WSDOT issues RFI for Cascades service

[CHamilton]

http://www.wsdot.wa.gov/NR/rdonlyres/86EB2449-DE3E-4830-BAA3-3A66CB82858D/0/RFI20140409CascadeService.pdf

Cascades Intercity Passenger Rail Service Opportunities
I. Introduction
The purpose of this announcement is to gather information from providers of rail services
about service delivery options to provide more convenient, rapid, and reliable intercity
passenger rail service between Vancouver, British Columbia and Eugene, Oregon. These
submittals are not responds to deliver the service but will be used to identify potential
efficiency improvements to the Cascades Intercity Passenger Rail Service.
II. Statement of Need
Washington and Oregon currently contract with Amtrak and other service partners to
provide a quality intercity passenger rail service that customers value with clean, safe,
reliable travel; and comfort and convenience, including amenities such as Wi-Fi and food
and beverage service. At the same time, rising costs and increasing budget constraints
require the Washington State Department of Transportation (WSDOT) and the Oregon
Department of Transportation (ODOT) to minimize the financial impact to the states
while continuing to achieve transportation goals. The states are requesting opportunities
for cost reduction and developing priorities based on what will generate the best value
relative to the resources required in a manner that will:

• Provide an efficient, safe, and cost-effective alternative to highway, bus, and air travel;
• Support future growth of intercity passenger rail service on the Pacific Northwest Rail Corridor between Vancouver, British Columbia and Eugene, Oregon;
• Operate an efficient, high-quality intercity passenger rail service that that help minimize the need for state subsidies;
• Provide flexibility for WSDOT and ODOT to manage service amenities and business costs;
• Be sensitive to community and environmental impacts; and
• Integrate with local roadway, transit, bicycle, and pedestrian transportation networks.

 

[neroden]

It had to be asked. Do you think anyone's going to call them back? I doubt it. The speculation was always that BNSF might want to operate Cascades itself, but BNSF seems to have its hands full.

 

[afigg]

It had to be asked. Do you think anyone's going to call them back? I doubt it. The speculation was always that BNSF might want to operate Cascades itself, but BNSF seems to have its hands full.

I expect there will be a number of responses to the RFI. We will have to assemble a list of the usual suspects that will respond and make bids for the state corridor services that the states put up for open bids to run. The Cascades service as an isolated corridor with unique equipment and one that has had the state DOTs making investments in track improvements could be one of the prime targets for a lower cost private operator. Going to be an interesting year.

 

[rickycourtney]

BNSF already operates the Sounder commuter rail trains and the owns the tracks. They'd be a logical choice to run the trains.

It'll be interesting to see what information they submit.

Another interesting thought... the Talgo trainsets have built in HEP generators. That means WSDOT & ODOT could use freight engines with the Talgos until they can get true passenger locomotives. Talgo is also responsible for maintenance of the trainsets. Both of those things would allow WSDOT & ODOT to make a clean break from Amtrak (no having to lease back the existing locomotives, or pay them for maintenance.)

 

[Amfleeter]

Did Amtrak's contract simply expire? If so, I don't honestly see any change happening. A few bidders may try, but I don't think anyone can really match Amtrak yet when it comes to operating true intercity service. If contract expiration's the case, ten to one Amtrak just gets the new contract.

However, if Amtrak doesn't get it, it does free up some F59PHIs, which could be used to supplement Amtrak's in-house routes, or the Surfliner. Perhaps the Virginia section of the Northeast Regional, unless there's tunnel restrictions. In addition, it sets an interesting precedent - I don't think there's any true intercity routes in the US operated by anyone but Amtrak yet.

 

[SubwayNut]

According to on-track-on-line Amtrak also owns the Mt. Hood and Mt. Olympus trainsets. The others are all owned by Washington and Oregon (for the two new Series 8 trainsets).

 

[neroden]

It's also worth noting that any operator has to be able to deal with Canada.

 

[yarrow]

if amtrak starts losing contracts for the services they aren't losing money on that would seem like a death knell for the system

 

[afigg]

if amtrak starts losing contracts for the services they aren't losing money on that would seem like a death knell for the system

Amtrak is still losing money on the Cascades service as they are on almost all state corridors. There is still a federal subsidy component for the shared parts of the national system that are difficult to separate out between the NEC, state supported and LD services. For FY2015, Amtrak is requesting $83 million in Federal operating support for the state supported corridor services.

Losing a few of the state corridor services will not be a death knell for the entire system. It will, however, probably drive up Amtrak's overhead allocation amount for the remaining services. I think people need to be prepared for some of the state corridor services to be run by other operators under contracts to the state. Because Amtrak is required to provide access to the national reservation system (at a cost to the state or operator), we should still be able to book the state corridor train through Amtrak. But Amtrak Guest Rewards points and bookings might go away for that corridor service.

Of the 7 Talgo trainsets, WS DOT owns 3, Oregon owns the 2 new ones, and Amtrak owns 2. Amtrak owns all the locomotives. WS will be getting 5 to 8 new locomotives from the Next Gen diesel Siemens contract by mid-2017. WSDOT is getting 5 with options for 3 more, but since the locomotives are funded with federal money, I don't see why WSDOT would not exercise the option, so they own and control more of the locomotive fleet.

WSDOT could lease the 2 Amtrak Talgos with an option to buy and arrange for an interim lease of the Amtrak locomotives they need. Then, if they can find the money, order as many additional diesel locomotives from Siemens as they need to run the expanded Cascades service, and cut Amtrak out of the picture entirely in 2018. But I don't know whether that is feasible or likely given the issues of maintenance support, access rights over the BNSF tracks, and operating into Canada.

 

[rickycourtney]

if amtrak starts losing contracts for the services they aren't losing money on that would seem like a death knell for the system

Amtrak is still losing money on the Cascades service as they are on almost all state corridors. There is still a federal subsidy component for the shared parts of the national system that are difficult to separate out between the NEC, state supported and LD services. For FY2015, Amtrak is requesting $83 million in Federal operating support for the state supported corridor services.
Losing a few of the state corridor services will not be a death knell for the entire system. It will, however, probably drive up Amtrak's overhead allocation amount for the remaining services. I think people need to be prepared for some of the state corridor services to be run by other operators under contracts to the state. Because Amtrak is required to provide access to the national reservation system (at a cost to the state or operator), we should still be able to book the state corridor train through Amtrak. But Amtrak Guest Rewards points and bookings might go away for that corridor service.

This was a big part of the PRIAA law... making Amtrak compete for the contracts to run state-supported corridors. Amtrak will now have to fight with several independent companies out there who specialize in operating railways (Keolis, TransitAmerica Services, Herzog Transit Services) and in limited cases the freight railroads for the contracts.

The good news for Amtrak is that they are already skilled at competitively bidding for contracts to provide operating services (conductors & engineers) to commuter railroads. They already operate lines for MARC, Shore Line East and Southern California's Metrolink.

Of the 7 Talgo trainsets, WS DOT owns 3, Oregon owns the 2 new ones, and Amtrak owns 2. Amtrak owns all the locomotives. WS will be getting 5 to 8 new locomotives from the Next Gen diesel Siemens contract by mid-2017. WSDOT is getting 5 with options for 3 more, but since the locomotives are funded with federal money, I don't see why WSDOT would not exercise the option, so they own and control more of the locomotive fleet.

WSDOT could lease the 2 Amtrak Talgos with an option to buy and arrange for an interim lease of the Amtrak locomotives they need. Then, if they can find the money, order as many additional diesel locomotives from Siemens as they need to run the expanded Cascades service, and cut Amtrak out of the picture entirely in 2018.

Since there hasn't been an expansion of service WSDOT/ODOT still only need 5 trainsets to run the Cascades service. They also have a big upper hand when it comes to negotiating with Amtrak for the purchase of the Series VI trainsets they own. Talgo has 2 Series 8 trainsets they're looking to sell and Amtrak likely doesn't want two Series VI trainsets that don't match with anything else they own.

But I don't know whether that is feasible or likely given the issues of maintenance support, access rights over the BNSF tracks, and operating into Canada.

If BNSF gets the contract to operate the Cascades, that might give WSDOT/ODOT an advantage when it comes to negotiating access rights and fees. Also, unless I'm mistaken , Amtrak doesn't provides maintenance support for the Cascades trainsets, that's handled by Talgo. But Amtrak does handle the maintenance for both the F59PHI locomotives used on the Cascades and the BNSF operated Sounder.

 

[Paulus]

if amtrak starts losing contracts for the services they aren't losing money on that would seem like a death knell for the system

Amtrak is still losing money on the Cascades service as they are on almost all state corridors. There is still a federal subsidy component for the shared parts of the national system that are difficult to separate out between the NEC, state supported and LD services. For FY2015, Amtrak is requesting $83 million in Federal operating support for the state supported corridor services.
Losing a few of the state corridor services will not be a death knell for the entire system. It will, however, probably drive up Amtrak's overhead allocation amount for the remaining services. I think people need to be prepared for some of the state corridor services to be run by other operators under contracts to the state. Because Amtrak is required to provide access to the national reservation system (at a cost to the state or operator), we should still be able to book the state corridor train through Amtrak. But Amtrak Guest Rewards points and bookings might go away for that corridor service.

This was a big part of the PRIAA law... making Amtrak compete for the contracts to run state-supported corridors. Amtrak will now have to fight with several independent companies out there who specialize in operating railways (Keolis, TransitAmerica Services, Herzog Transit Services) and in limited cases the freight railroads for the contracts.

The good news for Amtrak is that they are already skilled at competitively bidding for contracts to provide operating services (conductors & engineers) to commuter railroads. They already operate lines for MARC, Shore Line East and Southern California's Metrolink.

They've been losing those contracts when they go to bid however and the only reason they got Metrolink's back was because of safety issues with previous operator culminating in Chatsworth.

 

[neroden]

Amtrak is pretty competitive in the contract operations market, when it bids. Yeah, Amtrak lost VRE, but winning Metrolink back was a much bigger deal. Metrolink could have gone with someone else.

Veolia was taking over contracts all over the place until Chatsworth -- not so much any more. Herzog and Keolis are perfectly good alternatives but on price, Amtrak's comparable, and Amtrak often has economies of scale. (Veolia was usually low bidder, and we know why.)

Amtrak chose not to bid at all on Boston when it came up for bid, for whatever reason.

TransitAmerica won out over Amtrak on the Caltrain bid, but it wasn't a blowout or anything; Amtrak's bid was competitive.

On the corridor services, the final agreements leave Amtrak covering some of the overhead. Any new operator would have to *fully* cover overhead, *and* would have fewer economies of scale, so unless there's a low-bid low-quality operator like Veolia, or one of the class Is with large economies of scale decides to get into the business, any other operator is going to submit a more expensive bid. Now, if the other operator manages to offer better quality, the state might accept that bid anyway, but the other operator is starting at a disadvantage.

 

[rickycourtney]

Unlike the long-distance routes which Amtrak seems to want to get rid of sometimes, they have genuinely shown interest in keeping the contracts for the state supported corridors. I expect them to bid aggressively to keep the contract.

But the good part is that the competitive nature of a contract is good for passengers, it *could* compel Amtrak to improve on-board services, improve on time performance and lower ticket prices.

But the bad news is that if Amtrak loses the contract to operate the Cascades, the Amtrak Guest Rewards points are almost certain to go away. WSDOT & ODOT could still contract with Amtrak to provide ticketing services, but I have a feeling they wouldn't.

So a mixed bag for passengers.

 

[PRR 60]

In the last 15 years, how many competitively bid operating contracts has Amtrak won? None. They have lost Coaster, MBTA, VRE, MARC and Caltrain. They got the Metrolink contract back by political default with no bids, not by actually winning it. After losing the VRE contract (and behaving badly in the process), Amtrak pulled out all stops to win Caltrain. VRE was a huge embarrassment, and they did not want that repeated. They even partnered with Bombardier to try to lower costs (so it was not even a 100% Amtrak bid). They still lost.

Amtrak is organized like a municipal transit agency and is not equipped to compete financially. It has layer upon layer of management that adds costs to everything they do. Amtrak craft people are not paid more than industry average (in fact, they are often paid less), but when you add on all the G&A costs, Amtrak's price goes through the roof. That is not just my observation (from painful, first hand experience). It is also Joe Boardman's. He sent out an all-hands memo a few weeks ago warning of the possibility of losing multiple state-supported services due to Amtrak high cost structure. Indiana would be a loss. The Cascades would be a huge loss. The big prize, the California services, is the logical next step.

Amtrak pushed hard for greater state contributions for short-distance services. PRIIA was largely Amtrak's doing. Losing those state services to lower cost private operators may well be an unanticipated consequence of Amtrak's push for larger state payments. You can't charge $3 million a year for a rattle-trap, second-rate operation like the Hoosier State and not expect the customer to look elsewhere.

 

[CHamilton]

But the bad news is that if Amtrak loses the contract to operate the Cascades, the Amtrak Guest Rewards points are almost certain to go away. WSDOT & ODOT could still contract with Amtrak to provide ticketing services, but I have a feeling they wouldn't.

The Cascades had a "frequent rider" program even before AGR existed -- riders got Alaska Airlines miles for each Cascades trip. There was apparently a fraud problem, since everything was done on paper, but that could be fixed with modern technology. So if AGR is not available, I would expect WSDOT to talk with Alaska Airlines or someone else about re-creating a loyalty program.

Alaska might also be a potential source for ticketing. I happened to hear a presentation last night from an executive that Alaska hired away from Amazon to improve their website, create a mobile app, and similar projects. I betcha that he'd improve the heck out of the uninspiring Amtrak Cascades website!

 

[gn2276]

The mainence that is done on the Talgo train sets is done by Amtrak workers and is only overseen by Talgo.

 

[neroden]

Amtrak is organized like a municipal transit agency and is not equipped to compete financially.

Contradiction in terms. Municipal transit agencies are the leanest and meanest operators I've ever seen and routinely underbid for-profit bus operators when permitted to.

It has layer upon layer of management that adds costs to everything they do.

Certainly true at one time. They were flattened substantially by one of the recent Presidents -- Gunn, IIRC? I'd like a citation that proves that Amtrak has more layers of management than (say) Keolis. Particularly if Keolis is tasked with ticket collection and food sales.

Amtrak craft people are not paid more than industry average (in fact, they are often paid less), but when you add on all the G&A costs, Amtrak's price goes through the roof. That is not just my observation (from painful, first hand experience). It is also Joe Boardman's.

Do you have any evidence that organizations like Keolis have lower G&A costs? Because the thing is, railroading just has humungous fixed overhead.
There are some things which Amtrak has been doing in incredibly obsolete fashions, and those certainly mean higher overhead, but those are all being changed.

He sent out an all-hands memo a few weeks ago warning of the possibility of losing multiple state-supported services due to Amtrak high cost structure. Indiana would be a loss. The Cascades would be a huge loss. The big prize, the California services, is the logical next step.

I simply don't believe it. Amtrak isn't going to lose contracts due to its cost structure alone.

Due to Amtrak's grossly inconsistent service standards, however, sure. Remember, VRE didn't pick Keolis *just* based on cost... they were also getting unhappy with Amtrak's management style or lack thereof. From the WaPo at the time:

Townsend said Keolis will have more dedicated management monitoring the system than what had been in place. Keolis officials will be at the ends of each line and at Union Station daily to ensure a smooth operation, he said.

If Boardman is talking only about "cost structure", he's lost it. The problem at Amtrak is inconsistent and bad service. If Amtrak could provide trustworthy and reliable service levels, the states wouldn't even consider the approximately-the-same-cost bids by other companies.