Despite spending $42m on two new trainsets just two years ago, ODOT might be forced to suspend Cascades service south of Portland on July 1. In the post-PRIIA landscape – in which states must fully fund rail corridors of less than 750 miles – Oregon needs $28m in the 2015-2017 biennium to keep the trains rolling. With $17.6m already set aside from a hodgepodge of sources including unclaimed gas tax refunds and custom license plate fees, a gap of $10.4m remains. Former Governor Kitzhaber duly requested the full $10.4m, but the legislature thus far has only proposed $5m. If the $5.4m gap isn’t closed by July, the service will disappear.
When ODOT purchased its trainsets, it also prioritized intra-Oregon travel, changing the schedule to enable day trips from Portland to Eugene for the first time and reducing daily Seattle-Eugene trains from two to one. The expected demand never materialized, and ridership has fallen by 9.1% since 2013. While the other train’s ridership is mostly flat, the added morning train from Portland to Eugene has been a disaster, with just 8,800 riders in 2014, or 24 people per train.
ODOT’s recent performance report to the legislature paints a similarly grim picture, with runaway costs, poor on-time performance, worsening freight interference, and dropping ridership:
On the route’s performance:
The change required passenger trains heading in opposite directions to pass one another three times daily between Portland and Eugene. Although where these passings were anticipated to occur was designed into the new schedules, the actual location of each interface is determined daily by the host railroad’s dispatchers and any resulting delay is recorded as passenger train interference (PTI). The amount of PTI being incurred far exceeds that contemplated when establishing the new schedules and has been a contributor to host railroad delay.
Delayed passenger trains cost the service through loss of revenue (fewer passengers resulting from discouragement from unreliable timeliness) and increased costs due to overtime and other expenses. Oregon has seen a 9.1 percent drop in ridership since January 2014. A drop in ridership was anticipated initially because of the schedule change, with the ridership rebounding over the course of several months. This has not proven to be the case.
On rising costs:
Amtrak operating costs continue to increase annually from $745,384 for the first full year of service (1995) to around $8.2 million in 2014. Additionally, costs for Oregon increased over the past three years as a result of Amtrak’s implementation of a new accounting system that better isolates and identifies Cascades service costs. In addition, a recent change in methodology changed how Oregon and Washington divide ticket revenue and shifted more of it to Washington. While fair, this change increased ODOT’s out-of-pocket costs.
In addition, ODOT purchased two new Talgo passenger trainsets. From the beginning of service in 1994 until 2013, service in Oregon was provided using trains owned by Washington and Amtrak—meaning Washington was subsidizing Oregon. However, Washington will soon increase the number of daily trains between Portland and Seattle and will need its trains to serve this portion of the Corridor. In order to avoid having to cancel service in Oregon, ODOT used federal American Recovery and Reinvestment Act (ARRA) funds to purchase two new trainsets that went into service in 2013. Owning these trains – while allowing ODOT to continue passenger service in Oregon – also requires ODOT to pay an additional $2.4 million for annual train maintenance costs.
On exploring non-Amtrak operators:
ODOT and WSDOT have taken efforts to control the rising costs of the Amtrak Cascades service. Several of these efforts are outlined below.
ODOT and WSDOT, with assistance from the states’ consultant, Interfleet, are pioneering efforts to build a passenger rail operating model from the perspective of a start-up service. By developing modeling that incorporates cost averages drawn from other rail passenger services, the states will better position themselves to understand, validate and negotiate future agreements with Amtrak or other prospective providers. This modeling will include feedback, development and testing from Amtrak, other states and eventually the FRA.
$2.4m in annual maintenance costs ($6,600 a day for two trainsets!) is an enormous burden, and this cost alone eats up the first $18 of each intra-Oregon passenger’s fare. And with Amtrak no longer pitching in financially, ODOT and WSDOT are absolutely right to explore other operators, if for no other reason than to try to win concessions from Amtrak . On maintenance, labor, and operations costs, Oregon needs a better deal.
With extremely high costs of entry, high capital and labor costs, and a uniquely difficult regulatory burden, economies of scale are passenger rail’s only salvation. Spending the money necessary to grow and sustain a successful passenger rail service takes dedication and a bit of faith, but it’s the only way to make intercity rail pay off. Go big or go home. In the U.S. we have generally pursued the worst of all worlds, providing very low levels of very expensive service, incurring all of the sunk costs and reaping none of the economies of scale.
As dire as this all sounds, the answer is still more investment, not less. While there is no sugarcoating the recent performance of the Oregon trains, that is no reason to cancel them. Poor performance can be remedied, but the loss of institutional and bureaucratic memory that would accompany the elimination of rail service cannot.
So write your legislator and ask both for full funding and an overhaul of the service. Fight for capital improvements that free the trains from the bottlenecks of Union Pacific. Revert to the old schedule to match peak-direction demand into Portland. Aggressively pursue efficiencies. Explore other operators. Integrate as much as possible with WSDOT to jointly share costs. Let’s get back to the success stories of 2011-era Cascades.