Gulf Coast Rail will increase freight costs

By Aaron Rice
September 4, 2019

Have you ever offered to take a friend out to eat and when he realized you were paying he ordered the steak instead of the pasta? Your friend realized someone else was footing the bill and so ordered the most expensive thing on the menu.

Some friends are like that (friends like U.S. Transportation Secretary Elaine Chao).

The government is a lot like that too, except worse. That’s because the government “spends other people’s money on things it won’t consume,” as former Congressman Bob McEwen puts it. “It doesn’t care about the price or the quality.”

The Gulf Coast Rail Project is a perfect example of this dilemma: something we don’t really need at a price tag that is too high. Of course, “the government” won’t be paying for it, or even riding on it. You will: the taxpayers and residents of Mississippi.

The Gulf Coast Rail Project would bring a coastal Amtrak train back to Mississippi after the service was halted by Hurricane Katrina 14 years ago. The route will feature two trains a day running between Mobile and New Orleans, with four daily stops each in Bay St. Louis, Gulfport, Biloxi, and Pascagoula.

The project is supposed to cost $65.9 million, with $33 million being covered by federal taxpayers. Louisiana, which looks to benefit most, has committed another $10 million. The Mississippi Department of Transportation recently decided to kick in almost $16 million, money not apparently appropriated by the Legislature that just happens to be lying around. Alabama is on the fence, having committed no state funds.

The goal is to provide “new, regular, reliable passenger service along the Gulf Coast.”

Sounds great, doesn’t it? But is this really a good use of $33 million in federal funds and $16 million in Mississippi taxpayer funds? I can imagine about 100 other priorities that would put this money to better use.

It’s “free money,” though, right?

Nothing is free. First, let’s begin with one of the primary reasons Alabama is gun shy about this project. Right now, the Gulf Coast rail line is being used to carry freight by a company called CSX. In order to commence passenger service, Amtrak will have to work with CSX to craft a schedule to minimize delays and scheduling conflicts. (Under federal law, passenger trains have preference over freight, usually resulting in delays for both.)

CSX’s rail line carries a wide array of goods and supplies, ranging from agricultural products to automobiles. The new Amtrak service may well increase the cost of carrying every single one of these items. Sure, some businesses will benefit from the new passenger service, but many others will be harmed by higher freight costs.

Second, if the Gulf Coast Rail Project were a good idea, a private company would be investing in it. Instead, it’s being subsidized by millions in federal and state funds.

Amtrak’s business model is to lose money. Amtrak has never made a profit since its inception in 1970. It expects to run mostly empty, inefficient and expensive trains. “We have to get away from this idea that Amtrak has to make a profit. It does not have to make a profit,” explains Jim Mathews, one of the Gulf Coast Rail Project’s biggest supporters.

Since 2012, Amtrak’s customer base in Mississippi and Alabama has declined every year. In Louisiana, the customer base decreased all but one year. A 2015 study by Amtrak itself projected 26 riders per train at an annual loss of millions of dollars a year. Amtrak cheerleaders consider this a win. Maybe it is for a boondoggle that has soaked up $46 billion in federal subsidies over the years. 

It is well-documented that Amtrak loses money on nearly all of its routes. Ironically, one of the only routes it doesn’t lose money on is the Northeast Corridor, whose ridership is “highly educated, affluent and influential,” with an average household income of $170,000 a year.

In fact, none of Amtrak’s most popular routes are in the South, where most people would rather drive the two hours from Mobile to New Orleans instead of sitting on a train for four hours. This is not even to mention Amtrak’s mounting expenses from remodeling and retiring old trains like the “City of New Orleans” and the “Sunset Limited,” both of which serve New Orleans and, presumably, are part of the business model for the Gulf Coast Rail Project.

If the Gulf Coast Rail Project were a filet mignon, I’d still complain about the high price. It looks to me, though, that we’re paying top dollar for yesterday’s leftovers.

Mississippi should join Alabama in backing away from a deal that’s mostly going to benefit New Orleans and Amtrak at the expense of Mississippi taxpayers. 

This column appeared in the Sun Herald on September 1, 2019.


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