Transportation Deployment Casebook/2014/High Speed Rail

Qualitative Analysis

Mode Description

High Speed Rail (HSR) is a mode of rail transport that uses specially designed infrastructure and rolling stock to transport goods (usually passengers) at speeds higher than conventional rail. There is not one single definition of HSR in use throughout the world. The European Union defines HSR in Directive 96/48 as encompassing three elements:

• Infrastructure: track built specifically for high-speed travel of at least 250 km/h or track upgraded for high-speed travel of at least 200 km/h.
• Rolling Stock: technologically advanced rolling stock capable of safe, uninterrupted travel at speeds of at least 250 km/h.
• System Compatibility: rolling stock and infrastructure characteristics must have excellent compatibility.

The International Union of Railways, from which data was obtained for the quantitative portion of this assessment, generally relies on the EU definition, noting that HSR is more about the combination of all the elements that constitute the system (infrastructure, rolling stock, operating conditions) than about a train traveling above a certain speed.

High Speed Rail has several advantages as a transportation option:

• Capacity: HSR has the potential to move large amounts of people quickly and safely, mitigating congestion on road and air infrastructure.
• Safety and Reliability: HSR is less impacted by weather conditions than air or road transport and has proven to be a very safe mode of travel for riders.
• Environmental Benefits: HSR uses less energy per passenger kilometer than road or air transport.

The market for HSR is generally to connect large, closely-spaced urban areas where there is a high demand for transport. It is generally thought that HSR competes best at distances between markets of 200 kilometers to 800 kilometers, although some suggest that depending on regional characteristics, they could be competitive at longer distances.

The Scene

In many countries after WWII, automobile and airplane travel became the dominant modes. While passenger train travel continued to be popular in many places, roads and airports were filling up with congestion and authorities were looking for ways relieve this. Several countries had experimented with running trains at high speeds before WWII, but it wasn't until after the war that serious effort was put forth for implementation.

Invention

The first true High-Speed Railway was the Shinkansen in Japan, which began operations in 1964. It connected Tokyo with Osaka, a distance of 515 km. Due to Japan's mountainous terrain, the country's rail lines had a narrow gauge (1067 mm) and sharp curvature that were not suited well for higher speeds. Because of this, a completely new line was built at standard gauge and with many tunnels and bridges to afford high rates of speed and greater capacity. Continuous welded rail was used to increase comfort of passengers and decrease wear and tear on track joints. The initial design for the system and rolling stock allowed for a top speed of 250 km/h, however, the World Bank, which was financially supporting the project, was concerned that the technology had not proven itself and therefore limited the top speed to 210 km/h. A few years later this restriction was lifted as the technology proved to be safe and reliable.

The first High-Speed Railway in Europe that operated with a top speed above 250 km/h was the French TGV on the Paris-Lyon route. After success in Japan, officials and researchers in France began looking at implementing high speed trains. Initially, the plan was to use gas turbine engine technology to power the trains. However, the 1973 oil shock considerably raised prices and made it clear that electrification was the way to go. This forced researchers to develop pantographs that would be able to withstand speeds above 250 km/h. It was decided that the initial route for implementing this new technology would be the Paris - Lyon corridor, as it was already at capacity and was one of the busiest corridors in the country. A completely new rail line would be built, like the Shinkansen, that would use very gentle curvature along with bridges and tunnels. Once this was accomplished and testing completed, the line opened for service in 1981. One advantage that the TGV has over the Shinkansen is that it uses the same track gauge as the rest of the rail lines in France. This means that it has the ability to use existing infrastructure to access crowded places without a completely new rail line needing to be built. Also, if there is an incident on the HSR line, trains can be routed on other tracks and still reach their final destination.

Early Market Development

Early HSR lines in both Japan and Europe were a success and quickly became very popular. Their ability to significantly decrease travel time compared to driving, as well as be time competitive with air travel, allowed them to gain a large market share. The original market niche for HSR was a heavily traveled corridor between two large urban areas that were not too close but also not too far apart. It was in these places where the added capacity of HSR as well as decreased travel time and increased comfort really made them popular and well utilized.

The Role of Policy in Birthing Phase

One policy that helped with the birthing phase of HSR in Europe was the heavy regulation of airlines during this time. Airlines operating in Europe were bound by a host of operating agreements between nations that dictated everything from fares to frequency to capacity. There was very little room for competition. As more HSR lines were implemented and passengers shifted from air to train on these routes, there was almost nothing the airlines could do to try and use fare prices to compete with HSR and gain back passengers. This has since changed as the air market in Europe was liberalized in the early 1990's, and now airlines have almost complete freedom to decide fares, frequencies, aircraft sizes, and routes. However, during the birthing phase, this heavy regulation on airlines helped prop up new HSR lines.

The Growth of the Mode

Growth of HSR continued steadily from its birth between the mid 1960's and early 1980's. Determining exactly when it went from the birth to the growth phase is a little tricky. If it is assumed that the birthing phase ends when 10% of the saturation level (K) is reached, this happened right around the year 2000 (see the quantitative analysis below). However, a quick look at the chart below shows the steady rise through the 90's and 00's and then the sudden explosive growth starting in 2009. So it could be argued that this is when the growth phase really began. This huge, sudden growth in the kilometers of HSR is mostly due to the opening of new lines in China. China has been building new HSR lines at a frantic pace since the mid 00's and by the end of 2013, had over 10,000 kilometers of lines in operation - the largest network in the world. In addition, over 7,500 more kilometers are under construction and another 3,000 kilometers are in the planning stages. Almost all of these lines have top speeds between 250 and 350 km/h.

For many years, HSR was exclusive to Europe and East Asia (unless one counts the Northeast Corridor in the U.S. as HSR, which the author does not agree with). Recently however, countries elsewhere have begun implementing HSR technology. Turkey opened their first HSR line in 2009 and now has almost 700 km in operation, with another 400 under construction. They plan to eventually have a network of almost 3,000 kilometers that would connect almost all parts of the country. Saudi Arabia is also constructing a HSR line between Medina and Mecca that is set to begin operations in 2015. Morocco is building a new HSR line that will be the first one on the African continent.

In the United States, HSR has had a tough time catching popularity with politicians and other government authorities. Despite President Obama providing $8 billion in stimulus funds in 2009 for HSR projects, energy behind it has been hard to come by as of late. California voters approved initial funding for a line between LA and San Francisco, but this has since been bogged down in legal and financial messes that may end up derailing (no pun intended) the entire project. As the technology continues its trajectory through the growth phase worldwide and every year gets one step closer to a mature system, spending the enormous capital costs required for HSR will become more and more questionable.

Development during the Mature Phase

Worldwide, High Speed Rail has not reached the mature phase yet. It is still a growing technology, with many kilometers of track being added annually and thousands more kilometers in the planning stages. According to the quantitative analysis below, it is estimated that HSR will reach maturity sometime around 2050, although future growth is highly dependent on governments being able to take on the massive capital costs and debt associated not only with constructing a HSR line, but also operating and maintaining it. So far, governments have been willing to undertake this as the benefits of HSR have been seen to outweigh the enormous costs. As the technology enters the mature phase, investing huge amounts of capital will bring diminishing returns on investment. Many of the ideal markets for HSR will already have lines and thus, new lines will be located in markets that are not quite as ideal and will likely struggle to capture enough ridership to cover costs. Also, much of the technology by that time will be locked-in, discouraging innovation that could potentially benefit the system.

Quantitative Analysis

Data obtained for the quantitative analysis portion of this assessment came from the International Union of Railways, which keeps track of worldwide HSR development. The metric used for analysis was total kilometers of HSR lines in the world. Only lines in operation by 2013 or earlier were used. Lines under construction or in the planning stages were excluded.

In order to analyze the life cycle of high speed rail, the following equation was used: S(t) = K/[1+exp(-b(t-t0)]

S(t) = status measure (total kilometers in operation)

K = saturation status level

b = coefficient

t = time (in years)

t0 = inflection time (year when 1/2 K is achieved)

Since HSR has not reached maturity, K was unknown and needed to be estimated. This was done using an ordinary least squares regression, with different values of K used to do each regression. The regressions gave values of r-squared, which measures the goodness-of-fit of the estimate with the actual data. The closer the r-squared is to 1, the better the fit.

This chart shows actual total kilometers and predicted total kilometers of high speed rail.

Using the above method, a K value of 50,000 kilometers was determined. The r-squared value was 0.95, which shows that using 50,000 for K will match the actual data quite well. This K value was also chosen because it coincides with data from the International Union of Railways, who added up all the HSR lines in the world that are either in operation, under construction, or in planning. The total for this came to about 54,000 kilometers. With this in mind, K = 50,000 seems like a reasonable estimate of the saturation of HSR kilometers, as some of those planned lines will probably not get built while others that are not currently being planned may eventually be constructed. Using 50,000 for K gives an inflection time (t0) of 2023. This is the year when the total kilometers of HSR will stop increasing at an increasing rate. It is also the year when HSR will be approximately half way through its growth phase, with each additional year beyond this getting closer to the mature phase. Assuming that the mature phase begins at about 90% of K, this will occur right around the year 2050. Assuming that the birthing phase ends at about 10% of K, this occurred in the year 2000, although explosive growth would not start occurring for about 9 years.

Year	Km Added	Total Km
1964	515	515
1972	161	676
1975	393	1069
1981	569	1638
1982	735	2373
1984	74	2447
1985	27	2474
1988	90	2564
1989	291	2855
1991	361	3216
1992	703	3919
1994	450	4369
1997	316	4685
1998	189	4874
1999	62	4936
2000	362	5298
2001	259	5557
2002	346	5903
2003	1143	7046
2004	754	7800
2005	21	7821
2006	409	8230
2007	990	9220
2008	537	9757
2009	2635	12392
2010	3074	15466
2011	2195	17661
2012	2726	20387
2013	2147	22534