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From the E. Hunter Harrison Chair: Where is Amtrak Going?

By Phil Bell Recently, I took a walk through Washington Union Station to buy chicken strips from a new restaurant. Washington’s Union Station is, in many ways, an example of today’s Amtrak, with the glitz and glamour of bright electronic lights shining down on dirty floors in an aging facility that has seen better days. The main entrance of the classic building remains iconic, but a quick look around sees fraying around the edges and the realization that all is not ok.

 

Similarly, Amtrak in 2024 is a strange and stagnant entity. While some services like the Regional trains serving Virginia are seeing record-breaking traffic, just a few tracks over, the Capitol Limited is running with short consists that lack the Superliner Sightseer-Lounge which many non-railfans crave. It’s a jarring sight for someone who witnessed Amtrak’s growth under W. Graham Claytor, Jr. in the 1980s and believed that Amtrak could grow organically thanks to revived interest in passenger rail that is being driven by prospective passengers themselves.

 

While it is tempting to name a particular executive or group of executives as being the problem du jour, I believe Amtrak’s problems go all the way back to the company’s founding in 1970 as Railpax. You see, nothing in the history of the industry or Amtrak itself convinces me that a National railroad operator can be successful. After all, railroading is unique because it combines elements of local, regional, and national service under one roof…and adds to it the need to maintain private infrastructure. Therefore, whether we are talking about passenger or freight service, almost every train must be all things to all people, and this makes the idea of one entity serving all a truly bad one.

 

The first reason is the simple reality that it is incredibly difficult for the people at the top of a corporation to influence those at the bottom of the corporation. Legendary entrepreneur Peter Thiel illustrates this in his book Zero to One, by discussing how a state’s governor or legislature has very little ability to make the people at the DMV be less ridiculous. Amtrak President Stephen Gardner is likewise largely unable to convince the Sunnyside Yard coach cleaners to check the space between the tables and car walls in lounge cars…where you will almost always find months or years of grime, just inches from your food. When you consider that Gardner’s office is less than 300 miles away from Sunnyside Yard, how much influence do he and his apparatchiks have in Seattle, WA; Hastings, NE; or Grand Forks, ND?

 

To be fair, railroads of the pre-Amtrak era, such as the Penn Central and Burlington Northern faced the same difficulties with both passenger and freight service. But, the logistics of a regionally-oriented operation make it much more likely that both ends of the chain will be able to influence the other. And remember, this isn’t just about taking orders from top execs, it’s about sharing intelligence on traffic patterns, customer desires, and the impact of various initiatives.

 

The second reason that a single, National rail operation fails is the inconsistent need for capital allocation. Here, I am not just speaking of the funds for upgrading station platforms or buying new railcars. I am speaking of the need to operate a service for a month to link New York City with the New York State Fair in Syracuse, or to add significant capacity to the Silver Service trains to meet the various snowbird travel seasons. Making these decisions is difficult for a single entity to do because it can’t simply tell ticketed passengers on the Crescent or Illinois Zephyr that their cars are needed elsewhere. Yet, if a pre-Amtrak railroad were willing to take the risk, it could develop a program where cars are shared with other carriers to allocate capacity when and where needed. This was seen with the seasonal use of dome cars on Southeastern railroads, where the cars operated in other parts of the country when not needed by carriers like the Seaboard Coast Line. In a marketplace with multiple passenger operators, this works and passengers win…in the present environment, they lose, and so do employees and taxpayers.

 

Finally, there is one more negative to the single Amtrak arrangement, and that is a limitation on the number of suppliers who serve the industry. Think about it: the last batch of Viewliner cars were built by a Spanish company, while the newest passenger locomotives are German, even if both groups were assembled in the United

States. Of course, we still long for the days when a passenger train might have railcars from Budd, Pullman-Standard, and American Car & Foundry…plus maybe some built by the railroad itself, or smaller-name manufacturers like Bethlehem Steel or Harlan & Hollingsworth. But who will invest the capital to compete in this market when the customers are few AND the barriers to entry are high?

 

Very few companies, it turns out.

 

Now, I could go on about how Amtrak could do better by changing their food, equipment strategy, and even the CEO and senior managers. Yet, if nothing is done to the basic structure of the company, little substantive improvement will ever take place, no matter how much money Congress provides or how big its strongest supporters can dream.

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From the E. Hunter Harrison Chair is a weekly column by All Things Trains Chairman Phil Bell. Please contact Phil by email at Phillip.Bell@Gmail.com with any comments or questions, and follow him on Facebook.

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