High-Speed Rail: Getting Back on Track

As of June 9, 2009, the largest public works project in the U.S. is a railroad tunnel.

Thirteen billion dollars in federal stimulus funds are pouring into select high-speed rail projects like the Hudson River rail tunnel from New Jersey to New York City. . . $8 billion will come in 2009, and $1 billion more will pump into the industry annually through 2014.

And the bucks being disbursed by Washington make up just one part of a multi-billion dollar effort to update the nation's iron highways. The train is just now leaving the station. Are you on board?

Not Just New York

The New Jersey Transit's rail and bus lines take passengers on over 223 million trips a year. Nationally, ridership has been increasing not only on high-frequency commuter lines like NJ-NYC, but also between cities like Raleigh and Charlotte.

North Carolina's main Amtrak route runs you from point A to point B in about the same time it takes to drive. And when gasoline prices skyrocketed in 2008, the 170-mile Raleigh-Charlotte route saw a 28% jump over 2007 ticket sales.

To commuters, rail made more and more sense with every cent unleaded ticked upward.

But what if the same route took half the time by train as it did by car — and cost less?

That's the scenario in the making across the country's "mega-regions."

Mega-region is a term coined by Richard Florida, a transportation researcher who created an economic geography of the U.S. based partially on how lit up different areas are on nighttime satellite images.

The most heavily populated and economically vibrant mega-region is the Boston-Washington, D.C. corridor, known to many as the Megalopolis.

Nationwide, mega-regions like the ones stretching from Chicago to Kansas City and from San Diego up to Sacramento account for 3/4 of American economic activity. Check out this Department of Transportation map to see what I mean:

High-speed rail in these 11 key areas would lessen commute times between close-together cities like Washington and Baltimore, and it would let business travelers get from Boston's city center to the nation's capital in less than 3 hours.

Baseball fans in Baltimore know the bittersweet boost the local economy gets each year from Amtrak, as Red Sox and Yankees fans flood down for games against the Orioles. It turns out that it's cheaper for Boston and New York natives to catch the train down and catch a game than it is to buy a ballpark seat in their hometowns!

And the simple fact is that the nation's demographics are shifting. More Americans living in cities where they do not have family means more trips home, which require more transportation options than just planes and automobiles.

As people move, so does money. Florida will soon surpass New York in population, and the state wants high-paying, tech-oriented jobs to reinvigorate its flagging tourism economy.

Turning Florida into the Silicon Sunshine State will require high-speed lines between cities like Orlando and Miami, as well as commuter networks surrounding each city.

Tampa Congresswoman Kathy Castor told Time recently that "high-speed rail is a high-tech project. . . a linchpin of Florida's reinvention."

So what's going on in the country's most populous state now?

California, Here it Comes!

Some of the security hassles of air travel may be replicated as rail lines get more packed, but times to and from far-flung airports would be eliminated. What's more, you can book a train ticket for a reasonable price at any train station and often without an attendant. There's no comparison when it comes to the runaround.

There's also a huge savings to be had at the state level, as California makes clear.

California's state government says a statewide high-speed rail network would eliminate the need for five runways and 90 boarding gates to be built by 2020, and construction crews alone would employ 160,000 workers.

By 2035, all jobs associated with expanding railway infrastructure in the Golden State could come to 450,000!

That's in addition to saving on traffic congestion, pollution, and health care costs for citizens (3000 lane-miles of freeway would also be cut out by rail), and creating one billion dollars in revenue surplus for Sacramento, where state legislators are perennially locked in budget strife.

You know what, though? It's right to doubt the government's ability to get rail done right. Private companies with international experience will play a major role in the high-speed rail rollout.

The 'Big Dig' Bogeyman

As some politicians in Washington push for an "all of the above" approach to energy that includes more oil drilling in the U.S., do they also stand behind giving Americans the best options in efficient intercity travel?

Boston's "Big Dig" highway project became a laughing stock for time and cost overruns in a government-led project. The boondoggle even cost a life when temporary patchwork crushed a vehicle.

NJ Transit doesn't want the ARC (Access to the Region's Core) tunnel to become "Big Dig, Part 2." And in the southern part of the state, we're seeing an example of how rail projects can grow from more than one root.

The Delaware River Port Authority (DRPA) failed to get approval recently for its own diesel-fuel light-rail line towards Philadelphia's New Jersey suburbs.

DRPA couldn't get stimulus funding because the project didn't meet federal criteria on "ridership, cost-effectiveness, and commuter time savings."

"It's extremely difficult to meet the marks they put down," DRPA CEO John Matheussen told the port authority board.

How many proposals like DRPA's from around the country get federal funding, according to the CEO? Only two out of every 100 projects. That leaves room for states to act more quickly, he says, which can bring a time and cost advantage as the race for regional high-speed rail heats up.

America Plays Catch-up with International High-Speed Rail

Many Americans who have traveled on Japan's shinkansen or France's TGV high-speed rail systems know how many benefits come along when you travel at speeds over 110 miles per hour.

In fact, projections of how quickly one could get from, say, Boston to D.C. by high-speed rail are not based on theory alone. . .

Domestic high-speed travel schedules are being calculated using TGV speeds and similar distances in France.

For now, traversing the Megalopolis in three hours overland may seem like a dream, but there is a practical reality to high-speed rail and its economic impact.

High-speed rail stations could boost nearby real estate values when they're constructed, helping patch the market holes left by the sub-prime meltdown.

And on a personal level, elderly travelers and people whose physical impairments prevent them from comfortably traveling by plane are eager for an option.

There we see a clear benefit to Americans with a variety of physical conditions (not to mention fear of flying), as well as an influx of new money into sightseeing and other activities.

Comfort is a major component of the rail travel experience. Listen to your iPod, read the paper, or nod off. . . it's up to you. (I usually try for the first and end up doing the last.)

In much of the world, train service includes the same kind of aisle service flight attendants provide. Believe it or not, the air industry got that idea from the choo-choo!

Which brings us to a strange pivot point between the status quo and the simmering potential. . . maglev (magnetic levitation) rail between airports and city centers.

Maglev Moves Faster

I rode the maglev line from Shanghai's international airport right to Longyang Road in the city and watched the digits tick up, up, and way past any speedometer I'd ever seen before.

The Shanghai maglev goes from 0 to 220 mph in just two minutes! Expect to rocket over 280 — cruising speed — and complete the 19-mile trip in seven or eight minutes.

With millions of new drivers hitting the road every year, the Shanghai maglev helps prevent congestion on the way to China's third busiest airport.

Is maglev viable here in the United States? We've heard suggestions of "maglev incorporating superconductor technology" as a means of transmitting electricity while running rail lines.

Smart grid meets smart rail. . . now there's an idea!

A maglev line from Anaheim, California, to Las Vegas, Nevada, has been on the drawing board for decades as an attempt to pull traffic off the I-15 highway corridor.

But just since the beginning of June, Nevada Senator and Senate Majority Leader Harry Reid seems to have given up on maglev in favor of a conventional (probably diesel), high-speed train called the DesertXPress. Instead of running on a cushion of air like maglev, the latest proposal is back to wheels and aims for around a 150 mph peak speed — just above what the Japanese achieved over a generation ago.

"Maglev is not a priority for me anymore," the Leader said on the subject. "We need to get people moving."

We can all agree on the need to get people--and money--moving.

And rail infrastructure companies are chomping at the bit to deliver their products and services in exchange for serious dollars.

A Tragic Reminder

On June 22, America and the world saw a tragic reminder of just how essential infrastructure maintenance is. When two Red Line D.C. Metro trains collided on June 22, killing nine passengers and severely injuring many others, the response was an understandable "How could this happen?"

Investigations into the incident itself are continuing, but Maryland Congressman and House Majority Leader Steny Hoyer knows that moving millions of people a day on outdated infrastructure is an ongoing gamble with stakes that are far too high to fudge.

So Hoyer has just proposed an additional $3 billion in Metro transit improvements.

That's a positive move, but it's too much of a response to problems that have been allowed to develop. Forward-thinking investment is what systems like D.C. and other cities like it need, before disaster strikes.

As citizens, we need mass transit to be safe not only for existing riders but also to attract new ones. Getting Americans to ditch their cars is tough enough without such disasters deterring them further.

As investors, we want to put money into companies that can help policymakers be proactive and stay ahead of the curve when it comes to safety and efficiency.

One company I'm quite bullish on in this area is a European firm that has developed fault analysis systems that help prevent accidents while enabling a level of energy efficiency not typically found in any of our domestic rail systems today.

We're talking about safety implementations with the added benefit of energy efficiency — it's a win-win for those looking for a place to put all that stimulus money set aside for new rail development in the U.S.

An added benefit to this company is that it's not new to the rail game, either. . .

For years, this company has been landing deals with railway systems in Finland, Hungary, Italy, Germany, and Switzerland. From rail infrastructure to signaling and telecommunication systems, these guys manufacture and service all the systems and components used in modern urban, conventional, and high-speed rail systems.

And there is little doubt they'll soon be called upon to help implement the massive rail development we're about to see here in the U.S.

To find out more about this company, click here to get our latest report, Worldwide Rail Winner. 

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