Category Archives: Rail

NLX Slides

GrandCasinoHinckley

I was at a public forum in Hinckley, Minnesota last night (home of the world-famous Grand Casino), giving a talk on the Northern Lights Express (NLX). The crowd was, in the immortal words of Grampa Simpson “Agin’ it”. My slides are here, though readers of the blog have seen most of the material before.
It was fun, thanks to the many organizers from Pine County.

Dan Snow’s Locomotion

DanSnow

I just finished watching Locomotion: Dan Snow’s History of Railways. It doesn’t air in the United States (nor is it on US iTunes), so you will need to use your special internet TV show finding powers to get it.
This three episode modern documentary series is a nice social history of trains in England for their first century (through World War I), looking at the both the standard history and some side notes relating railroads with other social changes (from trains for the dead to early soccer hooliganism). If you liked James Burke’s Connections, and you like trains, and you like Victorian England, and you like history, and you like British accents, this show is well worth watching.

SPUD

My thoughts on the Saint Paul Union Depot at Streets.MN: SPUD :

“We entered the dimly authentically-lit Saint Paul Union Depot (SPUD), a large but not magnificent space. A train station with no trains. The restoration is nice, and I am sure a better space than the restorers found it in, but the original structure was really nothing special at all. Having only been to the front of the station previously (the acoustically challenged headhouse), I was actually disappointed at the rest of it given how much fuss and money have been expended on the project.”

NLX redux

I get into a Letter to the Editors battle over in Pine City. I am responding to this about everyone’s favorite intercity rail project, the Northern Lights Express. Keep in mind that the titles of Letters to the Editor are written by the editors, not the author.

Metcalf off the rails on NLX project

Posted: Thursday, May 2, 2013 10:04 am

Professor David Levinson | 0 comments

I am surprised at the Ad Hominem nature of the attack by Metcalf, whom I have never met, but desperate people say desperate things. I won’t respond in turn. I will say though I am trained as an engineer, I have done a significant amount of work in the related field of transportation economics and travel demand modeling. I worked as a demand modeler for 5 years and wrote my doctoral dissertation on the choice of financing mechanisms for highways, which I published as Financing Transportation Networks. I serve on the Editorial Board of the Journal of Transport Economics and Policy. I have over 100 peer-reviewed papers (see http://nexus.umn.edu/papers_journals.html), many of them on the topic of transportation economics, and hosted the International Transport Economics Conference in 2009, held at the University of Minnesota. I think I am qualified to write a letter to the editor.

So to begin, what are Metcalf and TEMS doing in this letter if not advocating for the project?

The letter says: “However, the Northeast corridor does not need an operating subsidy as it goes faster than 110 mph. It makes a good operating profit, just as the NLX will if speeds are kept up to 110 mph.” The key word is “operating”, meaning it does not include “capital.” This is a classic shell game. Operating revenue pays for the drivers and fuel, but not the longer-lived trainsets and tracks. Something else must pay for those. Also, the NLX is not the Northeast Corridor and nothing magically happens when speeds reach 110 mph; you get a few more riders in exchange for burning more fuel and paying more upfront for straighter and flatter tracks.

Metcalf writes: “The issue is can the service be franchised, by covering its operating costs and by covering operating costs only. If the train runs at 110 mph the answer is yes, it will cover its operating costs. The state and local communities will only be on the hook for annual operating subsidy not capital costs.”

Yes, state and local communities will be on the hook for the annual operating subsidy. This subsidy is what enables the franchised service to cover its costs. It gets revenue from passengers (farebox recovery) and from subsidy. The capital costs are of course generally paid “up front” by selling bonds. Those bonds will have to be paid back by someone or risk default. Often these bonds are backed by the downstream revenue source of the project they are supporting (they should be, otherwise the public is on the hook for paying them back), if the bond market has confidence that there will be sufficient revenue to pay back the bonds, otherwise it is backed by general revenue. Sure, having someone else (e.g. your Uncle Sam) pick up 80% of the check for the capital costs is better for you than picking that up yourself, that doesn’t mean the cost isn’t paid.

The letter asserts: “The Casino attracts nearly 8 million trips per year with over 3 ½ million visitors or 20,000 trips per day.”

That sure sounds like a big number, so, being an engineer, I looked at the traffic counts (http://www.dot.state.mn.us/traffic/data/maps/trunkhighway/2010/counties/pine1.pdf), which counts cars, not people. I-35W has about 20,700 vehicles per day just outside Hinckley in 2010 (total both directions). Near the Casino, there is a count of 9,600 vehicles per day (4,800 in each direction). East of the Casino, traffic counts are 5,100. So from the counts, it looks like the Casino is generating about 4,500 vehicles per day (both directions) or 2,250 vehicle trips into the site (we can annualize this: 2,250*365=821,250, a bit less than 8 million). Now of course, many of those vehicles are workers (the workforce is between 1,000-2,000), so won’t be taking a train. Others are delivery people and so on. So there are maybe 750-1500 vehicles per day of visitors coming in. Some of those vehicles are buses (and have lots of people), some are cars (and carry one to four typically). For what fraction of those people will taking the train be better?

Let’s do a thought experiment: Think about a typical trip-maker, two adults visiting the Casino for some entertainment. They leave their house in the northern Minneapolis suburbs (since there are different casinos serving other suburbs). Will they drive to downtown Minneapolis and pay for parking at the new Interchange Station? (unlikely). Will they drive to a suburban Minneapolis station and park, and pay for two round-trip tickets, and wait for a train, and then have to transfer when they get to Hinckley (since the train is not likely to drop people off at the Casino’s doorstop without a lot of added cost to build a diversion across I-35W), and then the same when going home? (perhaps) Will they drive straight to the Casino? (most likely).

A bigger market are people riding a tour bus, which picks them up at or near their residence. A train can’t beat that, even if it is faster. A train trip also has a lot of slow bits, like getting to the station and waiting for the train, and getting off the train, and going to your actual destination.

So yes, the cursory letter-to-the-editor level gravity model analysis skips the major metropolis of Hinckley Grand Casino and its 1,000 daily incoming vehicle trips. If the train captures five percent of those, its another maybe 100 daily passengers alighting at the station (if private vehicles carried 2 persons each) each way each day, less than 36,500 passengers alighting at Hinckley per year on a line that is purported to carry 10 to 20 times as many.

Next let’s consider the forecasts. We must ask “which forecasts?” Different professional forecasters looking at the line have come up with significantly different forecasts of demand for the line. Notably the State Railway Plan from 2010 (only three years ago) had ridership levels at half what the most recent Environmental Assessment projects. I won’t be getting into why the forecasts might be different (I am sure if you have read this far into the letter, you can surmise, and I suggest you read Flyvbjerg’s Megaprojects and Risk, or his research papers, on the subject for more details.)

The Best forecast from the State Railway Plan for this corridor has just over half the ridership of the more recent Environmental Assessment. The Base case is less optimistic with about one-third the riders.

It has been said that “Gambling is a tax on people who are ignorant of statistics.” Perhaps we should rephrase that … “Investing in transportation infrastructure and hoping for profits is a tax on people who are ignorant of history.”

This is a general problem, not only applied to rail, not just the US, and not only to the NLX corridor. The collective profits from US Airlines from the dawn of the passenger aviation era in the 1930s to the present are negative. The history of railroads is the history of bankruptcy. Minnesota’s storied Northern Pacific went bankrupt in 1875, and again in 1893. James J. Hill’s Great Northern acquired the St. Paul & Pacific Railroad from the bankrupt Northern Pacific and to launch his empire. The beauty of bankruptcy is it wipes out the original investors, but leaves the investment intact. Amtrak, nominally a “for-profit” corporation, was formed in 1970 to relieve freight railroads from their money-losing passenger operations in which they were disinvesting. More recent investments that have failed their initial investors include the Channel Tunnel (reorganized twice), which benefit/cost studies have shown would have been better for Britain if it had not been built (Anguerra (2006)).

There are many other examples, some are described in my book: Garrison, Wm and Levinson, D. (2006) “The Transportation Experience.” Oxford University Press.

See also: Adventures in Forecasting Intercity Rail: NLX edition, Who will pay if NLX fails, Does NLX make sense for Pine County, High-speed rail to Duluth gains steam

Adventures in Forecasting Intercity Rail: NLX edition

Projections around the proposed intercity railway “Northern Lights Express (NLX)” line from Duluth to Twin Cities are presented below. The first two columns of data are from the Statewide Rail plan, funded by MnDOT, prepared by Cambridge Systematics (lead). The last column is from the recent draft Environmental Assessment by USDOT, MnDOT and WisDOT

State Railway Plan Environmental Assessment
Base Best
Scenario Evaluated: High speed, 8 RT High speed, 8 RT
Phase I I Route 9
Capital Cost $878,500,000 $676,600,000 $820,000,000
Operating and Maintenance Cost (Annual) $45,700,000 $35,900,000
Revenue $9,600,000 $12,000,000 $27,660,000
Farebox Recovery 21% 34%
Capital Cost per Mile $5,800,000 $4,500,000
Capital Cost per Rider (2030) $2,042 $1,049 $732.14
Operating Subsidy per Rider $83.82 $36.96
Ridership 2020 938,000
Ridership 2030 430,000 645,000 1,120,000
Ridership 2040 1,302,000
Feb-10 Minnesota Comprehensive Statewide Freight and Passenger Rail Plan
http://www.dot.state.mn.us/planning/railplan/finalreport/MNRailPlanFinalReportFeb2010.pdf
Apr-13 Northern Lights Express High Speed Passenger Rail Project from Minneapolis to Duluth, Minnesota
http://www.dot.state.mn.us/nlx/documents/nlx-evironmental-assessment.pdf

Who will pay if NLX fails?

NLX

I was asked to write an opinion piece for The Pine City Pioneer: Who will pay if NLX fails? in response to one put forward by project consultant Alexander Metcalf of TEMS:

“TEMS, the consultant hired to advocate for the project, asserts that revenue will exceed operating costs at higher speeds. I agree that both revenue and costs will increase with speed, whether one increases faster than the other is an empirical question on which forecasts are highly questionable for a variety of reasons, not the least of which is lack of existing service on which to base such assumptions. Many have suggested the Downeaster is the most comparable market.
The Downeaster already carried 300,000 riders in 2005 and was in fact forecast to carry 625,000 passengers between Boston and Portland in 2015, so, [the fact] that it exceeds 525,000 riders in 2012 after a major investment is hardly testament to it beating targets. http://www.edrgroup.com/pdf/report-downeaster-final.pdf
More important is to compare the structure of the markets. Boston and Portland are less than 100 miles apart. Duluth is 137 miles from Minneapolis, so you would expect more trips between Boston and Portland if the sizes of the city pairs were equal. They are not.
The population of metropolitan Portland, Maine (516,000) exceeds that of Duluth (280,000); while the metropolitan Boston combined statistical area (7.6 million) remains larger than the Twin Cities (3.6 million). The number of trips between two places is a product of their sizes and inversely proportional to the travel time. On a population basis alone we expect the Boston to Portland market to have almost four times as many trips as Minneapolis to Duluth.
Of course metropolitan Boston has much greater transit use (12.2 percent) than Minneapolis (4.7 percent), and much better connections so that will also tend to increase ridership for the Downeaster above what the NLX should expect.
Unfortunately, U.S. experience with passenger rail for the past 50 years suggests the forecasts are optimistically biased in favor of the project in order to increase the likelihood they will be funded. The question at hand is will the project in fact recover its operating and capital costs?
We have no evidence it will. TEMS admits that Amtrak considers state revenue as income. A subsidy is a subsidy whether it comes from the federal, state, or local government. So even if the Northeast Corridor were operationally profitable (conveniently forgetting capital costs, which need to be paid somehow), that is not evidence any other particular route would be. Just because it pays its utilities (operating costs) doesn’t mean it pays its mortgage (capital costs). Who will pay if the NLX fails to meet revenue hopes?”

Scheduling for failure

Christian Wolmar writes about the romance of the rails in My window on America: From Los Angeles to New Orleans on an epic rail adventure:

“Then in the dark, we broke down, and the lights went off. The conductor said a hose has come undone and that the power had to be switched off while the problem was examined.
They had to send for an engineer, who arrived quickly with a huge lamp that eerily lit up the scene and solved the problem.”


There was more excitement and evictions at San Antonio, which we reached at 9.30pm and where we were scheduled for a two-hour stop. It gave us time for a drink in a bar. A couple of girls on the train, heading for a music festival, had drunk too much, and were too out of it to stop singing on the way back to the train, even after a conductor warned them to stop. The train was delayed for the police to be called. Off they went, still intermittently singing and swearing, into the cooler.

The train meandered around the outskirts of New Orleans, but still arrived an hour early.”

So the train broke down once and had to have the police called, but it was still early. How much slack is built into the system to ensure on-time arrivals?

HSR and Self-driving vehicles

Christian Wolmar writes: Innovation ignored at our peril :

“One of the reasons for my scepticism about HS2 is on the basis that it does not take into account future development of technology. Just look at how technology has changed since 1993 when mobile phones had barely taken root, Google, Facebook and Twitter were but twinkles in their founders’ eye and digital TV was just starting. Will there really be enough people wanting to pile into what are likely to be expensive trains in 20 years time to justify the huge expenditure on this project?
And here’s where I stick my neck out. The next big technology, one with such huge implications that it is impossible to being to predict them, is driverless cars. Google, which is investing billions in the project, announced back in August that its fleet of more than a dozen driverless cars had completed 300,000 miles – ten times round the world – without an accident. The cars have driven through San Francisco and through various parts of California and Nevada – where a law has been passed allowing them – and while there are no plans to produce them commercially yet, their time will inevitably come.
Perhaps they will start by being driven only on motorways but even that would have enormous consequences. It would combine many of the advantages of train travel with the flexibility of car use. Think trucks, too. The economics of transport would change as radically as they did when the railways were first developed. The time frame may be a decade or two, but the consequences will be much more far reaching than, say, the much talked about electric cars. The driverless car – or rather motor vehicle – is the innovation that we ought all to be taking into account in our future thinking.”