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07 December 2023

More Thoughts On The Economics Of Rail In The U.S.

The dominant cargo carried by freight rail in the United States is coal delivered to electric utilities, a dramatically contracting market. This uses rail because it is the cheapest option, because last-mile delivery isn't much of a concern, and because the demand isn't very time dependent since utility power plants can stockpile coal. 

But this means that there is little incentive to improve the very slow speed of freight rail which is slower than it was in the 1950s and maybe averages 45 miles per hour. 

A very large share of all other freight goes by long haul trucking instead, even though it is more expensive, because it is faster and provides point to point delivery.

Amtrak, outside the Northeast Corridor, shares tracks with freight rail to reduce infrastructure costs, but this makes Amtrak passenger rail slower than passenger rail was in the 1950s and unreliable. As a result, even with heavy subsidies, non-NE corridor Amtrak service has a tiny market share, because it isn't speed and reliability competitive with cars, buses and trains, even though it pays basically nothing for the freight rail tracks it uses.

This is a shame, because rail of all kinds has high fixed costs and low variable costs per trip, so the higher the volume of traffic it gets, the less expensive it is per passenger mile. Even as it is, if Amtrak trains outside the NE-corridor ran full, the cost per passenger mile would be much lower and the immense subsidies per passenger mile on many routes could be greatly reduced.

All other things being equal, however, having freight and passenger rail share rails is efficient, and unless your passenger rail volume is very high, if the two kinds of trains are traveling at similar speed, it isn't a problem. It is a problem for freight and passenger rail lines to share tracks now primarily because the speed and reliability standards for freight lines delivering mostly bulk products like coal are low in the interests of keeping costs as low as possible for low value cargo.

But imagine a post-coal world. 

What if we basically started over from scratch rebuilding a combined passenger-freight rail system with far fewer rail crossings over busy roads, that was designed for highly reliable 125 mile per hour to 150 mile per hour speeds for both freight and passenger trains, pulled by electric powered locomotives (whose electricity was generated with greener power grids)?

This could capture a large share of traffic that currently travels via interstate highways, and a large share of short to medium distance air travel, by offering greater speeds for freight and faster trips for passengers (who would also escape the long security lines and boarding process of airplanes). 

This would have to be combined with a system of last-mile regional/metro-area scale transportation that would take shipping contain sized rail cars and passengers from train stations to their final destinations. But for passengers, services like Uber and Lyft, as well as on demand car share systems, in addition to traditional car rentals and existing intracity transit options, could meet this need and could grow to meet demand. And, containerized shipping by a mix of rail and trucks is not exactly a radical new technological innovation. Reducing the amount of long haul trucking needed would also favor a conversion of more of the trucking industry to electric vehicles.

Passenger trains, run full, are faster than cars, are vastly more environmentally friendly, and result in far fewer transportation related deaths.  If the trains ran full, they could be cheaper per passenger mile than driving too.

The cost of maintaining a mixed passenger rail-freight rail system for 125-150 mile per hour rail service in good condition would be cheaper than the cost of maintaining an interstate highway and major state highway system designed to serve that much traffic, although the major upgrade of the rail system would have to be compete with the sunk costs of the initial build out of the interstate highway system. It would also remove the pressure to build more and bigger intercity highways in the status quo as traffic was diverted to rail.

But if the interstate passenger-freight rail system were upgraded in this way, the scope and scale of  and use of the interstate highway and major state highway system could be greatly reduced, which would ultimately reduce the maintenance costs for those major intercity road networks. The trucking jobs that remained would place far less of a strain the truckers and their families, as short-haul truckers, who would become a much larger share of the overall trucking industry, wouldn't have to spend lots of nights on the road, far from home.

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