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Pantheon

It saddens me to see the term "begging the question" misused by someone with a B.A. from Cambridge.

jfruh

The other day I read an interview with someone in the Maryland state highway bureaucracy about some confusing signage at an interchange that's being completely reworked over the next few years, and he said something along the lines of "The new signs we'll be putting up will better serve our customers." It just totally staggered me that people driving on a wholly tax-supported interstate highway (it's not even a toll road!) are "customers" now.

EngineerScotty

One reason that the road network in the US is so comprehensive (and a formidiable "competitor" to transit) is that it's viewed as--guess what--a public good. Other than a for few die-hard libertarians (and a few cashed-strapped governments in places like Southern California), the idea of outsourcing the freeways--the (potentially) "profitable" roads--and leaving government to "unprofitable" neighborhood streets--is ridiculous. Roads are viewed as a public good, and maintained as such. As a result, we've got a comprehensive road network which enjoys tremendous popular support.

Of course, there have been times where government (or quasi-public entities--the PA Turnpike Commission comes to mind) has used (or abused) its monopoly on infrastructure to seek rents from the public, monies which aren't used to sustain the unprofitable parts of the network....

Andrew Nash

I think you raise some good points in this post, but I did not get the idea from Judt's article that he was buying in to the Thatcher mentality. To me his article was more analysis of where we are than specific prescriptions for moving us forward.

I think your ideas: e.g. cross subsidization to create real networks (like the US Interstate - so appropriately pointed out in the comments) or more efficient public transport (buses to small cities) are part of what Judt is talking about when he says "Imperfect improvements upon unsatisfactory circumstances are the best that we can hope for, and probably all we should seek." near the end of the essay (note: read the article, the quote alone can't do justice to the important ideas Judt expresses).

We won't be able to keep trains running on some routes - but we need to keep them running on routes where we can show clear network benefits (social, economic and, yes, environmental); we need to focus on these routes and then figure out how we can provide adequate service to other places. Imperfect yes, but probably a better strategy in the long run given that the Conservatives seem bent on demolishing most of the important social gains made during the 20th Century (and seem to be succeeding).

Thanks for your analysis!

Yonah Freemark

You've raised a lot of interesting points and struck at the heart of the major political fight over transportation in our time: why, how, and when to privatize services.

Contrary to its typical stance on most matters, American government has been relatively slow in pushing for privatized operation of public transportation, though it has never been gung-ho about the nationalization of the railways. This compares to European countries, whose supranational EU government has rigorously enforced "competition" schemes in transport that are basically designed to force the public out of transportation.

The results are very problematic, starting with the case of the British railways, which were the first to go private all the way. The biggest issue with these privatization efforts is that they have a hard dealing with the seemingly competing motives for improved public transportation you discussed; in other words, profit or social good?

In general, the European authorities have split their rail operations between the publicly owned tracks and rights-of-way and the private or semi-private rail service providers with the intention of using the track owner to ensure equitable distribution of resources throughout the country and "better service" through competition in train operations.

But, as you noted, the system is fundamentally designed to privatize the profits and force the public sector to take the losses: this is a disaster for government budgets and no guarantee of better or cheaper service for the riding public. Because the national rail operators can no longer use their profits on some lines to subsidize the less-performing ones, the government has to do it, while allowing the formerly public operator to simply take in the profits as corporate benefits. That is, if the system doesn't bankrupt the operators first by imposing very high track rights fees on profitable lines.

There are no easy answers to the questions you've raised, but it does seem clear that the push for the neo-liberal supported privatization of public services is being done too fast to ensure that it's done right. Other than the corporate chieftains, there's no winner here.

Christopher Hylarides

The man is wrong about railroads being a natural monopoly. When you've nationalized and integrated a whole network and then try to privatize it into a competing system again you're going to have problems privatizing it, but In many parts of the world there are multiple railways each owning their own track competing for services. These are mostly in freight (do to massive highway subsidies and distances in North America, this makes the car and planes cheaper for the end user), but Europe once had this in their trains before the state got involved in transportation to the levels it does now. When britain quasi-privatized the railways (essentially the trains, but not the tracks), there was an immediate investment in new rolling stock, but the tracks remained uninvested. In Britain, during the brief time the tracks were privatized into the company Railtrack, the government forced them to open and invest in new lines at the expense of maintaining currently existing lines. Accidents and eventual bankruptcy of Railtrack brought the tracks back into government hands, but they never let them run themselves properly.

The SNCF doesn't really take profits from high margin lines and 'invest' them in branch lines to 'under served' areas. They rely on massive state subsidies to build out those branch lines, often at the cost of where transit is at high demand. Those "social service" lines are often not, but are instead vote machines where a bus to the local urban train station would have sufficed instead of a trunk railway. This happens with roads and "bridges to nowhere" all the time as well. Robert Moses redirected funds from transit into bridges and highways all over New York city in the 1950s and the city itself is still suffering from a dearth of public transit investment. If it was a private company "chasing profit" they would have built/expanded a train line to get fares instead.

If these were private companies instead, many of these mal-investments would have never been made. The governments also would have not taken revenue from them to fund other goals. Privately run transit has served Japan pretty well. The biggest expansions of public transit anywhere up until now where done by private companies before they were made public (early NYC, London, Paris, etc). This is because money isn't wasted on uneconomic lines.

There's no need to fear private industry running transit, so long as it's truly competitive.

J B

How would something like Hong Kong's MTR figure in this public vs private paradigm? As I understand it's a for-profit, publicly traded company, but one that's majority-owned by the government, meaning they seem to get the best of both worlds- the MTR earns a profit but the government can influence it for non-profit goals.

Louis Haywood

The biggest expansions of public transit anywhere up until now where done by private companies before they were made public (early NYC, London, Paris, etc). This is because money isn't wasted on uneconomic lines.

There's no need to fear private industry running transit, so long as it's truly competitive.

There is a difference between private industry running selective services and outsourcing transit operations to private companies. The latter (see Veolia and First Transit) is simply the state paying a corporation to run state-designated routes at a fixed rate per hour of service. (say, $72 per service hour per route)

Aaron M. Renn

I need to read this one again, as well as the original essay, but I gather you are suggesting that the profits from profitable services should be used to support social services.

Let me just say that there's more than one way to do that. First, we already do it through the redistributive nature of the tax system. Eurostar is serving a lot of high value business travel, and those travelers and businesses otherwise pay lots of taxes. Similarly, the land serviced by this is extremely valuable, making it a prime candidate for LVT/value capture.

I think there is plenty of value in thinking about transit in terms of "things we do because we think the make sense in their own right" and "things we do because we want to have a more fair society". When you combine the two into the same agency, rational decision making becomes paralyzed. The fact that US transit systems have become hugely burdened with social service functions is killing them financially, preventing expansion where it is needed, and creates a stigma around transit generally as a service for poor and minorities.

I'll admit that in the US example may not be directly applicable in Europe, where transit involves wide support. But to truly change the game on transit in America will require that it come to be seen as a public service, not a social service.

EngineerScotty

Private ownership of most of the US' freight railroad infrastructure, has been nothing short of a disaster.

0) The history of US railroading is one of corruption and abuse. Just as much wealth was lost in the recent "housing bubble", similar financial havoc was wreaked in the "rail bubble" near the end of the 19th century. And much of the impetus for modern antitrust law was the common practice of 19th century rail barons making money in real estate speculation through the practice of intentionally bankrupting farmers by refusing to transport their crops, and buying their lands at bankruptcy auction.

1) The large (Class I) railroads are generally interested in operating only mainlines and providing dedicated service to large terminals. This is, of course, where the money is in US rail--if a factory or warehouse is more than a short distance off the mainline, even if there is an extant branch nearby, the mainline probably doesn't care, unless you can promise them a ton of business. Otherwise you're probably dealing with a branch line operator.

2) Branch line operators often have a hard time making money, and frequently find it more profitable to abandon lines with willing customers, than to provide service. (In some cases they will threaten to abandon lines and return easements to property owners in order to gain state subsidy of their operations).

3) The state, for its part, doesn't help in that since RR operations and infrastructure are privately-held, it taxes them to death (property taxes, mainly). This increases the incentive to abandon lines, when the taxes on the ROW are higher than the profits to be realized by servicing customers.

The result is a freight rail network that is slow, inefficient, and highly incomplete (MANY towns have zero train service whatsoever). In short, a disaster.

Tessa

I don't know about you, but when I read his piece I didn't hear someone who was giving away profitable lines to private enterprise. In fact, if you read this sentence, I can't see how you came to that conclusion:

"But you cannot run trains competitively. Railways—like agriculture or the mails—are at one and the same time an economic activity and an essential public good. Moreover, you cannot render a railway system more efficient by placing two trains on a track and waiting to see which performs better: railways are a natural monopoly."

Maybe I missed something, but in what you quoted I think a lot of your arguments are things he would agree with.

Christopher Hylarides

"There is a difference between private industry running selective services and outsourcing transit operations to private companies. The latter (see Veolia and First Transit) is simply the state paying a corporation to run state-designated routes at a fixed rate per hour of service"

This would very much depend on the incentives the company has to run the services. The buses in London are run by private companies and can run the buses on their own schedules (they have to post them, though) to roughly meet supply and demand. But they also get to capture the revenue they earn, so they have an incentive to keep up good service.

Some cities outsourced their transit operations, but didn't give any incentives like that to produce good services. The result was that if they provided bad service, yet still got a flat rate they would provide bad service in the end.

Here in Toronto, there is a notorious bus route that goes through bridle path (a section of the city with gated mansions) twice an hour yet get's barely a few dozen riders a week. The rational is that "poor servants need to get to their jobs" but in reality this subsidizes the rich, whom would otherwise have to pay their servants wages that could have them afford to otherwise get there. Meanwhile, there's a bus route running along Steeles avenue, which is notorious for it's jam packed buses and riders that routinely have to wait for 2-3 buses just to get one that finally has room to pick you up.

Lauri Kangas

@Christopher Hylarides. Bus operators in London do not receive passenger revenues. London did experiment with that model (net cost) alongside gross cost, but settled on a refined gross cost model called quality incentive contracts. Here is a document from Transport for London explaining it in detail: http://preview.tinyurl.com/a7ar39

dejv

Yonah, your articles are great, but you're oversimplifying thing now. For example, JNR were state-owned, they were expected to pay for Shinkansen extensions, then they went bankrupt and were privatized. Private JR companies of today do cross-subsidizing you seem to like.

On the other hand, cross-subsidizing in most of Europe doesn't exactly work. Loss-generating lines are still subsidized by state while from profitable lines is kept by operating companies. The point of rail "privatization" on mainland Europe is that subsidy turns loss-generating line into profitable one and private companies can compete in tenders by requiring lowest possible subsidies needed to fulfill tender conditions. Such operations run successfully in Germany, Denmark and other countries.


EngineerScotty: issue 2) applies to public owned companies too and issue 3) is caused by regulatory framework.


PS: Jarret, could you close Scottys open i tag?

Corey Burger

I would also point out that for the most part, the big Class 1 US railways don't actually compete with each other all that much. Few places have more than 2 railways, with the exception of the large hubs like Chicago. I suggest this map to show you just how geographically segmented they are: http://en.wikipedia.org/wiki/File:Class1rr.png

samussas

From Christopher Hylarides:

The SNCF doesn't really take profits from high margin lines and 'invest' them in branch lines to 'under served' areas. They rely on massive state subsidies to build out those branch lines, often at the cost of where transit is at high demand. Those "social service" lines are often not, but are instead vote machines where a bus to the local urban train station would have sufficed instead of a trunk railway.

You are over simplifying things. SNCF does actually take margin from high margin line to run loss making services. It's a very well known practice. I'm not talking about regional/local lines which are now hevily subisdize by local governments but about IC relations which are (at the exception of the Normandy-Paris Corail trains) fuelled by TGV money.

However, this practice might not live long. SNCF is trying to run only profitable lines, cuting IC services to the minimum. She is in fact threatening local governments to cut services if they don't accept to subsidize the moey loosing services.

A shift fuelled by the ideological turn of the late 20th century toward neo-liberalism.

By the way, the servicing of regional branches is not a vote machine. They are effectivelly and intensively use (for those that remains) and the TER service have seen a yearly 5% increase of readership this past years. And this should be going on for several more years (hence SNCF investment in higher capacity regional rolling stock). I'd like to see you try to absorb such an increase with nothing else than busses.

If these were private companies instead, many of these mal-investments would have never been made. The governments also would have not taken revenue from them to fund other goals. Privately run transit has served Japan pretty well. The biggest expansions of public transit anywhere up until now where done by private companies before they were made public (early NYC, London, Paris, etc). This is because money isn't wasted on uneconomic lines.

How can you decide that investing in an non money-making railline is a mal-investment for the society in general? Like Jared said, there is more to the problem than economics. There is also a social and an environmental side to the story.

The major expansions of public transit in Paris was made under public subsidize. The CMP was a private company but they didn't fund the network construction but Paris governement did. Only the Nord-Sud Company had to privately fund their construction work, they were an utterly economic failure. They were at the end absorbed by the CMP.

Same goes with the first investments in the rail infrastructure in France. They all got bakrupted one after the other untill they were only 6 left and then they had to merge to form the SNCF.

This is because rail infrastructure (and infrastructure in general) is very capital consumming and can't be limited to offer services that would be (economicaly) profitable.

Also, Japan have its unprofitable lines and the JRs (like SNCF or DB or...) and the Private companies (Hankyu, Tokyo, Keihin...) are trying to close down those unprofitable lines or to hand them other to local agencies. A trend that, in Japan, will be growing in the years to come since Japan population is decreasing steadily and rural areas are going to be more and more deserted.

The thing is, all those economically unprofitable lines can have a great feeder effect on the profitable mainlines and the general network. If you cut every "unprofitable" feeder you can well end up with some money-loosing mainlines. You know, the famous network effect and all that.

But first, we have to agree on what "profitable" and "unprofitable" are.

Russell Bozian

Samussas, thanks for your hyper-lucid guidance through these complicated topics.

Hylarides, you point out that New York city's publicly run transit made bad political decisions in the 1950's. And you opine that a private company "chasing profit" would have made better decisions, it would have expanded a train line instead. You went on to say "...There's no need to fear private industry running transit, so long as it's truly competitive.

Granted that a private company doing pure economic calculations might have served New York City better in this case. But you are knocking down a rhetorical "straw man", i.e. you are sort of missing the point of Jarrett's entire article. Jarrett wasn't saying publicly-run companies probably make better economic decisions than private companies. And he wasn't denying that you can pick out instances where private companies might have made better decisions than politicians. He's saying that, overall, public transport is one of those huge, affects-everything societal subsytems, that is poorly decorated by designers wearing sunglasses filtering out all but green light.

The article was about the three-legged stool. Surely you agree that it would be inexcusably primitive to try to design a public transport system with just short term economic goals like this quarter's profits in the minds of its architects. Private companies only have (a)dollar values in their spreadsheet models, they by definition and charter do not look at (b)social and (c)environmental consequences of their actions. Jarrett is (among other things) pointing out that we make a huge mistake pretending transit design is as simple as designing a fast food concept, where you can measure success simply by counting the money you convinced people to part with.

P.S. Slightly off topic: Sure, politicians can make worse mistakes than CEO's. But I still don't want Walt Disney or McDonald's committing my country to their vision of public transport.

Even if public transport could somehow be optimally designed with only profits in mind, and even if private companies were forced to compete in the healthy ways you describe, doesn't the moral hazard of letting unelected monarchs("CEO's") handle hundreds of billions of society's dollars to irreversible ends scare you? After all, the corporate landscape is littered with dead malls and ridiculous internet concept companies, making a lifetime worth of riches for the brilliant founders. Generating lots of startup fees, signifying nothing.

Christopher Hylarides

@Lauri Kangas I didn't know they changed the model; that's interesting, but the point of incentives is still valid.

@samussas The network effect doesn't have to be done by rail, though. That's what I'm saying. Jared has written many times on peoples obsession with rail. It's a mal-investment if you built and maintain a trunk rail line in the name of social policy that's only going to be used by a few hundred people when 3-4 buses would have been fine. How is wasting all that steel and wood for the tracks environmentally friendly? The money for the trunk can now be spent on overcrowded lines.

Incidentally, rail traffic started to go up after the UK closed down hundreds of such trunk lines: http://bit.ly/bLMRpd People in smaller towns that were once served by under-utilized trains now take buses to nearby stations. Many people avoided such trunk lines anyways because the service was bad. They spread themselves too thinly. Sure, it's sort of a sad passing of an era, but the numbers show that it worked out ok.

I want a good transit system, too! It's why I read this blog, but we can't have cadillac-level services going everywhere. There are tons of other things at play. I love rail travel. I don't own a car and hope to never have to. If highways weren't as subsidized as they are, then rail could be more competitive. But you can't ignore much of the economics at play or you end up doing everything badly.

Alon Levy

Samussas: not all unprofitable lines are feeders. Lightly used rural lines are not feeders for urban commuter rail, which makes money in Asia. Multi-day intercity trains are not feeders for local trains, as Amtrak foamers claim.

Where the feeder effect is real is in urban lines feeding intercity rail, and there SNCF is gaining from local government subsidies. But not every country is like France. For example, in India, the nationwide passenger rail system is subsidized by freight, whereas the Delhi Metro is profitable. In Taiwan, the Taipei subway makes a profit, whereas Taiwan HSR collapsed under its own debt.

samussas

Christopher, I don't say that everything should be "railed". But I wanted to pointed out that, by looking just at the economic profit of transport, you miss the whole picture. Social and environmental profit doesn't allways recoup economical profit.

Incidentally, rail traffic started to go up after the UK closed down hundreds of such trunk lines: http://bit.ly/bLMRpd People in smaller towns that were once served by under-utilized trains now take buses to nearby stations. Many people avoided such trunk lines anyways because the service was bad. They spread themselves too thinly. Sure, it's sort of a sad passing of an era, but the numbers show that it worked out ok.

Yeah but nothing says that the observed rail traffic increase was not induced by a cultural and economical shift. This increase in rail traffic level is observed globally, it is a more general trend that can be observed outside the UK.

Also, the service was bad because nobody was investing in it. Wouldn't you have seen the same increase in overall rail traffic if instead of investing in bus the governement and the railway had invested into its regional rail network? I think you would have.

And mid-90s and 00s France exemple of overall rail investment by regional governments show it would have happen. Like I said, France sees a yearly 5% increase in TER services. Something that nobody would have dreamed off some 10 years ago.

But I'll concede that bus services can also be a boon compared to decaying rail service. But you have to be carefull with that because history showed us that scraping a means of transport for ideological or financial reasons can be a very bad idea. Mostly because buses can't handle the number of passenger that rail can and you might need to go back to rail at some point.

I've seen that many times in France, when you want to restore rail service you'll have to invest massively to get the service once again started because the tracks are in too poor conditions or because they don't exist anymore. And you will have to fight back all the unhappy Nimbies and given them compensations and so on... Worst case scenario, you don't even have a ROW anymore.

I know it was not really forseable at the time but if maintenance and investment has been done correctly maybe all those branch lines would still have had a correct traffic.

Reminds me about the trams network story. We scrapped them for bus service (because it looked more modern and not adapted to the car society) and now we are building tram networks again. That was clearly a wastefull idea. And when you invest one time and then another time some decades afterward cuting services that is for sure an unnecessary double investment.

But my idea was not to have a bus vs rail conversation or anything like that, but to show you that you missed a crucial part of Jarret's post. Plus I wanted to correct you on some wrong affirmations you made.

One last thing (just for fun):
How is wasting all that steel and wood for the tracks environmentally friendly?

Wood is not lost, it's a renowable product. You cut it and grow it back. Nothing wastefull. For buses you need asphalt and many other thing.

samussas

Missed this one, sorry Alon.

Not all unprofitable lines are feeders. Lightly used rural lines are not feeders for urban commuter rail, which makes money in Asia. Multi-day intercity trains are not feeders for local trains, as Amtrak foamers claim.

Where the feeder effect is real is in urban lines feeding intercity rail, and there SNCF is gaining from local government subsidies.

Hum... rural lines can be feeders of the intercity lines. They don't have the same impact as urban commuter lines but still, they do have an effect.

SNCF's Intercity network is very partialy subsidies, some lines are subsidies (they are now part of the TER) but most of all are not (they integrated into CIC - Corail Inter Cité) and loose money (except for the Corail Paris-Normandy that are not confronted to TGV concurence) on a daily basis. A deficit that is internally compensate by the TGV departments benefits... same goes for the Fret department. Big money eater. Only the regional/rural and urban network is subsidies in France.

But not every country is like France.

Hopefully! :p I speak about it mainly because that's the network I know the best (outside Paris') and because some people refered to it before.

Anyway, the French passenger network works, for exemple, more or less like (that is my impression) the German one where regional lines and urban lines rely heavily on subsidies from local governements. There too HSR is the most profitable branch.

In Taiwan, the Taipei subway makes a profit, whereas Taiwan HSR collapsed under its own debt.

Yeah... but that one is a totaly different story. The problem here, like for Eurotunel, lied in too optimistic traffic forecast and an unadapted debt servicing. Taiwan and Eurotunel or the dangers of a privately own infrastructure.

Alon Levy
Hum... rural lines can be feeders of the intercity lines. They don't have the same impact as urban commuter lines but still, they do have an effect.

They have a very small effect. You can see it by looking at Shinkansen and TGV traffic. On the TGV network, small towns rarely even get stations, and most trains skip those stations anyway. The Shinkansen does have rural stations, but most trains skip them, again. On the Tokaido Shinkansen, two thirds of the trains only stop at the major stations in the Tokyo, Osaka, and Nagoya metro areas. The majority of the other trains either are high-speed commuter trains serving exurbs, or run semi-express serving primarily midsize metro areas like Hamamatsu and Shizuoka.

And in the US, where the most profitable trains are regional intercity, this is even clearer. The vast majority of traffic on the Northeast Corridor or the other profitable lines is point to point. The long-distance trains, most of which don't even serve the East Coast, have so little traffic that even if all passengers on them connected to the NEC, they'd account for a small percent of ridership.

Anyway, the French passenger network works, for exemple, more or less like (that is my impression) the German one where regional lines and urban lines rely heavily on subsidies from local governements. There too HSR is the most profitable branch.

In Japan, too, HSR is much more profitable than the urban lines. But the urban lines run at a profit and so do the intercity mainlines. Toei, the publicly run half of the Tokyo subway, has just become profitable, so that the Tokyo rail network is 100% profitable (the other half, Tokyo Metro, is government-owned but run as a private company, pending full privatization). The unprofitable rural lines the JR companies are abandoning and spinning off to local governments.

In Germany the regional lines are unprofitable, yes, but to a far smaller extent than in France. Hans-Joachim Zierke asserts that German regional lines run at 70% farebox recovery, and Swiss lines do even better (link). This is not true for French regional lines. Wikipedia claims farebox recovery of 28% for the TER.

I know the Taiwan HSR collapse was a problem of debt servicing. At a lower interest rate than 8%, it would have survived. This isn't so much a problem of private ownership as of high-interest loans. But THSR also had unusually high construction costs due to its large number of viaducts.

Russell Bozian

Hylarides, perhaps an even more general truth you are describing is that in many areas of life, and transit, either do something (trains) well or don't do it at all (i.e. skip trains and provide somewhat more prosaic and frequent buses).

It is perhaps a bit blunt to say that anyone ever ignores economics. Because hidden within "paying attention to economics" are at least two subtopics: short term economics and long term.

I would offer that when the _private_ sector says they are thinking about economics, they almost always have in mind short-term economics. In America for example, where people only stay on one job an average of five years or less, it is quite rare for a CEO to say "Well, I'm happy to tell the stockholders we're going to lose money on my watch, for ten years, but just hang in there, because future stockholders and my successor are going to make out like bandits".

But it would be perfectly logical "economically" for a city or a nation to say "we're going to spend a painful ten years upgrading or installing a new all-electric city transport system, and then we're going to make out like bandits in a globally competitive world full of expensive gasoline".

A short version of this complaint about the private sector is that they can't even be trusted to do the national-level-impact economic analyses right, because private companies (at least in America) inevitably operate on way too short time frames. The private company mindset is to my taste too likely to screw up the long-term, national economics of a country's transport system. Hmm, politicians tend to screw up the long-term planning too, but merely frequently rather than always. Look at Penalosa, the mayor of Bogota. He even lost his job in great part because of pushing a wonderful Bus Rapid Transit system into his city, that continues to give it enduring benefits. He lost his job gracefully and gladly...would any CEO have agreed with Penalosa's economic analyses and done what he did?

samussas

What's going on here with the html tags?

They have a very small effect. You can see it by looking at Shinkansen and TGV traffic. On the TGV network, small towns rarely even get stations, and most trains skip those stations anyway. The Shinkansen does have rural stations, but most trains skip them, again. On the Tokaido Shinkansen, two thirds of the trains only stop at the major stations in the Tokyo, Osaka, and Nagoya metro areas. The majority of the other trains either are high-speed commuter trains serving exurbs, or run semi-express serving primarily midsize metro areas like Hamamatsu and Shizuoka.

I'm not speaking about TGVs going into small cities, and by the way, that happens on terminal treck of the TGV because the TGV network is more than just the HSL. I'm speaking about local/rural trains reaching out to towns that don't have any IC or TGV connections and connecting them with these networks. These lines (can) feed the bigger network by providing convenient connections. You don't need to service directly every town with a TGV to see people using it.

But, since these cities are small the feeder effect is small too. The majo fluxes and trains are between big city centers like Paris/Lyon or Paris/Marseille but that doesn't mean that these other marginal fluxes don't exist. They do and they are part of the big picture and without a convenient connection they won't. Because if you thing the fluxes observed between Paris and Lyon are just made of people living in Paris and Lyon metro area you are wrong.

By the way, these is a map of France TGV network: http://fr.wikipedia.org/wiki/Fichier:Carte_TGV.svg

In blue, the HSL. In black, the regular network used by TGVs. The red and orange points and square are all the serviced cities. That shows you the network extent.

In Japan, too, HSR is much more profitable than the urban lines. But the urban lines run at a profit and so do the intercity mainlines. Toei, the publicly run half of the Tokyo subway, has just become profitable, so that the Tokyo rail network is 100% profitable (the other half, Tokyo Metro, is government-owned but run as a private company, pending full privatization). The unprofitable rural lines the JR companies are abandoning and spinning off to local governments.

I know that, but I didn't want to go into so much details since Japan have a very different human geography than most of the western Euro-Atlantic world. Japan will better compared to Switzerland (high concentration of population in small corridors because of a very unfriendly physical geography) than to France, Spain, the US or Germany.

In Germany the regional lines are unprofitable, yes, but to a far smaller extent than in France. Hans-Joachim Zierke asserts that German regional lines run at 70% farebox recovery, and Swiss lines do even better (link). This is not true for French regional lines. Wikipedia claims farebox recovery of 28% for the TER.

Of course, that Switzerland does better, like I said its population density and repartition is very peculiar and practical for rail investment. Might be the same for the Netherlands. And France is generally very sparcely populated unlike the Ruhr area. In fact, I think France human geography is generally closer to the one of the eastern and northern part of Germany. That said, we all know that farebox recovery can be a tricky business to look at. It might show as well that France decided to have a very low fare price and Germany not. That's the case if you compare TGV and ICE ticket fare. ICE is very expensive where as SNCF allways prefered to creat massiv fluxes by offering cheaper ticket.

I know the Taiwan HSR collapse was a problem of debt servicing. At a lower interest rate than 8%, it would have survived. This isn't so much a problem of private ownership as of high-interest loans. But THSR also had unusually high construction costs due to its large number of viaducts.

It kind of does, it shows that private ownership of such capital consuming projects is not viable. It's again the short term vision of infrastructure projects vs. the small term vision of economic actors. THSR and Eurotunel needed high volume of passengers from the start to survive their debt but rail, like HSR, need time to build its traffic. Plus, THSR was build too far away from cities to cater for high level of traffic. It was cheaper to build it like that but the end result is bankrupcy.

This shows that if you are to hand over infrastructure building project you need to do it carefully and choose companies that can support their contracted debt the first years.

Russell Bozian

"... bus services can also be a boon compared to decaying rail service. But... scrapping a means of transport for ideological or financial reasons can be a very bad idea...you might need to go back to rail at some point...And you will have to fight back all the unhappy Nimbies and give them compensations and so on..."

Samussas this is great stuff, and you are enlarging Jarrett's original article by touching on another aspect of the problem with private sector management of transport using "economic" criteria. When we admire private companies for making public transport decisions based only on "economic" criteria, we are, as Jarrett originally pointed out, giving our approval to ignoring "social" and "environmental" consequences of their actions.

But private companies and banks also devalue something else you are talking about, which is goodwill, and habit. Banks and investors are nervous about assigning a specific value to the habit of using public transport, or the familiarity the public has with such transport, or the expectations or national identity that an electorate may have with public transport. However just because habit, comfort, expectations, and attractiveness to people who could live anywhere they choose, are hard to measure does not mean that their accurate measurement is zero. And private companies and banks, left to their own devices, will literally not give credit to such "soft benefits" of public transport that it is logical and smart for a nation to value.

samussas

The thing is, at one point we have two draw a line between economic, social and environmental profitability. But where? That is not easy to determine.

Christopher Hylarides
    I would offer that when the _private_ sector says they are thinking about economics, they almost always have in mind short-term economics.

Are you sure about that? Yes, companies screw up. They go out of business and are replaced somebody who does better than them. There are tons of companies with long-term horizons. Then somebody else buys their assets at a firesale and continues the service if there's an economic possibility of them turning a profit.

If you think it can't be done, read up on highway 407 in Ontario. The government built it as a toll road ~1990. Soon after, facing a huge deficit, they leased it for over a billion dollars to a private consortium for a 100 year lease. Even though the company isn't expected to recoup it's investment for 50 or more years, that hasn't stopped them from adding a lane in each direction and it has one of the most efficient snow removal operations anywhere. Now, instead of subsidizing it, the company pays corporate taxes.

Even when the main lines are run by government, they would have a lot of trouble raising the rates to subsidize any lower-revenue lines due to political pressures. Look at most of the toll roads that were setup to pay for the highways themselves in the United States. The tolls have often been left at 1970s levels because of the political backlash of raising them. Worse, when they do make a profit the money is often added to general revenue instead of reinvested.

I will admit that a private company can stop investing a line of it's a hopeless cause for them to continue to run the line at at least break even. If a government builds a huge highway and charges nothing for its use or another company builds a better line and they can't improve theirs enough to compete, or an area's population declines for whatever reason then there's nothing they can do.

Companies aren't evil or bad, though some of them have bad people running them. The "who framed roger rabbit" type of streetcar conspiracy are actually the exception to the rule.

Art Busman

The fatal flaw in the argument of treating transit as a for-profit enterprise is not that transit has social or political priorities like serving those who cannot drive, but rather that society, at least in America, has decided for better or worse to pay taxes to pay for streets and highways and not only subsidize them but then maintain zoning laws and preferential treatment to developers who build out and encourage sprawl making it even more difficult if not impossible for seniors, disabled, and youth to get arond without a car or bus. This is the "socialist" choice the Americans have made, empowering government with not only their taxes but votes. If Americans now want transit to operate for-profit, then I suggest, we even the playing field, rip up all the street and highways subsidized by taxes, provide no further susidies for development further from existing public services like schools, fire stations, sewage lines, etc. and then see if new streets and highways can be rebuilt for profit too.

As a libertarian, I'm not fond of big government, but I"m also not fond of government acting like a for-profit based on false premises. Instead of for-profit transit, I would rather see for-profit militaries, at least mercenaries stopping genocide in Rwanda and Darfur would have been more palatable politically than US troops which never happened.

Danny

Our freight rail system has a lot of faults, stemming from their histories of corruption, abuse, collusion, and rent-seeking. That being said, there are some railroads that have a long history of none of that, and they have been successful financially and economically when the regulatory conditions permit.

Despite their not so great history, we have the most successful freight rail system in the entire world. Furthermore, I would argue that we have the most successful rail system period...a contention that people on here would probably strongly disagree with.

The United States, due to its competitive class I railroads and hundreds of short line railroads, carries 38% of all freight tonne-kilometers, whereas Europe carries an anemic 8%. And regardless of Europe's passenger rail initiatives, rail's share of passenger transport is still incredibly low.

Due to advances in containerization, double stacking, logistical routing, cooperation between railroads, and diesel-electric technology, freight rail is steadily increasing its modal share in the US...while increasing passenger transportation in Europe is accompanied by steady decreases in freight rail modal share.

While rail is almost always a clear winner in cost and pollution, it is a limited resource. Rail rights-of-way are expensive to acquire, and rail is expensive to build. Being limited in its ability to expand, tradeoffs must be made with regards to what we should be transporting on the limited rail infrastructure that we have. Freight, being heavier and more expensive to transport, is more important to transport by rail, because the greatest savings in emissions, cost, as well as human safety.

While it would be nice to transport more passengers by rail, there are some limitations...all of which affect the cost of passenger rail:
1) Freight rarely cares if the road is smooth or rough...passengers always do.
2) Freight rarely cares about how fast the train goes. While transportation times are important, it is typically days that freight shippers care about...rather than hours or minutes like passengers care about.
3) Freight doesn't care about space, comfort, food, restrooms, noise, or air quality. Passengers do.

This ends up meaning that a freight rail car can end up costing $50,000-$100,000, whereas a passenger rail car can cost between $100,000 to $1 million. Freight tracks can cost between $250,000 to $1 million per mile, and passenger tracks can cost between $1 million and $20 million per mile.

samussas

@Danny, you just negated and forget one of the biggest reason why US rail freight network is so successfull... geography. It's easier to ship things through the continent than go around it where as Europe is peninsula, every point of the continent being easily accessible or reachable by sea. This little subtlety alone calls for a lot of logistic difference.

And its not because transporting passenger cost more than transporting freight that it can't be successfull and desirable.

You also forget to point out quite a big issue, regarding freight rail in Europe... it's higly difficult to make freight and passenger rail cohabit on the same rail. Europe prefered to advantage passenger trains over freight ones, making it very difficult for freight trains to be competitive with the heavily subsidize road network.

Hopefully, things are changing in Europe. The new European rail deregulation might see the emergence of competitive freight companies spaning the whole extent of the EU. Also, in recent years, people and politics have discovered that rail freight can be a good thing for our environement (and our roads) and we have since see many initiatives to transfer cargo from road back to rail. But it will take time.

It's also not possible to have double-stacking in Europe due to gabarit problem.

@Christopher Hylarides: like I said before, you should re-read Jarret post and even the original essai. The problem is, if you privatize money making infrastructure governments won't see the bread and butter of their investment. They will just see a small part of the benefits and, on the other hand, they will have to fully pay for money losing infrastructure because the private sector wouldn't want it. That's not really a fair deal.

It's the same with PPPs, they usually are very costly deal for the public sector. THe government don't need pay for the full investment from start but will pay more at the end for the simple reason that the private sector wants profits and is not going to invest without proof it can make some. I'm not sure it's worth the price since, usually, public sector can buy money with a nice discount on the market.

And the issue is not to decide wether private companies are good or evil but to try to understood if infrastructure should or should not be privatized and how and why.

Danny

Geography is an important factor, but it is still not the biggest reason for the difference. Even completely landlocked European countries have modal shares that never top 15%, with most landlocked countries still around 10% or less.

BTW, 38% modal share is a statistic from 2000. I just found a more recent statistic which shows that we have now increased to 43%.

Alon Levy

The rail modal share numbers in the US and Europe are not directly comparable. Europe counts construction trucks in its statistics, whereas the US doesn't. This deflates road modal share in the US relative to Europe. The headline truck modal share number is higher in the EU than in the US, but not by much - it's 45% versus 29%. Most of the difference in rail goes to sea, not roads.

The part about freight not caring about time is only correct within the American system, where freight rail competes on cost per ton-mile and nothing else. In Europe, freight rail does try to compete with trucking on time-sensitive goods.

The part about landlocked European countries doesn't matter too much. American rail freight is largely bulk goods from seaports and coalfields to markets nationwide. The same goods in Europe don't generate as many ton-miles of freight: seaborne goods can land at any port, not just ports on one coast; there's no predominant west-to-east direction of goods movement; coal mines are much closer to industrial regions than in the US.

Danny

Unless you can provide proof of the ommission of construction trucks in the data, I'm gonna call you out on this one. I have poured over the BTS methodology, and they never mention a thing about construction trucks and where they belong in the statistics.

The idea that geography and goods movement directions have an impact on rail modal share is a complete fabrication, and has no reconciliation with history. In 1970, European rail mirrored US rail for modal share, with 32% and 34% respectively. Both declined until 1980 with the passage of the Staggers Act. From there, European rail continued its decline to 8%, and US rail began to increase again, ending up at the 43% we have today. European rail modal share today is a direct result of policy...specifically the favoritism of passenger rail over freight rail...something that the US had until it reversed the policy.

The direct result of the Staggers act:
http://www.uprr.com/newsinfo/graphics/speeches/2009/turner_portland/slide6.gif

In the US, even trucking doesn't try to compete on an hour or minute basis. It is still a per day basis. In California, there were only 5 companies that competed on an hourly basis, but 4 now that my father's company went out of business. Rail, like trucks, compete in days. It is exactly the same in Europe.

Interestingly, part of the success of freight in the US is due to rail rates, which are the lowest in the world. Average railroad rates are half that of China and France, a third of Spain's and an eighth of Germany's. Some of the goods which you claim are just a geographic advantage (seaport traffic) almost exclusively belonged to trucks until rail rates decreased and productivity increased. Now higher value container intermodal traffic is the main profit driver for all class I railroads.

In part, the success of our class I railroads, and the failure of European railroads has to do with the success of our shortline railroads. Our shortlines serve as incredibly efficient and low cost individualized distributors and aggregators for the Class I's. For this reason, even in the utopian consultantless society known as France, SNCF has been hiring as many American shortline operators as possible as consultants so they can learn how to operate their shortlines as well as the US does.

Alon Levy

You can call me out on that one. You'll be wrong.

When it comes to things other than hauling bulk goods and double-stacked containers, US freight rail isn't that good.

(Shortlines? Meh. They're one third of North America's track length. The biggest transcontinental rail lines are Class I throughout. Freight goes from the Ports of LA and Long Beach on the Alameda Line, then on UP or BNSF, and finally on trucks.)

Danny

Ummm...can you provide any links that aren't written by a hobbyist? Maybe something with working hyperlinks and source references?

A class I railroad without shortlines is like an interstate without onramps, offramps, or city streets. Shortlines are distributors and aggregators for the Class I's. They are the distribution network that connects to a mainline network. Even with the stronger presence of intermodal facilities, the majority of traffic gets diffused to its final origin on shortlines.

Alon Levy

You can follow links from the links that I gave you.

But while we're on the subject, can you provide a reference for the claim that "the majority of traffic gets diffused to its final origin on shortlines"?

The shortlines aren't really like city streets. For a start, if you look at just the national highway system, the Interstates are just a small percentage of the route length. It's not the same with the Class I's. The Class I's also maintain their own feeder networks, at times - just look at the map of BNSF in North Dakota or CSX and Norfolk Southern in West Virginia.

By the way: I never said France was consultant-free. Only the parts that work are consultant-free, for example passenger rail. The unworkable parts often do have consultants... (It's the same in the US. UP doesn't need consultants to tell it how to haul coal.)

Danny

Its apparently 1 out of 4. I was confused because apparently for my state it is over half. Regardless, it is a significant business driver for the class I railroads...enough to kill their profits without them.
http://www.aslrra.org/images/ASLRRA_FS_PZ_Connecting.pdf

They account for 30% of the active route miles in the US.

I tried the links on your pages, but the only one that works is for the BTS. The BTS link doesn't mention anything about construction trucks, but they mention omitting intraterritorial truck traffic, which is not the same thing. The Eurostat links do not work and so I am having trouble verifying if intraterritorial truck traffic is included.

Regardless, the BTS has a new methodology that does not omit intraterritorial trucks. Pay attention to the notes
Old statistical method:
http://www.bts.gov/publications/national_transportation_statistics/html/table_01_46a.html
New statistical method:
http://www.bts.gov/publications/national_transportation_statistics/html/table_01_46b.html

The numbers adjust quite well, and it still points to a 39% modal share in 2007. Apparently the total intraterritorial truck traffic is insignificant.

Why is it so hard for you to admit that passenger rail has had an adverse effect on freight rail in Europe? It is easily observable. They had a high modal share in the 1970s almost exactly that of the US. These shares slowly declined, just like the US. In 1980, the US changed its policy, allowing railroads to abandon passenger service and focus on freight. Europe continued to decline, while the US rose to record levels. Its almost like its the closest you can get to experimental control in a real world macro environment.

Alon Levy

Um, I'm admitting that. I've never denied it. What I'm saying is that the supposed greatness of US freight rail is geographical more than anything. US railroads get to haul the lower-value goods the largest number of ton-miles, which would be hauled on ships and barges in Europe.

The BTS data you show doesn't really point to a dramatic reversal of rail fortunes versus trucks. The data shows decline in water transportation, and increases in rail and truck traffic. The only period where rail mode share increased relative to trucking in this data is the 2000s; by 2006-7, rail modal share versus trucks was back to where it was in 1980-1. To me it looks like an oil price issue more than anything.

samussas

Did you?

From one of your earlier post:
"The idea that geography and goods movement directions have an impact on rail modal share is a complete fabrication, and has no reconciliation with history."

From the paper:

"We find that almost 80 percent of the gap in 2000 is probably due to natural or inherent differences, principally geography, shipment distance and commodity mix."

"First, the shorter freight distances and more competitive coastal transportation in Europe are the main factors explaining the difference between European Union and United States rail share."

Funny thing no?

Danny

Actually, the reason why I asked was because his position almost mirrored the position of the paper. I wanted to know if his opinion came from reading the paper, and if so, why he was reluctant to accept the other 20% of the outcome.

I disagree with a few of the assumptions of the paper, which is why my opinion is different. Mostly, the simple fact that rail modal share was above 45% in 1960 shows that geography was not a limiting factor then...and unless there have been a few cataclismic seismic plate changes since then, the geography is not a limiting factor now.

samussas

I wrote a very long answer and lost it... now the short version.

I see your point but I think you are missing something. It's not because geography was not a limiting factors in the 60s that it can't be one today.

The economy has change a lot since then and ports are receiving more goods than ever and our countries are less and less industrialized (less good to transport from within).

Also, the state of our infrastructure changed a lot since the 60s and freight might not have to cross so many kilometers in Europe (because of physical and political/economical geography) compared to the US. When you don't have to massified fluxes, rail start to loose its appeal. It's easier, and cheaper, to let the ships hop from one port to the other and then make the final kilometers with a truck than one port and then trains.

If geography doesn't explain everything you shouldn't minimize the effects it can have combined with other factors. It can be the turning point.

Danny

The point is well taken, and that is also related to one of my complaints with the paper I posted. It is a classic static analysis...it doesn't cover technological change.

One example I see is containerization. When containers became commonplace, it benefited both rail as well as sea travel. But which did it benefit more? Furthermore, how did it benefit both?

Railroad mainlines were affected in different ways with some losing and some gaining traffic. Branch lines and shortlines gained traffic, due to the superior distribution ability of containers. But ports went under a massive consolidation, with smaller ports losing nearly all their traffic and large ports gaining it. Import/Export shipping experienced an unprecedented boom, but coastwise shipping dwindled.

I'm not intimately familiar with Europe's transport network, but I can't see the structural logistic changes of containerization being anything but the perfect alignment of stars for European freight rail. Port consolidation should lessen coastwise shipping, and give railroads stronger centralized access points. Branchlines should be much stronger, which has always been a weakness in Europe. Combine this with comparatively high fuel prices and prominent road tolls and truck road pricing.

Personally, I think the problem is investment. The conditions are nearly perfect right now for freight rail investment, but all the investment money gets funneled to passenger rail. It has been this way for some time too. I see the similarity in how American governments are treating passenger rail. The conditions are improving for passenger rail every day (especally intracity) but all the investment money gets funneled to road construction.

AL M

When "profit" is the only motive for anything, you can be sure that people will suffer.
The monetary system is structured to create suffering, not alleviate it:

http://www.youtube.com/watch?v=1gKX9TWRyfs

Tax money is squandered killing people in useless wars, but the "planners" want their to be a "profit" in operating transit for its citizens.

We live in a corrupt an immoral society. Hopefully mankind will evolve out of the entire concept of "profit". It may take another 100,000 years. Until humanity starts caring about humanity instead of money there will be plenty of suffering on this little planet of ours!

French Engineer

Danny, Samussas, Alon, late to the discussion, but my two cents.

Geography is also borders and languages.
One explication for the difficulties of rail freight in Europe I read was the minimal distance for being competitive with trucks, start to finish including loading/unloading at the origin and final destination.
I don't remember exactly what the number was, but let's say 800km will do.
In Europe, how many borders do you have to cross and language do you have to speak on a average 800km travel?
What is a border nowadays, you will ask? Check how many rail crossing there is over the Rhine, on the French-German border. Compare with the freight traffic between the two countries, and try to see the highest share of that traffic you could physically fit on the rail bridges there.
And I believe the psychological borders in the brains of German and French Railways are even worst.

Rail is the most penalized; tracks and line were defined and layed at a time where military did NOT TOLERATE easily border crossing facilities, it could have helped the ennmey in case of war.

And now check how much of the freight volume market increase in the time frame you discuss is made of goods crossing border in the EU.

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