Railway Revival: On the wrong track?

[Don1]

Some observations:
As I long suspected, no private capital could be found to fund the railway revival... ROI is very suspect and most probably negative... this will be heavily subsidized by taxpayers.

Is this deal satisfactory to those who support a railway revival?
We had this discussion some months ago... what say you now?

If GOJ is spending US$300m on this (JA$22b not $7b as claimed in the article) most presumably debt funding .... a better investment for this would be upgrading ghettos and squatter settlements... much better potential ROI.

Also... Portmore toll increase coming? I thought tolls were gonna be rolled back? Let the JLP orchestrated demonstrations begin.





Railway plans back on track - State to fund $7b renovation
published: Friday | May 30, 2008

Athaliah Reynolds, Staff Reporter


The deserted railway station in downtown Kingston against the backdrop of high-rise buildings. The Jamaican Government has enlisted the help of the Chinese to renovate the rail system. - File

Transport Minister Mike Henry has said the Government would be seeking to revitalise the country's railway system, with work expected to begin before year end.

Speaking during his contribution to the 2008-2009 Sectoral Debate at Gordon House on Wednesday, Henry said the move involves plans to reopen the Kingston to Montego Bay and Spanish Town to Ewarton services.

He said Government would be spending close to US$300 million (J$7 billion) on the initiative, which will be done within a three-year refurbishing schedule.

Arrangements made

According to Henry, arrangements have already been made with the Chinese government to facilitate the construction of 18 new railway stations across the country. These will accommodate new tracks of 105-pound standard to enable greater speed and load-carrying capacity.

He said the reintroduction of the passenger and freight railway service is intended to significantly impact on rising fuel costs. The Government is focused on getting much of the island's freight transportation done by rail and increasing mass transit to ease traffic gridlocks in urban centres.

The transport minister said the present wooden sleepers would be replaced with concrete over time, as concrete sleepers require less maintenance. The system will also accommodate five new engines, 45 coaches for passengers and 68 freight coaches.

To create jobs

Henry further said the initiative is expected to create thousands of jobs for Jamaicans during and after the construction of the railway lines and supporting networks.

Meanwhile, Henry reiterated that unlike other categories of service providers in the public transport sector, the state-owned Jamaica Urban Transit Company would not be granted a fare hike.

He, however, said he would be announcing a rate increase in July for the Portmore toll road.

Henry also said there has been a change in the toll policy under the concession agreement, which will now see an annual review of tariffs by the developer, instead of the twice-yearly review. Commuters, therefore, can expect a possible further increase in July 2009.

[Muadib]

What were your thoughts regarding Highway 2000 ?

[Willi]

What were your thoughts regarding Highway 2000 ?

Or the cost of maintaning it with all the cargo and freight going by road....

[Karl]

Some observations:
As I long suspected, no private capital could be found to fund the railway revival... ROI is very suspect and most probably negative... this will be heavily subsidized by taxpayers.

Is this deal satisfactory to those who support a railway revival?
We had this discussion some months ago... what say you now?

If GOJ is spending US$300m on this (JA$22b not $7b as claimed in the article) most presumably debt funding .... a better investment for this would be upgrading ghettos and squatter settlements... much better potential ROI.

Also... Portmore toll increase coming? I thought tolls were gonna be rolled back? Let the JLP orchestrated demonstrations begin.

The problem I have with the thought behind the questions is the too often put before us (the Jamaican people) - It is either dis or dat? In many cases I think it should be dis and dat!

...and the railway being brought back reminds me of Air Jamaica. Always a losing entity...if we are looking only at funds expended and funds returned on investment!

In my mind both entities have to be looked at just as we look at, for example, our roads. Vital for economy! Vital for economic well being! Not too unlike lead items...or perhaps, I should have said...Yes, every reasonable thing should be done to move them towards profitability....I said towards...I did not say, we could even attain profitability...but not unlike 'lead items' that marketers and or sellers of profitable enterprises use to bring in customers/clients and drive sales.

[Assasin]

if properly plan it will not lose. Kingston to Spanish Town and Portmore can not be a loser. Kingston to St.Ann and a Express train to Mobay could make a money.

[Hortical]

Rail for passenger and freight use is a GREAT use of taxpayer funds. The benefits are numerous, less cars and trucks on the road and this results in lower vehicle emissions and improved air quality benefits. Jamaican roads are becoming more congested and we can not build our way out of congestion. Rail passenger use is up in many cities across the world (Boston, NY etc) due to the increased cost in gasoline, and drivers have opted to take mass transit. Less wear and tear from trucks on public roads as freight traffic is moved to rail. The rail tracks have a much longer life cycle than asphalt and those tracks could serve passenger & freight traffic for many years to come.

[Karl]

if properly plan it will not lose. Kingston to Spanish Town and Portmore can not be a loser. Kingston to St.Ann and a Express train to Mobay could make a money.

We have neither the population from which numbers can be had to make passenger miles movement a 'winnah'...or freight!

...just like Air Jamaica!

The cost of upkeep just would not fit with rates/fares/prices per mile/movement that would have to be charged to make it a profitable concern.

[Assasin]

Karl nearly one million people live and move between Kingston and Portmore daily. That is a quick trip and it cost less.

For tourism purpose the Kingston route would make sense to St.Ann and Mobay using a express line. The problem with the Railway as it was in Ja was that it made too many stops and when mini van took over them drop you a yu yard. Now if they can use the taxi system at the rail station it would be viable. The problem is like Air Jamaica is if we going to support unprofitable routes, have the mobster unions running it. Again the Kingston, Portmore, Spanish town route is a winner.

[Hortical]

Not correct Karl, I will respond on this issue later.

[Don1]

Or the cost of maintaning it with all the cargo and freight going by road....

The highway is a different proposition entirely. My preference in Jamaica's current financial condition is that it be privately funded and maintained by the user fees... as the previous government claimed is the case (but seems to have somewhat mislead us on because GOJ has indeed raised funds for the project).

Any incremental or "extra" cost of highway maintenance due to freight transit would be far less than the carrying cost of a freight rail service revived for US$300m and destined to be eternally subsidized by taxpayers.
So I don't think it makes economic sense to do that rail investment (very sentimental and romantic but wasteful and unnecessary).

Rail investment should be deferred at least until the highway is completed and nearing capacity usage.

I recall your strong support for rail revival.... to me it's a guaranteed economic failure and better use can be made of those funds.

The highway has the potential to open new areas for sorely needed development (the proposed freight rail service has limited or no such potential) and GOJ should fast track incentives and development proposals to utilize the newly available zones in the highway corridor... in a coherent and structured manner of course.

[Muadib]

Have you factored in fuel efficiency in the movement of goods ?

[Don1]

Rail for passenger and freight use is a GREAT use of taxpayer funds. The benefits are numerous, less cars and trucks on the road and this results in lower vehicle emissions and improved air quality benefits. Jamaican roads are becoming more congested and we can not build our way out of congestion. Rail passenger use is up in many cities across the world (Boston, NY etc) due to the increased cost in gasoline, and drivers have opted to take mass transit. Less wear and tear from trucks on public roads as freight traffic is moved to rail. The rail tracks have a much longer life cycle than asphalt and those tracks could serve passenger & freight traffic for many years to come.

That's great theory... especially for advanced economies with access to cheap capital and whose problem is overdevelopment not lack of development as in Jamaica's case.
Rather than US comparisons... show me a country with Jamaica's metrics that's heavily investing in rail i.e. small size, small population, difficult mountainous terrain, limited disposable income and a population wedded to automobile travel who after an initial fascination with rail travel will return to their cars... my bet is you can name no such country.

Why it's not a good investment for Jamaica at this time:

1. We have already committed to build a highway system and are struggling to finance it. We'll further struggle to finance an underutilized and wasteful (but romantic) rail system.
2. We have low value added internal economic activity... in other words most of the stuff being moved around is not being converted to valuable finished goods either for the local or export market.... so why build another expensive distribution system? Bad choice.
3. Given US$300m to spend... there are far superior investments that GOJ should undertake NOW ... eg invest in education and our volcanic inner cities.
4. The overcrowded Jamaican roads you mention are largely within urban core areas... this rail service will have zero impact on that congestion.

Rail has a place... for all the reasons you outlined.... RIGHT NOW it's a very poor investment option with a negative ROI.

[Don1]

Have you factored in fuel efficiency in the movement of goods ?

what goods and in what volume do you expect to be moved by rail?

Rail is great for bulk freight eg ores and aggregates (we already have a bauxite/alumina freight system so discount that) bulk grain, cement, steel etc.

How much of this freight business will this proposed service capture?
On what route - Kgn- Sp Twn - Mobay? Is there enough business for the service to make sense when we will have modern highway connections within say 10 years? I think not.

If this is a good economic proposition why is private capital uninterested for the 10 years or so that this idea has been flogged?

White elephant for sure.

[Don1]

Karl nearly one million people live and move between Kingston and Portmore daily. That is a quick trip and it cost less.

For tourism purpose the Kingston route would make sense to St.Ann and Mobay using a express line. The problem with the Railway as it was in Ja was that it made too many stops and when mini van took over them drop you a yu yard. Now if they can use the taxi system at the rail station it would be viable. The problem is like Air Jamaica is if we going to support unprofitable routes, have the mobster unions running it. Again the Kingston, Portmore, Spanish town route is a winner.

What's being proposed is not a commuter service between Kgn-Portmore- Sp Town but a largely freight driven service with limited passenger capacity.

Commuter service needs specific schedules, rail cars and facilities to attract people in numbers to make it economic ... mix passenger service with freight service and you are disinviting commuters.

Let's not romance business.

[Don1]

dis n dat

[/color]


The problem I have with the thought behind the questions is the too often put before us (the Jamaican people) - It is either dis or dat? In many cases I think it should be dis and dat!

...and the railway being brought back reminds me of Air Jamaica. Always a losing entity...if we are looking only at funds expended and funds returned on investment!

In my mind both entities have to be looked at just as we look at, for example, our roads. Vital for economy! Vital for economic well being! Not too unlike lead items...or perhaps, I should have said...Yes, every reasonable thing should be done to move them towards profitability....I said towards...I did not say, we could even attain profitability...but not unlike 'lead items' that marketers and or sellers of profitable enterprises use to bring in customers/clients and drive sales.

In Jamaica's present circumstances it's almost always a case of dis or dat.
dis AND dat is usually an unaffordable luxury.

If you can make a case (a short one please) for rail service being VITAL to Jamaica at the current time I would love to see it.

To me it's neither vital or even necessary at the current time.