Thursday, May 12, 2016

Feds must lead on rail development

I submitted this article to "USA Today" for possible use in its op-ed section. I share it here now since the newspaper passed on it.

By Ellis B. Simon

Forty-five years ago, Amtrak, a creation of the federal government, took over operation of the nation’s money-losing intercity passenger trains from the private railroad industry. It was this country’s last major act of national passenger rail policy. While other industrialized nations embraced rail as a vital component of their transportation infrastructures, the USA stepped back.

Amtrak, at its core, is an operator of passenger trains, not a developer of a passenger rail network. Its last significant expansion was the electrification and upgrade of the Boston – New Haven line and the introduction of the high-speed Acela service in 2000. Its last long-distance start-up was the Auto Train between Virginia and Florida, begun in 1983 to replace a privately operated service that shut down in 1981. Amtrak today operates fewer overnight long-distance trains today than it did in 1971.

The expansion of U.S. intercity rail that has occurred has been largely regional and driven by states, such as California, Washington, North Carolina and Illinois, that have adopted rail but taken an incremental approach to its development. As a result, there is good service between such city pairs as Raleigh – Charlotte and Portland – Seattle but not on comparable routes such as Cleveland – Cincinnati or Atlanta – Nashville.
This happened because the federal government abrogated rail development to the states. Instead, Uncle Sam chose to play the role of banker. Through the Federal Railroad Administration, it helps finance projects but limits what actually gets built by imposing lengthy review processes and equipment and infrastructure requirements that add to project costs. Then, states must then use Amtrak to run the service and reimburse its operating losses.
The fragmented approach is also subject to the whims of state policy makers. For example, in 2011, newly elected Republican Governors Scott Walker of Wisconsin, John Kasich of Ohio and Rick Scott of Florida killed rail projects in their states and turned back federal funds to help build them.

Earlier, New Hampshire withdrew from a three-state partnership to develop a federally designated high-speed rail line from Boston to Montreal. Now, Massachusetts and Vermont are studying the feasibility of such service via Springfield, Mass., an 80-mile detour.
Even though high-speed rail projects are currently underway or planned in California, Florida and Texas, intercity passenger rail will not play a significant role in the U.S. transport system until the federal government steps into the engineer’s seat and drives its development, as it did with the Interstate Highway System. This requires new thinking about the government’s role in the development, financing, operation and maintenance of the rail system and it requires leadership from the White House and Congress.
Working in collaboration with the states and other stakeholders, the federal government should lead the decision making about where trains will travel, how they will operate and who will build, manage and maintain the infrastructure and rolling stock. To the extent practical, the process should promote interconnectivity and expand access to the network. Additionally, Uncle Sam should work with universities and the private sector to build this nation’s knowledge base in order to efficiently design, build, equip, operate and maintain an expanded and enhanced state-of-the-art system.
Amtrak, as a corporate entity with 45 years’ experience operating passenger trains across the country, can be expected to play a significant role in this future system by capitalizing on its core competencies. But allowing it a de facto monopoly could stifle efficiency and innovation. New entrants to the market, including freight railroads, should be encouraged to bid on operating franchises.        

Since Amtrak commenced operations in 1971, the U.S. population grew by 55.4 percent to an estimated 322.8 million people. While Amtrak’s ridership nearly doubled over this period and it now carries more than 30 million passengers annually, passenger rail needs to expand significantly if it is to relieve a congested highway system that has become increasingly costly to maintain. With the population expected to reach 438 million by 2050 and the effects of climate change making greenhouse gas reduction an imperative, the need to grow rail is becoming more urgent.
Democrats Hillary Clinton and Bernie Sanders have statements in their campaign platforms promising to invest in passenger rail if elected President. The presumptive Republican nominee, Donald Trump, also would “fund and rebuild U.S. infrastructure, including its crumbling railways.” However, past presidential promises to support rail have come up short. Uncle Sam must move from being an investor to becoming an Empire Builder if the USA is to have a world-class rail network.


Wednesday, April 22, 2015

Update - All Aboard Florida

While events have come to pass since my 2012 posting, none of such has wavered my contention that no train will ever turn a wheel for a private sector operator's own account.

First however, I'd like to update a point made at the 2012 posting from which I have backed away; I no longer believe that the owners of the Florida East Coast Railway, reportedly Fortress Investment Group through a maze of subsidiaries, are considering a sale of the railroad to another party such as a public agency

I have found myself leaning away from my earlier contention that AAF was simply a ploy to "fatten up the steer" for a sale of the FEC Ry. to a public agency, as the railroad, while making money on railroad operations, was being buried under debt service costs from a leveraged buyout. Within such a transaction, the equity once held by shareholders is converted to debt so that the remaining shareholders (usually "closely held") will either make "heap big wampum" or "loose their shirts' eliminating the middle ground. Now I have learned that FEC is doing so well that it is making money even after its debt service costs, and I'm certain that the closely held group wishes to maintain its ownership.

It is undisputed that the FEC, through one subsidiary or the other, still holds valuable tracts of land - especially the six or so acres in Downtown Miami that once was the site of their station. After laying dormant for some fifty years used only as a parking lot, the owners have now decided to develop that property into a mixed use facility. Touting that there will soon be a high speed Orlando-Miami rail line terminating in the building's basement, can only help stir up interest in the development. Of course, when the rail service becomes stillborn, as I still believe will be the case, the interest, and tenancies, have been stirred up and signatures obtained on the leases.

This is not the first time in history that passenger trains have been used to stir up public interest. That started with Henry Flagler, continued with Robert R. Young, and now the latest being this All Aboard Florida whatever.

Finally, I would like to share at this blog the passing of Randolph R. Resor which occurred shortly before Thanksgiving 2013. Randy responded to posts at this blog, as well as at several other rail related public forums under the name of Nellie Bly. I had the honor to know Randy face-to-face; and I hope that he is resting in the peace he so justly deserves.

Thursday, April 25, 2013

The Gospel According to Saint Donald

The Don Phillips column appearing in June TRAINS is indeed provocative. In the column, Mr. Phillips contends that Amtrak's allocation of fixed costs are allocated so that the Corridor, and in particular the Acela, are shown to be profitable and the Long Distance trains are hopeless losers. Mr. Phillips contends that if the fixed costs were properly allocated, as well as some costs being capitalized that should be expensed, the Corridor and Acela would be "The Biggest Loser" and the LD's would still lose, but the losses would be "tolerable".

The problem I have is that the column quotes Mr. Andrew Selden, at attorney from Minneapolis, but unsaid is that he has done work for NARP - and to me NARP is more concerned about the preservation, and for that matter expansion, of the LD System.

While of course the allocation of fixed costs/expenses in any industry with a high percentage of such as a railroad, can be the "Pandora's Box" ("figures don't lie but liars figure"), the column loses much credibility with the direct quotations from someone long affiliated with NARP. I have no answers for this issue; the Monthly Performance Reports that show the Corridor as profitable are of course unaudited. The outside auditors (Ernst & Young for the moment) are largely concerned with the presentation of the Consolidated Financial Statements, and as such the capitalization of costs that should be expensed is of their concern, how the fixed costs are allocated over the trains is of considerably less.

June TRAINS is presently being circulated; also of interest is an article on Iowa Pacific passenger operations.

Sunday, August 26, 2012

A "Faux"; All Aboard Florida

In all likelihood, readers of this material are aware that there has been a proposal set forth by the Florida East Coast Railway to enter the intercity passenger train business and operate trains for their own account, i.e. a private concern prepared to risk loss in the expectation of earning a profit, between Miami over their existing lines to Cocoa, then over a line that they will build from there to Orlando.

Quite simply, there will never be a passenger train operating over the Florida East Coast Ry for their own account. I give Amtrak operation over the FEC, which is independent of this proposal, at best a 50-50. So long as Martin County FL remains "train hating", Fox News watching, country, I do not foresee any northward expansion of Tri-Rail to locations such as Stuart (FEC) or Northwestward to, say, Indiantown (CSX) as Florida law requires any county desiring rail service to impose a tax (ad valorem or excise) dedicated to that rail service's funding.

But there are unfortunate facts of life that need be addressed. Despite the appearance of a well run railroad, the FEC simply is not “making it” The 2010 Florida East Coast Annual Report reports the FEC made some $43M from railroad operations during that year. However, owing to the "leveraged buyout" debt on which the debt service cost is some $66M, FEC had a Net Loss of some $23M. Possibly the only sale, given the bleak earnings outlook, is to a public agency. I think the FEC is so over leveraged that a private investor would be scared away. Even a minor recession, a Longshoreman strike, or a natural disaster, could have FEC in deep trouble. But to reiterate, with the commitment being made to have the post-PANAMAX Port of Miami something beyond where the Love Tubs tie up, the State has a vested interest in the FEC remaining a viable, and independent, line.

While on a national level, government is averse to go into profit seeking ventures in competition with the private sector, there is no law precluding them from doing so. Florida, with its conservative governance at present has nevertheless committed massive public funds build "world class' maritime ports at both Miami and Port Everglades and may want control of the FEC to protect their investment in such so that, in a post PANAMAX world, they are competitive. An open access railroad which has a 350 mile captive line haul to Jacksonville, would ensure that either Norfolk Southern Railway and CSX Transportation can access the traffic affording the shippers of the "competitive route" they desire and yet having a favorable division of the line haul with FEC. .

Even if either NS or CSX were "interested" (and again with the debt structure, I doubt if they are), the public sector party that is bankrolling the improvements to Miami, wants to be able to tout to the maritime industry "we have competitive rail routings" (never mind such is 350 miles away). If FEC ever got into CSX or NS hands, either would have no reason to provide good service as they collectively serve every major East Coast port as is. FEC would simply become a long branch line and maybe even abandoned. As previously noted, neither of its JAX interchanges is interested in acquiring it owing to the debt structure - and the shippers, be they in place or "in waiting" post-PANAMAX, do not want any merger either, for they want the South Florida maritime ports to be "open", i.e. there is a competitive rail service, albeit in this case it is 350 miles away. However, there is a caveat to any Port commission/authority and to anyone who follows maritime affairs. This is a recent report in The New York Times, that the East Coast may have overbuilt its ports anticipating a post-PANAMAX traffic boom. There is distinct possibility that these ports, of which Miami is one of such, may be on a ruinous competitive run. The unfortunate outcome could be they are all getting ready to throw a post-PANAMAX party - and nobody came.

So how does this passenger service initiative play into the picture? What better way would there be to get "man on the street" support than to tout "we will give you some trains - and you won't have to pay for them unless you choose to ride'. Politicians since the Roman Empire have bemused the Proletariat in such a manner. It simply generates public visibility so that when the private equity concern that owns FEC approaches a public agency such as the State to buy the road, all this public excitement about passenger trains will translate to voters saying "buy it" (or we'll find someone else to vote for). But since the political climate in Florida, with its ever increasing conservative tilt, will have nothing to do with publicly funded passenger trains beyond the existing Tri Rail and the "in the works" Sun Rail, this passenger service proposal simply represents a "faux". Should such a sale be consummated, the passenger initiative will sort of go the way of Sunset East, or otherwise “Adios“.

“All Aboard Florida” is a ploy; enjoy the fun and dreaming while it lasts.

Wednesday, March 14, 2012

Adios "Sunset East"

TRAINS Newswire reports that effective May 7, a new schedule for both Eastward and Westward Amtrak Trains 1 & 2, Sunset Limited, will be adapted. Additionally Westward #1 will adopt new days of operation, which will enable one set of equipment presently assigned to be released. Here is a link to the material at Newswire. In order to access, a subscription to a rail related Kalmbach publication is required.

The reason why this days of operation change had not been made earlier is because there was the "phantom" Sunset East "temporarily suspended". Therfore the train had to be scheduled so that the "equipment" could "run" to Orlando and be "turned" for a "next day' departure.

However, somebody in the Amtrak Legal Department apparently has decided it is now safe to go in the water. Possibly there is an applicable Statute of Limitations, but I believe the now apparent discontinuance of Sunset East without required 180 Day Notice under ARAA '97 was simply the Amtrak Legal Department determing that "nobody cares" outside of the advocacy community.

After Katrina, Amtrak likely found they were confronted with a dilemma regarding "a golden opportunity to be rid of something in all likelihood they never wanted in the first place". To what extent will the law be "bent" or do we annul with the intent as we did in the case of disruptions with other trains such as the Builder, Zephyr, and Starlight - all services where to not have them, the political repercussions would be severe, so therefore we want them.

But failing some remote possibility that Amtrak will be required to restore the service, Amtrak has successfully discontinued a train without the Notice; management should be pleased to know they now have that prerogative.

With the upcoming days of operation change, as well as the release of the equipment set assigned to the "Sunset East", Amtrak will be in a hard to defend position that they have done anything other than discontinue service over the route. Violation of ARAA '97 notwithstanding, Amtrak appears confident they can deflect any possibly challenges from advocates, and that they will not be forced into restoring service - and maybe for longer than 181 days as a form of "punishment". It will be interesting to see how the Sunset route is presented in the next timetable.

Unless it can be established how Amtrak complied with 180 Day Notice provisions of ARAA '97, or that provisions somehow "sunset" after a given period of time, I can only hold that Amtrak violated the law. However, contrary to thoughts likely held by the advocacy community, I'm not about to suggest Amtrak be sanctioned for this apparent violation. This was a route outside the Basic System set forth under RPSA '70, that was inaugurated in response to some political leaning, and never "pulled its weight" with regards to patronage.

All told, Amtrak management appears to have won a victory in successfully discontinuing a service without Notice. To what extent this victory will serve as precedent elsewhere remains to be seen. It appears that the coffin has now been nailed.

Tuesday, February 14, 2012

To Lorton In "WGC"

Auto Train Voyage #20 was Northbound from Sanford to Lorton aboard #52 (29 JAN).

This was part of a six day trip that I must acknowledge was four nights “on the road” and the remaining two were in Florida. That Sunday, January 29, had me leaving The Villages for a Lunch time meet up in Bellview. After our Lunch, it was time for a leisurely drive over to Sanford (65 miles) arriving there at 230P for the 3PM closing.

This journey was not going to be a moneymaker for Amtrak, as "the count" which always announced on-board was only 109 auto and 219 passengers. However, the consist was its usual sixteen cars. My auto was aboard within five minutes of surrendering it, and there was no line whatever when I checked in. While checking in, I learned the term “fare Bucket’ is official Amtrakese; previously I thought it was only “fanese”. I was surprised to find that no longer tickets are printed for the AT - or at least at Sanford. The necessary info such as accommodation and vehicle load number is recorded by hand on to the Auto Train folder. Personally, I would like to have a ticket, but then the majority of people nowadays apparently simply do not care, as I have learned that only a fraction of people using a credit card for a purchase will even retain their Customer Copy, if in fact the merchant even tenders one..

Well to the train; this journey was to be in Bedroom C of 10BR car “W Graham Claytor”. Conveniently the car was A End forward which meant a forward ride - a “plus” with me as I would guess anyone else here at the Forum.

The wine tasting started promptly at 3PM, and can be a “wine chugging” if one is into that. To my surprise, there still remains one Sightseer car, 33043, assigned to the AT. The car has been reconfigured with all tables upper level with the Smoking Lounge ‘down below’. The latter “did its job”, or maybe no one was smoking any time I was in the car. Reportedly, all of the 3310X damaged at Crescent City have been returned to service; there should be one available as a spare. Therefore with the “if you’ve seen one Pine Tree, you’ve seen ‘em all” scenery along the route, it appears a waste to have a Sightseer permanently assigned to AT.

Departed Sanford at about 350P.

First serving of Dinner started promptly at 5PM; the Beef Tournedos were prepared exactly as ordered, all service other than dessert were with metal, glass, and ceramic ware - and the “comp” wine “flowed”. Somehow, I don’t think there are too many Food & Beverage sales in the Lounge car - maybe in the Coach Lounge, but not in Sleeper.

Movies are still shown after Dinner, and evidently since all Lounges have been upgraded with flat screen monitors, they are not about to go away.. But then, that is why I had a Bedroom - and for that matter, an unread Sunday New York Times.

About the only minor incident that took away from the pleasure of the trip occurred when I started to do a walk through the train. So far as I knew, Sleeper passengers have the “run of the train..’ Well, I got kicked out of the Coach diner (courteously but still assertively… “your Lounge is back in the Sleepers, sir‘). Then if that wasn‘t enough the two Conductors were sitting in an empty Coach and said to me “you must be some kind of company spy“. “Well I was with a railroad thirty years ago, but I‘m a paying passenger; here‘s my ticket“. “Well, you sure know how to walk aboard a train, and not too many around here do‘. So what am I going to do, forget how to walk on a train? “Have a good evening , sir“.

Oh well, time for The Times, then bedtime.

Aside from a minor issue requiring a stop to “reboot’ one of the locomotives, all went well.

“Continental Breakfast’ was served for me passing through Richmond; if there is any scenery on the route, it is on the RF&P. Arrival in Lorton was about 950A or 20min off. My auto was about first off; in fact I was talking with some travelers I had met in the Lounge earlier that morning. Nice people, so my auto sat out there for some fifteen minutes.

My autos are used to being last off - and I have two “consolation prizes“ in my collection for being such.

Otherwise, the drive home with an overnight in Akron was essentially without incident.

I still hold that along with Acela First, Auto Train is Amtrak’s “best foot forward’, Voyage 20 affirms my “more positives than negatives” overall rating of my Amtrak travel experiences.

So far as I'm concerned, I got value for the $610 total fare paid.

Tuesday, January 3, 2012

Amtrak's "Finest Hour"??

Today could well be Amtrak's "Finest Hour' in that never has public acceptance of Amtrak's services been stronger.

I'm inclined to hold this may be it; the closest could well be early '80's when W. Graham Claytor was at the throttle.

During that era, everything was new - Amfleets, Superliners, F-40's, and AEM-7's. While needless long distance routes had been eliminated by the Carter Cuts, other routes such as The Desert Wind and Pioneer were inaugurated (those were taken care of by the Mercer-Clinton Cuts). WGC, with his vast railroad and governmental experience appeared to be a "fit" that Amtrak had never previously enjoyed.

Even though patronage rose under WGC, it was still below the 1974 "gas crisis" levels. Today, Amtrak has left that mark in the rear view mirror.

So despite aging equipment, a fair amount of "horror story' travel experiences, and sky high fares, Amtrak today enjoys public acceptance not seen at any other time in its history. The momentum is there and should there be a Romney administration (if you care to believe as Karl Rove recently wrote in The Wall Street Journal, there will be), they will choose not to disturb what is there (blow some wind, of course) - and by many a measurement, works.