The Antiplanner recently had the privilege of meeting Amtrak’s new president, Wick Moorman. He is a charming guy who has impressive managerial skills that allowed him to rise to be CEO of Norfolk Southern, one of America’s largest railroads. Those are probably the talents that Amtrak needs right now.
Since we both love trains, we have a lot in common so we agreed to simply ignore our disagreements on the future of passenger trains. I did tell him that, if he were an efficient manager, he would kill Amtrak’s worst-performing train, the Los Angeles-New Orleans Sunset Limited, but I knew he couldn’t do it for political reasons. So I was chagrinned to read that, not only is he not proposing to cut it, he wants to extend it to Orlando, Florida.
The Sunset Limited was originally a Southern Pacific train and starting in 1894 it went all the way from San Francisco to New Orleans. Passengers could take a steamship from New Orleans to New York and arrive just about as quickly as taking a train. In 1930 the train was cut to Los Angeles-New Orleans, and San Francisco passengers would have to change trains in L.A., which probably wasn’t a huge inconvenience.
The Antiplanner has previously argued that Amtrak uses “accounting tricks” to make the Northeast Corridor appear profitable and the system as a whole appear to cover most of its operating expenses out of revenues. The most important of these tricks is that it appears to count maintenance as a capital cost. As a 2001 Congressional Research Service report noted, “Under generally accepted accounting principles, maintenance is considered an operating expense,” but Amtrak excludes it when it compares operating revenues and expenses.
Recently, I met with an Amtrak official who explained that the situation is a little more complicated than I described. Historically, he said, railroads had counted maintenance against revenues when calculating their bottom lines, but this led some railroads to defer maintenance in order to improve their apparent profitability. As I understood his explanation, the Interstate Commerce Commission corrected this several decades ago by changing the accounting rules so that maintenance would be included in capital costs. This eliminated any incentive to defer maintenance.
I sort of understood that, but I’m not an accountant, so I looked up the history of ICC accounting rules. The best explanation was in a 2007 paper in the Accounting Historians Journal called “The End of Betterment Accounting.”
Amtrak issued its F.Y. 2016 unaudited financial results last week with a glowing press release that claimed a “new ridership record and lowest operating loss ever.” Noting that “ticket sales and other revenues” covered 94 percent of Amtrak’s operating costs, Amtrak media relations called this “a world-class performance for a passenger carrying railroad.” The reality is quite a bit more dismal.
Many new high-tech firms attract investors despite losing money, but a 45-year-old company operating an 80-year-old technology shouldn’t really brag about having its “lowest loss ever.” The “world-class performance” claim is based on the assumption that trains elsewhere lose money, which is far from true: most passenger trains in Britain and Japan make money, partly because they are at least semi-privatized.
Moreover, a close look at the unaudited report reveals that Amtrak left a lot of things out of its press release: passenger miles carried by Amtrak declined; ticket revenues declined; and the average length of trip taken by an Amtrak passenger declined. The main reasons for Amtrak’s positive results were an increase in state subsidies (which Amtrak counts as passenger revenue) and a decrease in fuel and other costs.
Last week’s commuter train crash in New Jersey has left people wondering how safe our transportation system really is. We can answer this question with data from National Transportation Statistics, which show passenger miles, fatalities, and injuries by mode of transportation since 1990.
Table One: Fatalities per billion passenger miles by mode. As noted in the text, the most recent decade is 2005-2014 except for commuter rail, which is 2003-2012. Sources: Calculated from National Transportation Statistics, tables 1-40, 2-1, 2-34, and 2-35.
|Mode||1990-1999||Last 10 Years||Change
The statistics show transit data only through 2012, but the Federal Transit Administration has safety data for the years since then. Unfortunately, the Federal Railroad Administration, not the Federal Transit Administration, monitors commuter rail safety, and it doesn’t seem to publish those numbers, so we only have them through 2012.
Amtrak’s plan to use most of the $2.45 billion “loan” it received from the Department of Transportation to buy new high-speed trains for the Northeast Corridor has come under fire from, of all people, a high-speed rail advocate named Alon Levy. The new trains will cost about $9 million per car, which Levy points out is nearly twice as much as France is paying for Eurostar train cars. The reason for the high cost is that the new trains can go more than 200 mph and tilt on curves more than any previous trains.
Levy is a transportation writer who takes a highly mathematical approach to reviewing proposals and who says he is for “good transit” but against boondoggles. He says the problem with the expensive new trains is that Amtrak tracks can’t support trains that are as fast as they can go, and in order to support such fast trains, they would have to reduce curvature so much that they wouldn’t need to tilt as much as the new trains. Levy argues that Amtrak should have spent less on the trains and more on the infrastructure needed to boost speeds. As another high-speed rail advocate put it, “They need to speed up the slow bits first, which isn’t something you do by blowing money on trains.”
Amtrak hopes that Democrats will sweep Congress this November and give it the $290 billion it wants to rebuild the Northeast Corridor to higher speeds. But, as Levy points out in other articles, Amtrak’s Northeast Corridor plans are far more expensive than they need to be.
Amtrak has selected former Norfolk Southern CEO Charles Moorman to be its new president and CEO. Moorman will take the reigns from career bureaucrat Joseph Boardman this week.
Rail industry insiders were surprised when Boardman decided to step down in the middle of his contract. But, according to Trains magazine’s Don Philips (no link available), Boardman had alienated other officials in the organization with angry tirades and poor management.
Boardman leaves the organization with one victory: Amtrak has successfully negotiated a $2.45 billion loan from the Federal Railroad Administration. The funds will be used to buy new trains and upgrade the Northeast Corridor to operate at top speeds of 160 mph instead of the current 135 mph. Amtrak claims it will repay the loan out of revenues earned from the additional riders attracted to the new trains and higher speeds.
Eau Claire, Wisconsin–whose urban area barely has more than 100,000 people–is located on Interstate 94. United Airlines offers residents two daily flights to Chicago. Greyhound has buses to Chicago and Minneapolis, while Jefferson Lines has buses to Green Bay and Minneapolis.
But that’s not enough for members of the West Central Wisconsin Rail Coalition, who want train service from Eau Claire to Minneapolis and Chicago. Why? Because millennials don’t want to drive; everybody wants to take the train; only cities with trains will grow in the future; blah, blah, blah.
People who believe this line of drivel probably don’t want to know the real data. In FY 2015, Amtrak carried 6.60 billion passenger miles, down from 6.65 billion in 2014. Meanwhile, in the 12 months ending in November, 2015, Americans drove 3.14 trillion vehicle miles, up 3.6 percent from the previous 12 months.
A recent draft environmental impact statement published by the Federal Railroad Administration estimates that it would well over a quarter trillion dollars in capital improvements to make Amtrak “a dominant mode for Intercity travelers and commuters” in the Boston-Washington corridor. Even that is optimistic as the data in the report suggest that Amtrak would be far from dominant even aver spending that much money.
Click image to go to the download page for the draft environmental impact statement, which is downloadable in more than 30 parts totaling well over 30 megabytes.
The statement considers four alternatives:
- No action would keep train service at current levels. This would nevertheless cost $19.9 billion in maintenance and improvements over the next 25 years.
- Alternative 1 would increase service at a rate equal to the region’s population growth. This would cost around $65 billion (the average of a range given in the DEIS), or $45 billion more than No Action.
- Alternative 2 would increase service faster than population growth at a cost of around $133.5 billion, or more than double Alternative 1.
- Alternative 3 would supposedly make rail “a dominant mode” in the region at a cost of around $287.3 billion, more than double Alternative 2.
The Antiplanner spent part of yesterday in Washington DC stuck on a train while Metro was suffering yet another service disruption. I eventually got off and took a taxi, and soon after reaching daylight I received a call from a New Jersey reporter asking what I thought about a revised plan to build new tunnels under the Hudson River to supplement the North River Tunnels Amtrak and New Jersey Transit use today.
New Jersey Governor Chris Christie killed the tunnel project in 2010 because he didn’t want New Jersey taxpayers to have to pay most of the cost including the inevitable cost overruns. Christie is perfectly happy to have the tunnel built so long as New York pays more of the cost. New York Governor Andrew Cuomo wants the federal government to pay the vast majority of the cost (it was already going to pay 51 percent) because, after all, this is interstate commerce. Now Senator Charles Schumer (D-NY) has a grand plan to create a quasi-governmental corporation to build it, as we didn’t already have enough of those. The two governors claim to love this plan even though Schumer still doesn’t say where the money is going to come from.
The justification for building the project is completely unrealistic. As the Antiplanner’s faithful ally, Wendell Cox, noted when Christie first cancelled the project, Amtrak and New Jersey Transit predicted that Midtown Manhattan would soon gain 500,000 new jobs. That as many jobs as are inside the Chicago Loop and far more than any other downtown in America, and there is little evidence that Manhattan job numbers are growing that fast (and little reason why taxpayers outside of New York or New Jersey should subsidize that growth).
A number of articles in National Review last week supported the Antiplanner’s view that more infrastructure spending wouldn’t have prevented the May 12 Amtrak crash in Philadelphia. Rich Lowry says Amtrak is a huge waste that carries so few passengers that it is “a rounding error of American transportation.”
John Fund shows that Congressional budget cutting wasn’t responsible for the crash. Ian Tuttle considers the “rush to blame the Amtrak crash on infrastructure” shortfalls to be “shameful.” And Charles Cooke points out that the ones who were quickest to jump on the infrastructure bandwagon were mainly from the left.
Of course, all of these writers are on the right and thus would be expected to decry Amtrak. (There are some conservatives who support Amtrak and rail transit, but they are social conservatives, not fiscal conservatives.) Similarly, Amtrak supporters generally come from the left.