Executive Briefings

Is High-Speed Passenger Rail a High-Speed Route to Disaster for America's Freight Railways?

The problem with America's plans for high-speed rail is not their modesty. It is that even their limited ambition risks messing up the nation's successful freight railways. Their owners worry that the plans will demand expensive train-control technology that freight traffic could do without. They fear a reduction in the capacity available to freight. Most of all they fret that the spending of federal money on upgrading their tracks will lead the Federal Railroad Administration, the industry watchdog, to impose tough conditions on them and, in effect, to reintroduce regulation of their operations. Attempts at re-regulation have been made in Congress in recent years, in response to rising freight rates. "The freight railroads feel they are under attack," says Don Phillips, a rail expert in Virginia.

Before deregulation America's railways were going bust. The return on capital fell from a meager 4.1 percent in the 1940s to less than 3 percent in the 1960s. In 1970 the collapse of the giant Penn Central caused a huge shock, including a financial crisis. By 1980 a fifth of rail mileage was owned by bankrupt firms. Rail's share of intercity freight had slumped to 35 percent from 75 percent in the 1920s. Tracks were neglected and fell into disrepair, leading to a downward spiral of speed restrictions and deteriorating service. The term "standing derailment" was coined to describe the toppling-over of stationary freight wagons when the track gave way beneath their wheels.

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The problem with America's plans for high-speed rail is not their modesty. It is that even their limited ambition risks messing up the nation's successful freight railways. Their owners worry that the plans will demand expensive train-control technology that freight traffic could do without. They fear a reduction in the capacity available to freight. Most of all they fret that the spending of federal money on upgrading their tracks will lead the Federal Railroad Administration, the industry watchdog, to impose tough conditions on them and, in effect, to reintroduce regulation of their operations. Attempts at re-regulation have been made in Congress in recent years, in response to rising freight rates. "The freight railroads feel they are under attack," says Don Phillips, a rail expert in Virginia.

Before deregulation America's railways were going bust. The return on capital fell from a meager 4.1 percent in the 1940s to less than 3 percent in the 1960s. In 1970 the collapse of the giant Penn Central caused a huge shock, including a financial crisis. By 1980 a fifth of rail mileage was owned by bankrupt firms. Rail's share of intercity freight had slumped to 35 percent from 75 percent in the 1920s. Tracks were neglected and fell into disrepair, leading to a downward spiral of speed restrictions and deteriorating service. The term "standing derailment" was coined to describe the toppling-over of stationary freight wagons when the track gave way beneath their wheels.

Read Full Article