Why Is High-Speed Rail in the United States Undeveloped? Why Is It Unprofitable?

The reason why high-speed rail in the United States is undeveloped is because it is difficult to guarantee profits. It is also rarely the case that the states fight over federal government high-speed rail investment.

On May 9, the head of the U.S. Department of Transportation, Ray LaHood, issued a statement stating that the U.S. government will invest $2 billion in high-speed rail to develop the next generation of high-speed passenger trains. A large portion of the capital will be used to construct high-speed rail in the northern United States (according to the May 11 issue of the International Finance News).

There are big differences between the United States and China in terms of population distribution and methods of transportation. Therefore, there will naturally be a big difference in terms of high-speed rail. In the United States, land is widespread, as is the population; there are few big cities, and family cars and air transportation are common. As a result, there is much less construction of high-speed rail. At the same time, U.S. high-speed rail has its own special characteristics in terms of investors, profitability and sustainability.

The differences mentioned above do not prevent the two countries from learning from each other’s strengths. The United States can use some of the methods that China uses for constructing high-speed rail, such as replacing tracks on land with elevated tracks, which greatly increases efficiency because it avoids the problem of sedimentation. China can draw on the merits regarding the investment, profitability and construction methods that the U.S. high-speed rail system uses.

In the end, high-speed rail is just another form of transportation, a market-based transportation tool that competes with roads, regular rail and aviation. Therefore, the pool of investment for high-speed rail can be opened up to private capital. If private capital is allowed for high-speed rail projects, or even to direct investment in such projects, then the budget for the projects would be managed much more efficiently and effectively than projects that are completely publicly funded.

At the same time, because high-speed rail is a market-based transportation tool, its profitability is still very important. The reason why the U.S. high-speed rail system is not very well developed is because it is difficult to guarantee any profits. Florida began examining the feasibility of high-speed rail in 1976, but because high-speed rail did not seem to promise any future profits, the state did not want to waste taxpayer wealth through blind construction, and the project was debated throughout the following decades. Obama’s high-speed rail project appropriated $2.4 billion to Florida, but because profits could not be guaranteed, the state returned the funds to the federal government. It is also rarely the case that the states fight over federal government high-speed rail funding.

At the same time, the U.S. method of constructing high-speed rail on old lines is worth further study by China. The biggest project in the $2 billion high-speed rail construction project is the reconstruction of the northeast corridor that connects Washington, D.C., New York and Boston. After reconstruction, the speed of the busiest line in America will increase from 217 kilometers per hour (135 miles per hour) to 257 kilometers per hour (160 miles per hour). Michigan received $197 million in appropriations to reconstruct the line between Chicago and Detroit so as to allow a speed of 176 kilometers per hour (109 miles per hour), cutting the time of the journey between the two cities by 30 minutes. Amtrak will receive $450 million in appropriations to reconstruct the line between Philadelphia and New York as well as to raise passenger volume. However, high-speed rail construction in China is mainly focused on laying down new track, which requires a large amount of funding, occupies a large portion of land, and stretches the time frame of construction. Therefore, applying the advanced experience of the United States is perhaps a better idea.