Abstract
US President Barack Obama has released a strategic plan to develop high-speed
rail in the US. A Vision
for High-Speed Rail in America identifies 10
potential corridors in the country. BMI, however, is
concerned for the
feasibility of the ambitious plans considering the level of cost and planning
associated
with developing high-speed rail. Obama announced the plans to
develop a network of high-speed rail
routes across the country in an
attempt to revolutionise the US transport network. The project is hoped to
boost the economy, create jobs, reduce dependence on oil and make transport
more ' green' in America.
The proposal includes 10 high-speed rail
corridors, crossing more than 20 states and plans to upgrade the
existing
high-speed line. In the federal stimulus package, US$8bn has been allocated to
developing highspeed
rail; an additional US$1bn will come from the budget
each year, proposed under the FY2010
budget, for the next five years to
support the plans. However, there are concerns, which BMI echoes, that
this is not nearly enough funding. The US currently has only one high-speed
line: Amtrak' s Acela
Express, which links Boston to Washington DC via New
York. However, the line tends to travel slower
than the 125mph needed to
classify it as ' high speed' . This is compared to 1,180miles of high-speed rail
in
France, a country roughly the size of Texas. There are plans underway
in California already to develop a
high-speed railway stretching 800
miles, linking San Francisco to Los Angeles. That project alone is
estimated to cost around US$45bn, far more than the entire amount allocated
from the federal stimulus for
10 corridors, indeed the cost for all 10
would amount to around half of the federal stimulus package. This
comparison highlights the fundamental financial issues that BMI warns of.
There are plans to involve the
private sector in the proposal, something
BMI believes will be necessary to get the projects on track. Best
estimates for the California rail put full operation in 2020, and this is a
project that has already been in
planning for some time. The strategic
plan for the development of high-speed rail will concentrate on
projects
that can be completed quickly and provide job creation sooner rather than
later. In light of this,
BMI believes that it may be decades before some
of the planned corridors come to light, if at all.
This latest issue of
BMI’s US Transport Report predicts that over the 2009-2013 forecast
period, overall
freight carried across all transport modes will grow by an
annual average of 1.2%, measured in million
tonnes-km (mntkm). This will
lag predicted economic growth which we see averaging 1.4%. Both
numbers
have been pulled down by the recession that we see as being the dominant story
of 2009-2010.
By transport mode, we see growth being led by railfreight
(1.6% per annum), followed by airfreight
(1.4%), road haulage (1.2%),
shipping (0.9%) and pipeline throughput (0.7%). Companies will be
monitoring the fall in demand for freight to assess when the bottom of the
cycle has been reached and
when to anticipate a possible recovery. We
expect transport and communications GDP to grow to
US$1.143trn by 2013,
representing 6.6% of US GDP.
The protectionist trend in US freight
transport first hit the headlines early in 2006, when US Congress
broke
ranks with President George W. Bush and successfully opposed the sale of a
controlling interest in
six key ports (including New York, Philadelphia,
and Miami) to Dubai Ports World (DPW) on security
grounds. Under intense
political pressure DPW, which acquired the ports through its takeover of
Londonbased
Peninsular & Oriental (P&O), then agreed to sell its US
interests to a third party, an American
International Group (AIG) unit.
Similar protectionist trends have shown up in the aviation sector, where
Congress and trade unions tried to hold back plans to give foreign investors a
greater say in the running of
US-based airlines. At the beginning of 2009
another international player, Deutsche Post-owned DHL,
withdrew from the
domestic US express delivery market after years of losses. The exception,
perhaps
because it has gone largely unnoticed, has been road transport,
where a series of foreign toll-road
operators have been buying large
stakes in US roads. But here too there are signs of greater caution. BMI
believes the new government will be under continuing pressure to take a
protectionist stance on a range of
trade and transport issues, but since
taking office has shown itself minded to hold back from moving far
in that
direction.
As the largest economy in the world, it could be argued that
there is already enough internally-generated
competitive drive in the US
freight business. BMI disagrees, taking the view that even major US
companies could improve their performance by being exposed to greater external
competition. Major US
airlines have, despite some exceptions and recent
improvements, piled up massive losses and have been in
and out of
bankruptcy protection. There has been a notorious lack of new investment in
the country’s
pipeline and refinery infrastructure, exposed during
Hurricane Katrina.
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