Brian Dondanville Maxx Paez Kevin Ortenzio Sean Rademaker [email protected] [email protected] [email protected] [email protected]
What is the plausibility of implemen ng High‐Speed Railway (HSR) Structure of passenger railroad service: Drivers of Change: systems in the United States for intercity transporta on? 1. Commuter Railroads (28 services in U.S.) 1. Consumers – demand ridership uncertainty; other modes of transit 2. Intercity Passenger Rail (1 service – Amtrak) 2. Society – increasing popula ons could lead to land scarcity; pollu on While ridership demand and economic feasibility are the most significant concerns •HSR is an opportunity for the government and/or private equity 3. Government – loyal support of this mode of transit; economic and barriers to entry for HSR, our research shows that prime investment societal benefits firms to turn the notoriously unprofitable government‐subsidized opportuni es lie within U.S. regions featuring both popula on and Constraints of Change: IPR service profitable. economic growth. 1. Government – lack of available state and government funding; budget •Promising entry point for HSR: Northeast Corridor, which connects deficit ci es between DC and Boston 2. Private Equity Firms – disinterest in leasing; sca ered cost es mates •Barriers to entry: demand uncertainty and economic feasibility. & uncertain demand
Metrics: Expected Future (by 2025): 1. Popula on: More specifically, this measures the total number of residents living in agglomera on 1. The Northeast Corridor, which is comprised of Boston, New Haven, New York City, Philadelphia, within each urban area. 2. Metropolitan GDP: Necessary because it is the primary measurement used to record economic Bal more, and Washington D.C. offers the most promising op on for HSR. value. 2. The Northeast corridor will derive the necessary cash flows in the future to make HSR an NPV posi ve project. Most Qualified Corridors for HSR: 3. It is likely that the primary U.S. HSR venture would require government funding. 1. Northeast Corridor 2. Chicago Hub Network 3. California Corridor
Popula ons by Corridor Total Annual Ridership Metropolitan GDPs by Corridor
45,000 18000 $4,500,000 40,000 16000 $4,000,000 Northeast Northeast 35,000 14000 $3,500,000 California Northeast California 30,000 12000 $3,000,000 Chicago Hub Chicago Hub 25,000 10000 California $2,500,000 20,000 South Central 8000 $2,000,000 South Central Florida Florida 15,000 6000 Chicago $1,500,000 10,000 Southeast 4000 Hub $1,000,000 Southeast Shinkansen 2000 Total GDP (in Millions) Shinkansen Popula on (in thousands) 5,000 $500,000 0 ‐ $0 1990 1995 2000 2005 2010 2015 2020 2025 Total Passengers (in Thousands) 2001 2005 2009 2013 2017 2021 2025 2006 2008 2010 2012 2016 2018 2020 2022 2014 2024 Year Year
1. Stay‐ca on – Low Demand, Public En ty Uncertain es: Needy Travelers – High Demand, Public En ty 3. Needy Travelers – High Demand, Public En ty •Government will not take steps toward priva zing the public en ty of 1. Ridership Demand (Changes in Resident and Business traveler Re ring Boomers are looking for more comfortable and efficient modes •Re ring Boomers look for more comfortable and efficient modes of travel preferences) railroads. •Businessmen and women benefit from HSR • of travel 2. Private versus Public Ownership of Rail Sector (Government Large investment in HSR technology is out of the ques on •Federal investment in HSR innova on well received by U.S. ci zens versus Business) 2. Wait and See – Low Demand, Privately Held Businessmen and women benefit from HSR Federal investment in HSR innova on would be well received by the 4. Where is the Funding – High Demand, Privately Held • Unlikely that profits would be experienced in the short‐term ci zens of the United States. •Priva zing the rail industry would likely pave the way for a high‐speed rail Preferred Future: •Current low demand could translate to high ridership demand in the future High demand for business and residen al travelers and Where is the Funding – High Demand, Privately Heldoverhaul that could turn a notoriously unprofitable industry profitable. once HSR is implemented and consumers are sa sfied with their HSR business ownership Priva zing the rail industry, in whole or in its majority, would likely pave experience. the way for a high speed rail overhaul that could turn a notoriously unprofitable industry profitable.
1. While the ridership growth trends per city are large determinants of HSR performance, it is the urban agglomera ons and GDP per capita that are most appealing to businesses 2. Where are services needed? Where are consumer demands high? •Miami: growing; may be too late for innova on that will yield rapid future growth •Detroit: not growing, opportunity for rapid growth in future