Today’s read is about ~7-9 minutes
Hello friends,
The United States of America is undeniably good at many things, like basketball, and some other stuff.
But.
There are some things the US does not do well. One of those things is trains, specifically passenger rail. Any infrastructure enthusiast (or asshole with a newsletter) will tell you that, especially in comparison to other rich countries, American passenger rail is somewhat of an embarrassment. However, a hot young startup is out to change that.
In today’s update we’ll look at a privately funded railway bringing clean, affordable, intercity transit to South Florida, and why it represents a unique precedent for private rail projects. I’ll discuss why I like it, why I’m skeptical about it, and what considerations other cities should keep in mind before building their own intercity choo-choos. Let’s dive in.
Today’s focus: Brightline
Brightline is a privately-run rail company that operates trains between the cities of Miami and West Palm Beach in Florida, USA. Originally conceived in 2012 by Florida East Coast Industries (FECI), it’s been actively carrying passengers since 2018, though it did temporarily cease operations during COVID. They also plan on expanding to additional Florida cities (Orlando and Tampa Bay), as well as adding a Las Vegas to Los Angeles line over the next few years.
Why it’s great
Brightline trains have quite a few things going for them:
Sustainability: Brightline trains run on a combination of electricity and clean biodiesel, making them carbon neutral. Additionally their website estimates they remove ~3 million cars/year from the road, further contributing to a reduction in carbon emissions. 1
Job creation: Through construction of the rails and their support staff, Brightline employs ~2,000 workers in the south Florida area, and they estimate over 10,000 jobs will be created in the long-term.
Accessibility: Brightline trains are highly accessible, not just in terms of modern conveniences like no-touch interactions or in-app ticketing, but also with regards to handicapped or mobility-impaired passengers. The aisles are wide enough to accommodate wheelchairs, all cars are equipped with handicap accessible seats, and the train’s floor is level with that of the station’s, meaning those with heavy roller bags, walkers, or wheelchairs can easily board. This is especially important as this region attracts a lot of tourists and tends to skew heavily towards the elderly.
Economic development: The argument is that by creating more travel alternatives and building attractive rail stations, Brightline spurs economic development along their route. That’s certainly the claim of Florida East Coast Industries (FECI), the parent company of Brightline, and while it sounds promising, some critics have argued FECI doesn’t actually care about transit/economic development, they just want to increase the value of their existing holdings along the Brightline route. I’ll touch on this later in the update.
All the above traits are good things, but in terms of speed, comfort, or cost, Brightline trains themselves are not anything revolutionary. They are good, but not world-class trains, especially compared to those high-speed maglev bad boys they have in Japan.
But. While trains themselves are cool, they’re not what I want to focus on today (who do you think I am, this guy?). No, the biggest reason I’m excited about Brightline is that they are the best (and currently the only) example I could find of private investment successfully operating in this industry. I’m incredibly interested in the precedent they can set, and the ways in which they are approaching their growth; not as a slow-moving extension of the Department of Transportation, but as a modern company bringing the same disruption and innovation to passenger rail that the best startups bring to any industry.
Freight vs. passenger
As a quick aside, I should clarify that in terms of freight rail, i.e. trains that haul cargo and raw materials, America actually does pretty well. Efficient, cost-effective freight trains carry 1.7 billion tons of cargo per year, a feat which would take ~99 million trucks and use 4x as much fuel if done via roadways. You could write a whole article on freight rail alone, but that’d be too much for one update so I’ll just be sticking to passenger rail today I’m a-freight.
How’d we get here?
To better understand why Brightline has got my heart all aflutter, let’s take a quick look at the history of trains in the US.
The reign of train
Brightline is the only American private rail company operating today, but it’s certainly not the first one. Back in the 19th century American private rail companies didn’t just exist, they kicked ass, and privately-run intercity rail travel was incredibly common. In fact, these companies used to be so powerful and influential that they are largely the reason why time zones were invented, since faster rail travel necessitated more accurate, less confusing timetables between cities. Rail companies started using standardized time zones, which eventually morphed into the Eastern, Central, Mountain, and Pacific time zones Americans still use today.
But alas, in the early to mid 20th century the popularization of cars and significant federal investments into interstate highways caused the passenger rail industry to begin a slow, painful decline. Add in the growing availability of airplanes, and government subsidies previously used for building railroads were redirected towards highways, airports, and other non-rail infrastructure.
There's a lot more to the rise and fall of passenger rail in the US, but I don’t want to focus too much on that right now. If you're curious I highly recommend this video here but otherwise let’s get back to Brightline.
Florida man demands train
So why exactly does Brightline exist between Miami and West Palm Beach, as opposed to any other intercity route in the US? Why not Boston to NYC, or San Francisco to LA? Well, there’s a few likely reasons:
Florida is as Florida does: The parent company of Brightline, Florida East Coast Industries (FECI) is based in, you guessed it, Florida. They primarily invest in infrastructure and real estate projects in, you guessed it again, Florida. That is likely part of the reason, though there are other factors as well.
Some routes are already well serviced: Routes like Boston to NYC certainly do have a lot of people traveling between them, but they also have major highways, rail service, and a billion bus lines already running routes there. Demand is high, but so is competition.
Some routes are too long/short to build: San Francisco to LA would love to have a railroad, but that distance (~350 miles) is considerably longer than Miami to West Palm Beach (~75 miles), so the upfront capital investment you’d need to build that long of a railroad is a major deterrent.2 Similarly, some intercity routes are too short, making it harder to wrest people away from driving.
These last two reasons give you an idea of the Goldilocks-esque sweet spot that Brightline is aiming for, and why the proper choice of cities is so important for them. Places that are too long to drive, too short to fly, and aren’t already served by Amtrak or other transportation modes is what Brightline is looking for.3 And this brings us nicely to the next section, which is what I think they’ve been doing well so far.
Why it works
An existing market
Brightline benefits from the fact that going from Miami to West Palm Beach is already a well-established route for many travelers. The same is true of their planned expansions to Orlando, and their ambitious plan to build a rail running from LA to Las Vegas on the American West Coast.
Furthermore, careful consideration was given by choosing Florida, where an intercity travel route is already established, but not so well serviced that capturing part of that market becomes difficult. Additionally, Florida not only has a high population of college students, who are less likely to own a car, but also senior citizens, who may not be able to drive, or just prefer the comfort/convenience of riding a train. Finally, Florida is a tourist hotspot, meaning travelers often fly there and don’t have a car. Brightline is there to offer an alternative way of exploring not just the vice and decadence of Miami, but also the vice and decadence of West Palm Beach.
An (attractive alternative) in an existing market
Directly related to the existing market, is that Brightline is (in some cases) a more convenient, more reliable, and safer mode of transit. It’s much cheaper than flying, and while comparable in price to driving, it removes the hassles of parking or renting a car. People who want to get a little work done during their commute or, as the very first line of this review notes, just want to get hammered responsibly without worrying about their car, can all choose Brightline as an alternative.
On top of that, the service and experience themselves seem to be very pleasant.4 Little details like seamless wi-fi integration between the station and the cars themselves (meaning you only log in once), chargers and USB ports in all the seats, and touchless bathrooms on their own might not convince a driver to take the train instead, but collectively they do make Brightline a more attractive option.
An (attractive alternative) in an existing market (in a single state)
Additionally Brightline is able to keep costs low and construction speeds (relatively) high because they are only operating within a single state. This vastly simplifies the permitting and approval process; they only need to pass environmental reviews, apply for grants, and deal with zoning/construction regulations in Florida alone. Compare that to the planned expansions into California and Nevada, which will likely add layers of complexity. It’s still too early to say for sure, but I’m betting that the comparative construction timelines and efficiency for those interstate projects will suffer because of it.
Coordination with other enterprises
Brightline has also done admirably in committing to last-mile integration (i.e. how do you get from your house to the station, or from the station to your final destination?). They do this both by bolstering its own offerings, as well as partnering with other private companies.
Lyft coupons are available for riders getting picked up from Brightline stations to help them get to their final destination.
A recently announced partnership with Oonee, a bike-storage startup, will offer riders convenient, secure places to store bicycles at select Brightline stations.
The upcoming Brightline+ service will offer free shuttles for passengers going to and from Brightline stations (within a fixed range ~3 miles), with private rides also available for a small fee.
In the Amsterdam series on cycling I talked about the success Dutch train stations have had by offering ample cycle parking and storage space at stations. These kind of thoughtful touches help integrate with other modes of transit, and allow Brightline to reach a broader base of customers by making trains a more viable door-to-door travel mode.
Downsides and Criticisms
As intriguing as Brightline is, the company itself (and their broader private rail strategy) do have some downsides.
High cost and low profitability.
First off is cost. Upfront costs for railroad companies are high, both for the railroads and the trains themselves. While, most public transit operators in the US keep ticket prices artificially low and then subsidize/cover the difference with public money,5 Brightline can’t rely on tax revenue like they can. The company is partially subsidized by grants and funding from FECI, but they are definitely not profitable, and don’t expect to be for a few more years. It is true that a lot of startups like Uber or Doordash have basically proven you don’t need to make a profit to be “successful”. However, that doesn’t mean they’re immune from criticism, and especially considering Brightline’s massive upfront infrastructural costs, this isn’t a viable long-term strategy.
Private access to public funds
The next downside is, as a private corporation Brightline is not eligible for many federal grants, most of which can only be allocated to actual public transit agencies. Predictably, Brightline is lobbying for this rule to be changed. While they have already received some federal/state grants, there still remains a dearth of money that is frustratingly out of reach. Brightline looks at these funds the way a hungover 20-something looks at a bottle of blue Gatorade, but unfortunately, the government is holding firm.
For the love of money
Another argument against Brightline is directed at their parent company, FECI. They’ve drawn criticism for allegedly pursuing the Brightline project solely to increase the value of their existing real estate holdings along the Brightline route.
Basically the idea is
Buy a bunch of real estate
Build a railroad around those properties, increasing the value of the nearby land
Sell the railroad, sell the real estate, make a ton of money
Though this tale of build rail, make sale, then bail 6 might sound far-fetched, it’s sort of already happening with FECI/Brightline. This strategy is actually quite common, and is formally referred to as the “Rail plus Property” (R+P) model, though I prefer the term “Rail Estate”. Personally, I think that even if their motives aren’t purely altruistic, if they do end up bringing clean, reliable transport to the region while simultaneously making money for themselves, I’m not sure that’s really a bad thing.
Barriers to Implementation
So, what’s stopping other companies or cities from doing this?
Market selection
We already discussed how market selection is important, so obviously choosing the right cities to build between is crucial. The sweet spot is a route that is:
Long enough to warrant a train trip
Short enough to not cost a bajillion dollars to build
Not already serviced by an existing rail route
Finding the right market is important for any company, and especially so if you are going to spend a few billion dollars building a railroad first.
Mo’ states, mo’ problems
The next barrier to entry is also related to picking the right market, specifically with regard to inter- vs. intra-state railroads. The uniquely American division of authority between local, state, and federal governments means that, if Brightline really does want to build a line between Portland and Seattle for example, they won't be able to copy + paste the work they've done in Florida, they will need to start over and deal with laws in Washington and Oregon (the states where those cities are located), in addition to the regular city permits and regulations.
You come into my house?!?!?!?!
While Brightline is the only private rail company currently operating, there are a few others trying to get intercity choo-choos up and running. The rail company Texas Central is trying to build one between Dallas and Houston, though some residents in the notoriously territorial and testy Texas unsurprisingly do not want railroads being built through their backyards. This rancher vs. railroad drama is a good example of another major obstacle to building private railways; aside from the actual cost, you need land to build it on, and this land often already has people using it. Government projects can claim eminent domain and basically just take it, but private companies cannot do so as easily. In fact, that’s one of the key arguments that opponents of Texas Central are making, and the issue is still ongoing.
Conclusion
While the Brightline trains themselves are nice, what I think is most interesting is to see a private player emerge in a space that is otherwise totally dominated by the public sector. In that way, Brightline is an interesting experiment, and I’m hopeful that they’ll inspire some other intercity rail projects over the next few years.
Spend 30 seconds on Twitter and you’ll find some small-government policy wonk saying that the private sector would do XYZ function better. And whether or not you agree with that philosophy, it’s refreshing to see someone at least trying it out.
That’s it for today, thanks for reading as always and if you didn’t already click the train guy link earlier, I seriously cannot recommend this video enough, his enthusiasm is so pure. Have a good week everyone!
-Max
Though I couldn’t find exactly how they calculate this number.
This is partially why California has had such a hard time building a railroad there, and also why Elon Musk’s Hyperloop idea is Hyperstupid.
In fact, I stole this “too short to fly, too long to drive” phrase from their CEO, who uses it pretty regularly during presentations and promotional materials
I haven’t personally ridden the trains but high reviews on Yelp, TripAdvisor, and a lot of “wows” from this one guy’s YouTube video review seem to bode well.
Examples like Chicago CTA and New York MTA are not profitable, but as public services, don’t necessarily need to be.
Sorry