by Tadman
I think we're still missing the forest for the trees. All this talk of building more tracks. Amtrak can't even figure out how to pay market rates for the slots they have, let alone money to build another track!
Think of it this way: Private car rates are something like $3/mile. So let's pretend the average LD train is 3 coach, 3 sleeper, 3 non-rev, 2 engine. 11 units, $3/mile, 800 miles Chicago to New York, you get a track slot for $26,400. (We know this isn't exact, but let's just play with some numbers). We know Amtrak pays so far under market rate that the class 1's don't care to lift a finger. Figure Amtrak maybe pays $15,000. If the frequency per day is 1x each way, Amtrak shorts the class 1's $20,000/day or $7.3m/year per route.
So now Amtrak has decided they want to run on time, come heck or high water. They can either find $7.3m/year extra to pay market rate, $10m+ extra to pay above market to ensure priority, or they can find $1m/mile ($800m to New York) to lay track.The payoff in that situation is 80 years.
The correct answer, as we can see, is to pay at/above market rate. Carriers like Norfolk Southern and CSX exist for one reason: to be paid to move flanged wheels down the railway and make a profit better than cost of capital. That's it and that's all. Nothing more or less. Ergo, a giant step to getting priorty is to pay for it on the tracks that exist.
Consider this: how big of a customer would Amtrak be in the hierarchy of a Class 1 if they paid market rate? Where would Amtrak's annual billings stand up against Ford, GM, US Steel, Maersk, COSCO, et al? Probably pretty well.
Here's another parallel: pretend you ride the subway every day, 45 minutes to work. It's rush hour and you have to stand most days. Do you (a) pay NYCTA or CTA $1m to buy you a new railcar; (b) give some guys $20 to get up and give you his seat?
Think of it this way: Private car rates are something like $3/mile. So let's pretend the average LD train is 3 coach, 3 sleeper, 3 non-rev, 2 engine. 11 units, $3/mile, 800 miles Chicago to New York, you get a track slot for $26,400. (We know this isn't exact, but let's just play with some numbers). We know Amtrak pays so far under market rate that the class 1's don't care to lift a finger. Figure Amtrak maybe pays $15,000. If the frequency per day is 1x each way, Amtrak shorts the class 1's $20,000/day or $7.3m/year per route.
So now Amtrak has decided they want to run on time, come heck or high water. They can either find $7.3m/year extra to pay market rate, $10m+ extra to pay above market to ensure priority, or they can find $1m/mile ($800m to New York) to lay track.The payoff in that situation is 80 years.
The correct answer, as we can see, is to pay at/above market rate. Carriers like Norfolk Southern and CSX exist for one reason: to be paid to move flanged wheels down the railway and make a profit better than cost of capital. That's it and that's all. Nothing more or less. Ergo, a giant step to getting priorty is to pay for it on the tracks that exist.
Consider this: how big of a customer would Amtrak be in the hierarchy of a Class 1 if they paid market rate? Where would Amtrak's annual billings stand up against Ford, GM, US Steel, Maersk, COSCO, et al? Probably pretty well.
Here's another parallel: pretend you ride the subway every day, 45 minutes to work. It's rush hour and you have to stand most days. Do you (a) pay NYCTA or CTA $1m to buy you a new railcar; (b) give some guys $20 to get up and give you his seat?
The new Acela: It's not Aveliable.