Rescue workers search for victims in the wreckage of a derailed Amtrak train in Philadelphia, Pennsylvania May 12, 2015. (Reuters/Bryan Woolston)

This is why Amtrak train derailed: The real story behind our disastrous infrastructure neglect

The rails haven’t been important enough to anyone to invest sufficiently in repair/renewal. It's a shameful legacy


Rosabeth Moss Kanter
May 13, 2015 10:46PM (UTC)
Excerpted from "Move: Putting America's Infrastructure Back in the Lead"

One catastrophe sums up the challenges for passenger rail and the significance of aging infrastructure for everyone in the neighborhood, whether or not he or she uses rail. On Friday, May 17, 2013, at 6:01 p.m., Metro-North Railroad 1548, a commuter train traveling east from New York City to New Haven, derailed, partially obstructing the adjacent track. Twenty seconds later, it was struck by a westbound Metro-North train. The conductor of the second train had applied the emergency brake, and both trains were relatively new, sturdy models. Nevertheless, the 23-mile-per-hour impact of the westbound train shattered the insides of the train cars and ripped off their steel shells “like ribbons of clothing,” an observer said. Seventy-three passengers, two engineers, and a conductor were injured. The direct cost of the damage to the Metro-North system was $18 million.

The significant human and financial harm was magnified by the location of the crash. The four-track-wide stretch in Bridgeport, Connecticut, was one of the busiest in the United States, being used both by Metro-North for commuter services and by Amtrak for intercity passenger transportation; scores of trains crossed the site every day. At the time of the accident, two of the four tracks were closed for scheduled maintenance of the electrical system. When the crash destroyed the other two tracks, virtually all rail services eastbound from New York were suspended, including highly trafficked routes to New Haven, Providence, and Boston. Locomotives between Boston and New York were stranded, creating ripple effects that disrupted travel along the Eastern Seaboard, where the Boston–Washington Amtrak route alone carries about 700,000 people a day.

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The crisis spilled over, as the 30,000 people in Connecticut who normally commute by train took to the roads instead. One commuter who spent ninety minutes on what is usually a twenty-minute drive to the Bridgeport train station complained about the nightmare of just getting into the city that day. Urging residents to stay home, or at least to carpool, Governor Dannel Malloy of Connecticut warned that if all the commuters were to get on highways in single-occupancy cars, it would turn the roads into parking lots. Bridgeport mayor Bill Finch remarked that his city’s pipeline to New York City was going to be shut down for some time, costing the region a great deal of money, not just for the repairs but also because of the lost wages and reduced economic activity.

Two days before the accident, a routine visual inspection had found that a rail joint near the scene of the accident had inadequate supporting ballast and indications of vertical movement, the National Transportation Safety Board reported. That single broken rail became the most immediate suspect, although it was just one of many trouble spots resulting from years of deferred maintenance of components dating to the late 1800s. The catenary wiring that supplied electricity overhead is 110 years old. (It was the first mainline electrification in the world.) Upgrades have been under construction for 20 years.

A mere 2,000 feet of track was ripped up, less than half a mile, and it is possible to redo a mile of track a day, so repair should have been swift. In fact, it took nearly six days before Metro-North and Amtrak services were restored. Fragmentation was one cause of the delay; numerous local jurisdictions had to be involved, as well as state and national entities and the railroads. Moreover, track in the Northeast is used and owned by a complex web of stakeholders, including commuter rail agencies, freight train operators, and Amtrak. Then there was government bureaucracy, which delayed approvals, and union work rules, which delayed crew deployment.

U.S. Senator Chris Murphy of Connecticut said that $4.6 billion would be needed in the next two decades for rail infrastructure in Connecticut alone to be in good repair. He and others in Congress called for the creation of a rail trust fund—modeled on the Highway Trust Fund—that would sell Treasury bonds to support train and track investments. Soon the outcry died down, although in June 2014 Murphy cosponsored a bill in the Senate with Republican Bob Corker of Tennessee to raise the gasoline tax for two years to pay for transportation infrastructure improvements. Nothing happened.

The Metro-North crash illustrates many of the problems with U.S. passenger rail services, which remain woefully underdeveloped, analysts say—especially when compared with most other wealthy OECD countries. Or compared with freight rail.

Amtrak and the Passenger Train Predicament

Although the United States has the world’s largest national rail network and one of its largest populations, America ranks a middling seventeenth in passenger-miles of services provided each year. This is barely above Iran and well below both emerging markets like China and India and low-density developed economies like Russia. Indeed, on a per capita basis America performs even worse. With a per capita annual ridership of less than 50 miles, it ranks thirty-second, below emerging economies like Indonesia, Kazakhstan, and Pakistan. In contrast, per capita passenger rail usage is over 750 miles in Russia and over 850 miles in France. These rankings reflect the American deprioritization of passenger rail over other modes of transportation.

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Since the passage of the Rail Passenger Service Act in 1970, the National Railroad Passenger Corporation, known as Amtrak, has been the only nationwide provider of passenger rail services in the United States. A wholly government-owned corporation, Amtrak provides services to over 31 million passengers across three lines of business: the Northeast Corridor, short-distance and state-supported routes, and long-distance routes. But despite increased management flexibility granted in its 1997 reauthorization, Amtrak has been plagued by internal turmoil and turnover. We spoke to many current and former Amtrak officials and board members, all off the record because of political sensitivities. Amtrak’s 1997 vision of high-speed rail remains undelivered and unlikely. Even advocates for leaps forward in transportation and infrastructure are unsupportive. General Electric CEO Jeffery Immelt says, “I can tell you as a private investor, as a private company, I’ve had the chance to invest in high-speed rail a dozen times, and I’ve said no every time, because I didn’t think it made sense from an economic or technical perspective.”

In 2012, Amtrak recorded an operating loss of $1.2 billion on revenues of $2.9 billion; losses ranged from 39.0 percent to 49.1 percent over a five-year period. But financial performance varied. The Northeast Corridor, one of Amtrak’s flagship services, accounted for 11.4 million riders in 2012 and an operating surplus. It includes the Northeast Regional route, which stretches across major population centers from Boston to Newport News, Virginia, as well as Acela Express services from Boston to Washington, D.C.—the latter a higher-speed route that aims to compete with airlines’ shuttle services. Amtrak’s twenty-four state-supported and short-distance routes (under 400 miles in length) carried 15.1 million passengers in 2012 and are the railroad’s fastest-growing business line. Designed to be time competitive with other modes of travel, these types of services include routes like the Pacific Surfliner (San Louis Obispo to San Diego), the Vermonter (St. Albans to Washington, D.C.), and the Illinois Services (Chicago to Carbondale, Quincy, and St. Louis). In 2011, state funding of $185 million made up 31 percent of revenues for the routes, keeping losses to $166 million. Combined, the Northeast Corridor and state-supported routes achieved a positive operating balance of $47 million on revenues of $1.6 billion, according to data compiled by Robert Puentes and a Brookings Institution team. So, depending on how the math is done and costs are allocated, some parts of the system can make money.

Amtrak’s eighteen long-distance routes, over 400 miles, are seen by supporters as integral to the maintenance of a national passenger rail system. “If you are a passenger operator, long-distance trains keep your options open,” says Marc Hoecker, a former passenger manager now working for an eastern Class I carrier. “If they go away, and you lose the stations, the tracks and, above all, the land, good luck trying to get any of it back.” The long-distance routes carry millions of Amtrak passengers, but they account for all of Amtrak’s losses, especially the fifteen routes over 750 miles in length. In 2011, with aggregated revenues of $518 million and costs of $1.1 billion, Amtrak lost $598 million on long-distance routes, even before capital expenditures. These long-distance routes include the 2,438-mile-long Empire Builder service, from Chicago to Portland and Seattle, and the Texas Eagle, which runs from Chicago to Los Angeles via Dallas and San Antonio. They provide a baseline of connectivity among small towns and between rural areas and major cities in the twenty-three states where they are the only passenger rail services available. If the money-losing long-distance trains did not give lightly populated places like Montana its only good public transportation, federal funding for the Northeast Corridor would be politically difficult, a former Amtrak executive said.

Commuter rail services account for approximately $1.8 billion in rail industry revenues. In 2012, they provided over 466 million trips, a 13 percent increase from 412 million trips in 2002 and a 43 percent increase from 326 million trips in 1992. Commuter rail services in the United States are operated by twenty-seven different entities, the vast majority of which are government-controlled public transit agencies focused on specific regions and primarily subways. For example, commuter rail services in the New York City area—the nation’s busiest in 2013, with 14.8 million rides per month—are delivered by the Metropolitan Transit Authority, an independent agency with board members appointed by the state governor, New York City’s mayor, and suburban leaders. Similar governance structures are found in the country’s four other major commuter rail providers: Newark’s New Jersey Transit (6.2 million monthly riders), Chicago’s Metra (5.7 million), Boston’s MBTA (3 million), and Philadelphia’s SEPTA (2.8 million). Most others have as few as 40–50,000 riders per month.

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Like those of all publicly operated passenger rail systems globally, commuter rail revenues cover under 40 percent of expenses; public transit agencies in general lose about $36 billion a year across all services. However, whether owing to their contribution to economic development or to a view that they are public services, commuter rail services are heavily subsidized by federal, state, and local governments. Just the federal government’s contribution to public transit agencies in 2011 was nearly twenty times Amtrak’s operating loss in the same year.

The poor financial performance of passenger rail services has led to underinvestment. Unlike freight railroads, Amtrak has no profits to reinvest in maintenance, much less in ambitious capital projects that would make American passenger rail services truly globally competitive. Although some insiders say that Congress set Amtrak up for failure, some current leaders in Congress view Amtrak’s continuing losses as evidence of poor management, and argue that they should not throw good money after bad in the form of public subsidies. “Amtrak is the popular punching bag for Congress,” the industry insider said. He explained that Amtrak’s poor revenue should not be evaluated as a reflection of poor management, because no publicly operated passenger rail system in the world has a profitable revenue stream. The result has been an infrastructure deficit almost unparalleled in the world. According to the Organization for Economic Cooperation and Development (OECD), the United States must invest an additional $230 billion between 2015 and 2030 to restore its rail infrastructure to a level of global competitiveness. The United Kingdom, in contrast, is $48 billion behind and Canada’s infrastructure deficit adds up to a relatively small $28 billion between 2015 and 2030. If past is precedent, this funding gap is unlikely to be filled by government. Rail’s share of U.S. federal transportation funding peaked in 1976 at 4.95 percent and has since declined to 1.02 percent. This contrasts with highways’ 80 percent share of transportation spending; aviation industry subsidies round out the remaining 19 percent. Do we need any more evidence that trains are the neglected stepchildren of America?

Capital investment in commuter rail infrastructure declined to under 15 percent of public transit investments in 2011. Of all public transit modes, commuter rail services have the highest share of antiquated infrastructure; 24 percent of commuter railcars were manufactured before 1980. Mass transit agencies have also been slow to increase the efficiency of commuter rail infrastructure. Although the share of buses powered by diesel fuel decreased from 81 percent to 64 percent between 2006 and 2011, the share of locomotives powered by diesel declined by only half a percentage point during the same time period. (More about public transit later, as a central aspect of rethinking cities.)

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The lack of investment in American passenger rail services has led to comparatively poor performance. Speed is one metric: a “high-speed” trip from New York to Washington on the Acela Express takes two hours and forty-two minutes; it would take only one hour and fifty-five minutes on a European or Asian high-speed train. Similarly, the Boston–Washington Acela journey currently takes six and a half hours compared with the potential to do it in just over four hours with technology that is commonly used abroad. It’s little wonder, then, that Amtrak’s customer satisfaction index has barely improved over the past few years. Or that Amtrak insiders are so hesitant to talk on the record.

Then there’s the connection challenge. Unlike freight rail, which maintains tight connections with trucking companies and ports, passenger rail doesn’t play well with other modes of transportation. This further decreases efficiency, raises costs, and makes passenger rail less attractive to passengers. An industry insider said, “According to the MBTA (Massachusetts Bay Transportation Authority, which runs subways, buses, and commuter rail), there is no Amtrak. None of the timetables are integrated. All the agencies act locally. For example, no one can understand low use of T. F. Green Airport in Providence. MBTA uses it as a commuter station. A bunch of trains pull out in the morning heading to Boston, but nothing pulls in. You can’t get to the airport from any point north of Providence. The State of Connecticut runs up the Northeast Corridor, which is a natural connection, but nothing goes there. Amtrak trains slow down at T. F. Green but don’t stop. There is no fare integration. Fares are all different, all local. Google makes an attempt. Everyone talks about standardizing, but they don’t.”

Intramodal and intermodal connectivity issues cut across all forms of transportation. Mobility does not stop at local and state borders, yet funds are often allocated to states without regard for how they will work together. Hypothetically, if Ohio were to build a 200-mile-per-hour rail capacity, does that stop at the Indiana border? And if Indiana decides to restore a third track to get freight trains off two main lines, can Illinois, which is out of money, remove the benefits by doing nothing? Improvement requires collaborative innovation.

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The problem of underinvestment exacerbates the innovation problem. America is also behind in train manufacturing and servicing. The countries with the most competitive rail manufacturing industry make a large, steady stream of investments in rail and public transit, which creates substantial domestic markets and demand for innovation. Although America’s freight rail service industry is robust, freight trains run relatively slowly and do not require the same technical sophistication as modern passenger trains. The lack of sustained, ambitious investments in advanced passenger services has led to comparatively low demand for innovations in speed and performance.

We should all care that America’s position in the global train manufacturing and servicing industry is just middling and want it to be better. Of the top ten train manufacturers in the world by 2010 revenues, four are European and two are Chinese. General Electric Transportation is the only American firm on the list, ranking tenth, with revenues of less than a fifth of the market leader, China’s CSR Corporation. Of approximately twenty top-tier original equipment manufacturers serving the U.S. domestic market, thirteen are foreign firms. But most of the foreign-owned firms serve broad swaths of the market, while American firms tend to be more narrowly focused. For example, Alstom (France) provides train sets for intercity passenger rail, high-speed rail, regional rail, metro rail; Bombardier (Canada) supplies each of those types of trains, plus light rail systems. Bombardier and Kawasaki (Japan) together account for more than half of the new railcars sold in the United States. Indeed, in mid-2010 (the most recent comprehensive market analysis), only six firms supplied 94 percent of the American railcar market. In contrast, three of the U.S. firms—EMD, GE Transportation, and Motive Power—manufacture only locomotives, for intercity and regional passenger rail; three other manufacturers—Brookville, Gomarco, and United Streetcar—were only in the streetcar industry; and US Railcar makes cars only for intercity and regional passenger rail.

“Buy America” rules require federally funded rail infrastructure to be assembled in the United States and to be composed of at least 60 percent domestic content. To comply, foreign firms have set up assembly plants in the United States. An estimated 159 suppliers, of which 135 have U.S. headquarters, provide propulsion components like engines and suspensions, electronic systems like driving control systems and communication systems, and body and interior components ranging from heating and air-conditioning systems to doors and bathrooms. Some belong to large conglomerates; others are small companies with fewer than one hundred employees. The relative importance of the rail segment for these companies also varies, accounting for anywhere from 20 percent to 90 percent of revenues. But despite the law’s intent, the bulk of design and other high-value work that foreign companies undertake is done overseas.

In America, it seems, rail hasn’t been important enough to anyone to invest sufficiently in repair or renewal, let alone innovate to reinvent rail transportation for future needs. That’s why all Americans should care. It’s a self-reinforcing cycle. A strong domestic industry serving a demanding domestic market encourages competition to reach those customers, which in turn encourages innovation. Of course, without innovation, customers seek alternatives, which weakens demand and moves investment elsewhere. Finding new approaches is essential.

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Excerpted from "Move: Putting America's Infrastructure Back in the Lead" by Rosabeth Moss Kanter. Published by W.W. Norton and Co. Inc. Copyright 2015 by Rosabeth Moss Kanter. Reprinted with permission of the publisher. All rights reserved.


Rosabeth Moss Kanter

Rosabeth Moss Kanter holds the Ernest L. Arbuckle Professorship at Harvard Business School and is chair and director of the Harvard University Advanced Leadership Initiative. She is the best-selling author of Confidence, When Giants Learn to Dance, The Change Masters, Men and Women of the Corporation, and many other books.

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