How Amtrak Expansion Threatens Supply Chains

I n the bipartisan infrastructure law, Amtrak received $66 billion in funding, its largest influx of federal cash since Congress created it in 1971. Amtrak’s statutory purpose was also changed from achieving “a performance level sufficient to justify expending public money” to “meet[ing] the intercity passenger rail needs of the United States.”

In other words, we’re not even going to pretend there’s financial sense in running passenger-rail routes across most of the country anymore. It would be bad enough if this change in purpose were only another example of the federal government’s irresponsible spending. But it’s worse than that: It could do real harm to the country’s freight-rail network at a time when supply chains are already facing unprecedented struggles.

Outside the Northeast Corridor (Amtrak’s most-ridden line by far, which runs from Washington, D.C., to Boston) and a few other spots around the country, Amtrak does not own the tracks it uses; freight railroads own them. And freight rail is a profitable, vital part of the American transportation network, while what Amtrak has in mind for passenger service is neither profitable nor vital.

One of the things that Amtrak wants to use its budgetary windfall on is restoring passenger service between New Orleans and Mobile, Ala. Amtrak previously connected these two cities, before Hurricane Katrina destroyed a portion of the tracks. Service was suspended in 2005 and has not been restarted since. One of the reasons for that is probably that the service isn’t very useful. Amtrak can sometimes give the impression that the suspension of service was an act of God, but Amtrak’s own report from December 2015 showed that ridership of the New Orleans–Mobile line had been declining for years even before Hurricane Katrina.

That report remains the most recent estimate of ridership and costs for twice-daily round-trip service between New Orleans and Mobile, which is what Amtrak wants to restore now. And its findings don’t bode well for Amtrak’s plan. Trains would make intermediate stops in Pascagoula, Biloxi, Gulfport, and Bay St. Louis, all in Mississippi. The 143-mile journey would take three hours and 23 minutes (an average speed of 42 miles per hour), while driving from New Orleans to Mobile on I-10 takes just over two hours. The report estimated that if the line were restored, it would have an annual total ridership of 38,400, and two round-trip services would mean four total trips each day. Divide the total annual ridership by the number of trips per year, and you get an estimate of just 26 passengers per trip. Amtrak would be better off running a bus — except that privately owned and operated intercity bus lines already service the route, with tickets costing around $30.

And we haven’t even considered the costs to taxpayers yet. The 2015 report estimates that the annual operating expenses of the New Orleans-to-Mobile service would be $6.15 million. Those 38,400 annual passengers would only generate $704,000 in revenue, the report says. Government, state and federal, would be on the hook for the rest of the $6.15 million total, plus the capital costs of continued investment in infrastructure.

Remember, those are Amtrak’s estimates, so they’re probably optimistic, and they’re from before Covid, when rail ridership was higher in general. Amtrak president Stephen Gardner testified to Congress in December that Amtrak is having a hard time maintaining its current level of service, with ridership at only 65 to 70 percent of pre-pandemic levels.

And yet, the Biden administration still wants to expand passenger-rail service. The Department of Transportation wants the Surface Transportation Board (STB), the federal regulatory agency tasked with adjudicating the dispute between Amtrak and track owners CSX and Norfolk Southern, to “set a precedent” by forcing the freight railroads to allow the Gulf Coast service.

“The outcome of this proceeding will be pivotal to the future development of intercity passenger rail in this country,” FRA administrator Amit Bose testified to the STB. Buying into that narrative, the mayors of Madison, Wisc., Scranton, Pa., and Crestline, Ohio, all testified before the same panel in support of the Gulf Coast service expansion.

Meanwhile, politicians from Alabama, in particular, are lining up to oppose the service. The reason? The Port of Mobile has grown to become a major part of Alabama’s economy, and having passenger trains on the tracks that service the port could cause snarls for freight. Mobile mayor Sandy Stimpson was quoted in FreightWaves as saying, “The Port of Mobile is not the same port it was in 2005 when Amtrak last operated in Mobile.” He said $1.4 billion in private and public money has been invested in the port since 2005, and that investment is set to continue: Just this year, the Alabama Port Authority announced a $54 million investment in a new intermodal container-transfer facility in Montgomery, connected to Mobile by CSX trains. Mobile is also the U.S. terminus for a rail ferry to Mexico, which received its second new ship late last year.

The same FreightWaves story quoted David Sessions, an Alabama state senator who represents the Mobile area, as saying, “I would love to see passenger rail — I believe in mass transit — but this area is so reliant on the services of CSX.” Also quoted was Mac McCutcheon, the speaker of the Alabama House of Representatives, who said, “I do not believe that this is the right time to voluntarily introduce dynamics that threaten to add to a serious supply-chain [crisis], which challenges our country.” Alabama’s commerce secretary, Greg Canfield, said, “If [Amtrak’s proposal is] accepted in [its] current form, the attractiveness of our business climate will erode.”

All nine members of Congress from Alabama (eight Republicans and one Democrat) signed a letter to the STB saying, “As a delegation, we are particularly concerned about the effects of Gulf Coast passenger rail service on the Port of Mobile, which in recent years has experienced tremendous growth.” The letter urged the board to proceed with caution, and added that, “Our ports and shippers should not have to bear the cost of facilitating Amtrak’s passenger rail service expansion.”

CSX and Norfolk Southern are adamant that Amtrak’s plan would disrupt their operations. They pointed out to the STB that the route between New Orleans and Mobile includes seven moveable bridges, which cause scheduling challenges as it is. They also said that most of the route is single-track, which makes it more difficult for trains to pass each other and stay on schedule.

Proponents of the passenger service say the skeptics are being dramatic. During cross-examination at the STB hearing, STB chairman Martin Oberman questioned the veracity of the freight railroads’ claims of interference, saying that only 5 percent of current container volume at the Port of Mobile is interchanged by rail.

Even if CSX and Norfolk Southern are exaggerating and the line has sufficient capacity to carry passenger service right now, focusing on the present at the expense of future growth is exactly the type of mindset that created our supply-chain struggles in the first place. Our West Coast ports have shown themselves to be woefully inefficient and unable to meet the needs of American consumers and producers alike. Ports in the Southeast have responded with increased investment to make themselves into attractive alternatives. An article from the Federal Reserve Bank of Atlanta lists expansion projects not only in Mobile, but in New Orleans, South Louisiana, Gulfport, Tampa Bay and Jacksonville, Fla., Miami, and Savannah, Ga., among other places. That’s behavior policy-makers should want to encourage, not impede with passenger service that hardly anyone will use.

America needs more freight-rail capacity now, and as ports expand, that need will only continue to grow. So policy-makers need to decide: Will they support expanding superfluous passenger-rail service, or will they prioritize efficiency in supply chains?