because one long train can carry a lot of harvest.

Interesting thing about trains is that they don’t have a steering wheel.  For there is only two directions they can go.  Forward.  And backward.  If you’ve traveled passenger rail to the end of the line you may have experienced a train turning around.  The train will reduce speed to a crawl as they switch over to a perpendicular-running track.  For trains do not travel well on curves.  Because the wheels are connected to a solid axel.  So in a turn the outer wheel needs to travel faster to keep up with the inner wheel.  But can’t.  Causing the wheels to slip instead.  Causing wear and tear on the train wheels.  And track.  Which is why curved track does not last as long as straight track.  The train travels a while on this perpendicular track at a crawl until the rear end passes another switch.  It then stops.  And goes backward.  Switching back to the track it was originally on.  Only now backing up instead of traveling forward.  The train then backs into the passenger terminal.  Ready to leave from this end of the line going forward.  To the other end of the line.

Freight trains are a lot longer than passenger trains.  Some can be a mile long.  Or longer.  And rarely turn around like a freight train.  Rail cars are added to each other creating a consist in a rail yard.  A switcher (small locomotive) moves back and forth picking up cars and attaching them to the consist.  In the reverse order which they will be disconnected and left in rail yards along the way.  Once they build the consist they bring in the go-power.  Typically a lashup of 2-3 locomotives (or more if they’re the older DC models).  The lead locomotive will typically face forward.  Putting the engineer at the very front of the train.  In the old days they had roundhouses to switch the direction of these locomotives.  Today they turn them around when they need to like the passenger train turning around.  Which is much easier as they only have to turn around one locomotive in the lashup.

Planes may Fly close to 500 mph in the Air but on the Ground they move about as Fast as Someone can Walk

Airplanes are big.  In flight they’re as graceful as a bird in flight.  But it’s a different story on the ground.  Planes are big and heavy.  They have a huge wingspan.  And the pilots sit so far forward that they can’t see how close their wingtips are to other things.  Such as other airplanes.  When they leave a gate they usually have a tug push them back and get them facing forward.  At which time they start their engines.  As it would be dangerous to start them while at the gate where there are a lot of people and equipment servicing the plane.  They don’t want to suck anything—a person or a piece of equipment—into the jet engines.  And they don’t want to blow anything away moving behind the engines as the jet blast from a jet can blow a bus away.  And has.  In flight they use their ailerons to turn.  The flaps on the tips of each wing that roll a plane left or right.  Causing the plane to turn.  The rudder is used for trimming a plane.  Or, in the case of an engine failure, to correct for asymmetric thrust that wants to twist the airplane like a weathercock.  On the ground they use a little steering wheel (i.e., a tiller) outboard of the pilot (to the left of the left seat and to the right of the right seat) to turn the nose gear wheel.

Pilots can’t see a lot out of the cockpit window while on the ground.  Which is why they rely on ground crews to give them direction.  And to walk alongside the wings during the pushback.  To make sure the wings don’t hit anything.  And that no one hits the plane.  Once the tug disconnects and the plane is under its own power the flight crew takes directions from ground controllers.  Whose job is to safely move planes around the airport while they’re on the ground.  Planes may fly close to 500 mph in the air but on the ground they move about as fast as someone can walk.  For planes are very heavy.  If they get moving too fast they’re not going to be able to stop on a dime.  Which would be a problem if they’re in a line of planes moving along a taxiway to the runway.

When we use big things to move people or freight they work great where they are operating in their element.  A ship speeding across an open lake.  A train barreling along straight track.  Or a plane jetting across the open skies.  But when we rein these big things in they are out of their element.  Ships in narrow, shallow rivers.  Trains on sharply curved track.  And planes on the ground.  Where more accidents happen than when they are in their element.  Ships that run into bridges.  Trains that derail.  And planes that hit things with their wings.  Because it’s not easy moving big things in small places.

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Air Transport vs. Rail Transport

Posted by PITHOCRATES - July 29th, 2013

Economics 101

Trains require an Enormous Amount of Infrastructure between Terminal Points whereas a Plane does Not

Trains and jets are big and expensive.  And take huge sums of money to move freight and passengers.  Each has their strength.  And each has their weakness.  Planes are great for transporting people.  While trains are best for moving heavy freight.  They both can and do transport both.  But pay a premium when they are not operating at their strength.

The big difference between these two modes of transportation is infrastructure.  Trains require an enormous amount of infrastructure between terminal points.  Whereas a plane doesn’t need anything between terminal points.  Because they fly in the air.  But because they fly in the air they need a lot of fuel to produce enough lift to break free from the earth’s gravity.  Trains, on the other hand, don’t have to battle gravity as much.  As they move across the ground on steel rails.  Which offer little resistance to steel wheels.  Allowing them to pull incredible weights cross country.  But to do that they need to build and maintain very expensive train tracks between point A and point B.

To illustrate the difference in costs each incurs moving both people and freight we’ll look at a hotshot freight train and a Boeing 747-8.  A hotshot freight gets the best motive power and hustles on the main lines across the country.  The Boeing 747-8 is the latest in the 747 family and includes both passenger and freighter versions.  The distance between Los Angeles (LA) and New York City (NYC) is approximately 2,800 miles.  So let’s look at the costs of each mode of transportation moving both people and freight between these two cities.

Railroads are so Efficient at moving Freight because One Locomotive can pull up to 5,000 Tons of Freight

There are many variables when it comes to the cost of building and maintaining railroad track.  So we’re going to guesstimate a lot of numbers.  And do a lot of number crunching.  An approximate number for the cost per mile of new track is $1.3 million.  That includes land, material and labor.  So the cost of the track between LA and NYC is $3.6 billion.  Assuming a 7-year depreciation schedule that comes to $1.4 million per day.  If it takes 3 days for a hotshot freight to travel from LA to NYC that’s $4.3 million for those three days.  Of course, main lines see a lot of traffic.  So let’s assume there are 8 trains a day for a total of 24 trains during that 3-day period.  This brings the depreciation expense for that trip from LA to NYC down to $178,082.

So that’s the capital cost of those train tracks between point A and point B.  Now the operating costs.  An approximate number for annual maintenance costs per mile of track is $300,000.  So the annual cost to maintain the track between LA and NYC is $840 million.  Crunching the numbers the rest of the way brings the maintenance cost for that 3-day trip to approximately $278,671.  Assuming a fuel consumption of 4 gallons per mile, a fuel cost of $3/gallon and a lashup of 3 locomotives the fuel cost for that 3-day trip is approximately $100,800.  Adding the capital cost, the maintenance expense and the fuel costs brings the total to $566,553.  With each locomotive being able to pull approximately 5,000 tons of freight for a total of 15,000 tons brings the cost per ton of freight shipped to $37.77.

Now let’s look at moving people by train.  People are a lot lighter than heavy freight.  So we can drop one locomotive in the lashup.  And burn about a gallon less per mile.  Bringing the fuel cost down from $100,800 to $50,400.  And the total cost to $516,153.  Assuming these locomotives pull 14 Amtrak Superliners (plus a dining car and a baggage car) that’s a total of 1,344 passengers (each Superliner has a 96 passenger maximum capacity).  Dividing the cost by the number of passengers gives us a cost of $384.04 per passenger.

Passenger Rail requires Massive Government Subsidies because of the Costs of Building and Maintaining Track

A Boeing 747-8 freighter can carry a maximum 147.9 tons of freight.  While consuming approximately 13.7 gallons of jet fuel per mile.  At 2,800 miles that trip from LA to NYC will consume about 38,403 gallons of jet fuel.  At $3/gallon that comes to a $115,210 total fuel cost.  Or $778.97 per ton.  Approximately 1,962% more than moving a ton of freight from LA to NYC by train.  Excluding the capital costs of locomotives, rolling stock, airplanes, terminal infrastructure/fees, etc.  Despite that massive cost of building and maintaining rail between point A and point B the massive tonnage a train can move compared to what a plane can carry makes the train the bargain when moving freight.  But it’s a different story when it comes to moving people.

The Boeing 747-8 carries approximately 467 people on a typical flight.  And burns approximately 6.84 gallons per mile.  Because people are a lot lighter than freight.  Crunching the numbers gives a cost per passenger of $123.11.  Approximately 212% less than what it costs a train to move a person.  Despite fuel costs being almost the same.  The difference is, of course, the additional $465,753 in costs for the track running between LA and NYC.  Which comes to $346.54 per passenger.  Or about 90% of the cost/passenger.  Which is why there are no private passenger railroads these days.  For if passenger rail isn’t heavily subsidized by the taxpayer the price of a ticket would be so great that no one would buy them.  Except the very rich train enthusiast.  Who is willing to pay 3 times the cost of flying and take about 12 times the time of flying.

There are private freight railroads.  Private passenger airlines.  And private air cargo companies.  Because they all can attract customers without government subsidies.  Passenger rail, on the other hand, can’t.  Because of the massive costs to build and maintain railroad tracks.  With high-speed rail being the most expensive track to build and maintain.  Making it the most cost inefficient way to move people.  Requiring massive government subsidies.  Either for the track infrastructure.  Or the electric power that powers high-speed rail.

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