Shifts in automobile technology and ownership will have consequences for public transit.

TechBy Joseph M. Giglio and Charles Chieppo

The rise of shared electric self-driving cars and the transition from a world of ownership to one of consumers purchasing transportation as a service holds the promise of significant economic, environmental, and quality-of-life benefits. But it will also pose an existential threat to public transportation in general and commuter rail in particular.

The first recommendation in the December report from Governor Baker’s Commission on the Future of Transportation is “Prioritize investment in public transit as the foundation for a robust, reliable, clean, and efficient transportation system.” In broad terms, the commission is right. But maximizing potential benefits from the unprecedented disruption of surface transportation that lies ahead will also require fundamental change at the MBTA and a hard look at which transit modes are positioned to compete in a brave new world.

The commission’s charge was to look at the Commonwealth’s needs and challenges over the next 20 years. But if that horizon is extended to 40 years, station-to-station service to the suburbs is unlikely to be very attractive in a world where shared electric self-driving cars will offer much faster door-to-door service at a price that won’t be much higher.

Drivers are normally the largest expense for any transportation business. It currently costs about 55 cents a mile to operate a vehicle with a single occupant. But it’s estimated that the cost could fall to 15 cents a mile for autonomous vehicles carrying two or three passengers, which would significantly reduce public transit’s price advantage.

Connected vehicles will also dramatically reduce human error, resulting in big increases in throughput thanks to variables like higher travel speeds, less space between vehicles, and less frequent braking in response to accidents and other travel events.

In the future, agencies like the MBTA will probably subsidize trips that are currently taken on commuter rail rather than operate them. Even with the transportation transformation in its infancy, Florida’s Pinellas Suncoast Transit Authority, which serves the St. Petersburg/Clearwater area, eliminated some bus routes further from the urban core, after it experienced an 11 percent overall drop in ridership, and replaced them with subsidies for Uber and Lyft rides. Since then, over 25 US communities have established similar partnerships — and the disruption caused by ride-hailing services is minuscule compared with what is to come.

MBTA commuter rail ridership has declined. Nonetheless, it will remain with us for the next couple of decades. It still needs to be improved, but massive investments in new lines like South Coast Rail or, even worse, Springfield, would be a fool’s errand.

The biggest challenge for the future will be making transit work in congested downtown areas. One Boston traffic simulation model showed that while shared autonomous vehicles would reduce travel times and the number of vehicles on the road even as total miles traveled rose by 16 percent overall, downtown travel times would be 5.5 percent longer because the vehicles would substitute for transit use.

Rising to this challenge will require focusing more investment in the urban core. But success will require something more: changing the MBTA’s top priority from providing jobs and pensions to serving its riders.

During a three-year exemption from the Commonwealth’s costly anti-privatization law, the T dramatically improved performance in areas such as cash collection and reconciliation and warehousing and logistics, and saved millions. Despite this success, there was nary a peep about extending the exemption or making it permanent.

Few would argue that the MBTA is skilled at putting customers first. The question is whether — in the face of an existential threat to public transit and with far less margin for error — political leaders, bureaucrats, and unions can change the authority’s culture and begin to lay the groundwork that will allow the T to perform the way we’ll desperately need it to in the future.

Part of that culture change will be recognizing that commuter rail is poorly positioned to compete over the long-term. When the Patriots win the 2060 Super Bowl, stories about a suburban rail network overwhelmed with riders are likely to generate the same reaction as when we tell our kids about having to get up and walk to the television to change the channel.

Originally Published: February 15, 2019.

Joseph M. Giglio is a professor of strategic management at Northeastern University’s College of Business Administration. Charles Chieppo is the principal of Chieppo Strategies.


The MBTA’s snow job: Lack of accountability

Amid endless discussion about the MBTA’s damnable inattention to maintenance and its indulgent over expansion, accountability has not been mentioned as one of the causes of the T’s meltdown. Lack of accountability may in fact be the organization’s biggest weakness.

A raw fact of life is that the public sector is awfully good at ducking accountability. It’s no wonder then that people feel increasingly distrustful of political institutions. And the governor has now created the obligatory commission to assess the MBTA’s problems and make recommendations for fixing them, a Sisyphean task to be sure. One can only hope they will address the question of why this essential, non-discretionary service has consistently failed to be accountable to its customers.

In the meantime, thousands of disgusted customers are demanding refunds for a service that was not rendered. They want the MBTA held accountable for failing to keep their promise to provide the safe and reliable service that, to many, is just as basic as access to water, education and health care.

At the heart of accountability is a promise that obligates you to a course of action. When you are paid for a product or service, you are accountable for delivering it. If you don’t fulfill your promise, you are expected to take responsibility for failing to deliver on it and expected to compensate the other party. This creates a modicum of credibility; a promise made is a promise kept.

Sure, the MBTA board of directors is not responsible for creating private gains, their quasi-public structure means the MBTA has no owners to whom the board is primarily accountable. But they are accountable to taxpayers and customers for creating societal benefits and satisfying the promises made to their multiple constituencies.

If board members are confused about how and why they should be making good on this promise, the new commission should figure it out for them. Commission members should also keep in mind that they cannot expect the MBTA board of directors to perform surgery on themselves. The commission would be wise to recall Einstein’s words that you can’t fix today’s problems with the folks who created the problems in the first place.

One obvious imperative for the nice people on the MBTA board is to acknowledge their failure to deliver a basic service. The stewards at the MBTA can’t make up for lost wages and all the other collateral damage done to the average Joe and Jane. But if they are serious about customer service and want to be viewed as legitimate, they should move at the speed of light and provide customers with refunds for the services those customers haven’t received. What’s to discuss? Just do it.

Even better still, going forward, a money-back guarantee would make public transportation much more attractive to customers and also be the acid test for accountability. And why not a money-back guarantee, it is routinely used by successful private firms that distribute goods and services though the marketplace.

Of course, this principle can only be implemented after Hercules has cleaned out the Augean stables at the MBTA. To expect anything less is to be as amateurish as the folks who are currently in charge.

originally published: February 28, 2015

Intellectual dishonesty and the MBTA

The bacchanal of charges, counter charges, accusations, and recriminations concerning the MBTA’ s highlight-reel non-performance  over the last several weeks is redundant. In sum, you would be right to conclude that a lot of people had a lot of years to get a job done and failed to do it, and that failure haunts the region in numerous ways.

Of course the public is told that this crisis is the equivalent of a “Sputnik moment,” a blessing in disguise, a wake-up call for elected officials to redouble their efforts to reimagine and modernize the MBTA.

Let’s hope so.

One is reminded that after Winston Churchill’s electoral defeat in 1945, his wife tried to cheer him up. “It might be a blessing in disguise,” she told him. “At the moment,” he replied, “it seems quite effectively disguised.”

A cynic might be forgiven for insisting that the recent MBTA crisis reminds us that there is much is to be said for intellectual dishonesty. She would argue that part of the criminal neglect of the T is that we are much more likely to enjoy an adequate supply of the public goods and services that are so vital to the commonwealth’s welfare if we can convince ourselves that someone else is paying for them. Whenever the cost is coming out of our own pockets, we inevitably try to cut corners, do things on the cheap, and ultimately deprive ourselves of much that we really need.

One definition of intellectual dishonesty is ignoring reality when it interferes with what we want to believe about the way the world works. This is what government enterprises do when they pretend that operating and maintenance are not part of the true costs of providing a public service and are not truly accounted for in the price charged for a public good.

The public is as much to blame for this as elected officials who underestimate true project costs.  People’s expectation of receiving more services from government than they are willing to pay for leads to those officials to provide numbers that have all the accuracy of a Brian Williams anecdote. Taxpayers want more for less and elected officials lack the courage to tell them flatly there is no free lunch.

For example, when former Gov. Deval Patrick announced a nearly $1 billion federal grant to finance the MBTA’s $2 billion Green Line extension, little attention was paid to the fact that the commonwealth still has to foot another $1 billion in construction costs. Still further there is little if any discussion at all of how the project’s life cycle operating and maintenance costs will be covered.

People seem to have forgotten that public transit has to live in the real world and the biggest real-world concern these days is how to pay for it. In simple terms, this comes down to a choice between taxes or user fees – fares in the MBTA’s case.

The deterioration of the MBTA is testament to the consequences of deferring maintenance to disguise the true cost of providing the service. In the T’s case, maintenance has been deferred for decades.

The public is misled about the true life-cycle costs of public transportation assets. It is being economical with the truth to continue to believe you can pay for the overhaul of the MBTA or any other public provider of public transportation without either charging fares that reflect real life-cycle costs or increasing taxes to include operations and maintenance.

Hopefully, elected officials will finally catch the joke, end the intellectual dishonesty and truly embrace the hard work of cutting the MBTA’s financial and managerial Gordian Knots beyond the mere telling of words.

originally published: February 21, 2015

MBTA financial plan is Band-Aid, not a solution

Massachusetts transportation managers seemed to pull another rabbit out of the hat when the most recent chapter in the ongoing drama of MBTA budget woes ended with relatively minor service cuts and fare hikes that aren’t as steep as had been contemplated. But with $8.6 billion in debt and a $3 billion maintenance backlog, those managers are the first to say that the T will be right back in the budget soup again next year.

And the MBTA is just the latest piece of the Massachusetts transportation system to face financial meltdown. Before that there was an emergency program to address the deteriorating condition of our bridges. It is a trend that will continue until we adopt a sensible means of allocating and pricing transportation capacity.

Several transportation professionals have compared our transportation network to Garrett Hardin’s common pasture. It’s a worthwhile analogy.

In Hardin’s pasture, local farmers graze their cows for free. Not surprisingly, each grazes as many cows as s/he can on the pasture because it results in increased milk production at no additional feeding cost.

All is well until the number of cows exceeds the pasture’s feeding capacity. Because the cows get less nourishment, their milk production declines. Yet the farmers’ response is to add even more cows to the now barren pasture.

And so it is with our transportation system. Fuel taxes don’t nearly cover the cost of building new roads and maintaining the ones we have. Other than fuel taxes, the vast majority of roads are free.

Riders pay to use the MBTA and other transit services. But unfunded expansion has left the T owing so much that fares barely cover what it pays in interest on its debt. Yet the clamor is to build more roads and transit lines. When we do, we too often budget based only on the cost of construction, without taking operating and maintenance costs into account.

Pricing is the key to a functioning and sustainable transportation network. Revenue is needed to operate and maintain the system, and also to build new assets when needed. Fares and tolls also help regulate demand, avoiding the consequences of overuse that rendered Hardin’s pasture barren. The goal should be to price each transportation asset based on the value it provides to customers. Doing that effectively is the essence of good management.

A logical pricing system also provides the framework for debates about whether to expand capacity. If toll revenue in a particular area is robust, perhaps new capacity should be considered. If it’s determined that expansion is the best option, toll revenue offers a rational way – as opposed to just borrowing more, like we now do – to pay for it.

And paying for expansion doesn’t just mean the cost of building a new road or transit line; it means covering the cost to build, operate and maintain the asset over the course of its useful life.

Nobody wants to pay more, as Gov. Deval Patrick learned when his proposed a gas tax hike was largely ignored in 2009. But as the MBTA teaches us, the commonwealth’s current transportation system­ which is in shambles due to an unwillingness to face up to actual construction, operation and maintenance costs – simply isn’t sustainable.

Stopgap measures like those being employed to keep the MBTA afloat don’t solve our transportation problems. In fact, they make the problems worse. Next year, the T’s budget crunch is likely to be even more severe.

Perhaps by then voters will see that a rational pricing system is far less painful than dealing with the fallout from massive debt and maintenance backlogs. If they don’t come to that realization soon, inexorable decline will produce a transportation network that looks eerily like Garrett Hardin’s common pasture. 

originally published: April 26, 2012

Transportation fiefdoms a roadblock to shared goal

The MBTA faces a $161 million shortfall for the coming year. As hard as closing that gap is, doing it the right way is an even more difficult task, because it requires understanding the impact of fare hikes and service cuts on the overall transportation system, not just the T.

Roadways, transit systems and railroads each have their own unique technologies and operating traditions. As a result, transportation officials generally view each as its own functional enterprise. According to their catechism, it is only logical that each mode should have its own funding, planning and construction programs.

But transportation customers don’t care about the physical distinctions between modes. They care about moving themselves and their goods door-to-door in the fastest, most efficient manner. If a particular trip requires using more than one mode, so be it.

Customers are also unlikely to care if integrating all modes into a single, seamless system of regional transportation requires using revenue generated by one mode to help support another. It’s the results that count.

Done correctly, the results of integration would include lower costs from each mode being used for the trips it’s best suited for; less congestion; better mobility for those with fewer transportation choices like poor, elderly and disabled customers; and cleaner air.

Every transportation mode has the same overall goal: to maximize mobility for people and goods. As such, each should operate under a single institutional framework for funding, planning, construction and maintenance. Professional managers view surface transportation through the customer’s eyes and understand that the system’s common purpose transcends technical or operating differences.

It is scarcely a secret that the silo approach to transportation remains far more common, but it is becoming increasingly apparent that the management professional’s approach better serves the public.

While there may currently be some cross-subsidizing of public transportation, continued fragmentation prevents existing capacity from being used as efficiently as possible. The challenge is to weave together the various modes in a manner that provides customers with reliable and timely service at a price that makes economic sense to both the customer and the provider.

Achieving that goal will require Massachusetts leaders to ask whether the proposed MBTA fare hike is consistent with the strategic objectives of the commonwealth’s 2009 transportation reform legislation, which merged transportation agencies and promised savings on the order of $6.5 billion over 20 years from the resulting operating efficiencies.

Just as important as the savings, reform was designed to improve customer service through the integrated management of surface transportation. Put another way, the commonwealth can now price the entire transportation portfolio rather than simply pricing each individual mode.

As they target the MBTA’s budget gap, state leaders should not lose sight of how their decisions will affect the larger transportation network. That requires asking questions like how the proposed fare increase would impact system goals, how it could help provide customers with better value and whether it would lay the foundation for better pricing and strategic decisions going forward.

Getting to the balance that will best serve all the regional transportation networks might require transportation policy makers to compare the impact of increasing the commonwealth’s fuel tax, which has not been raised since 1991, against hiking MBTA fares and cutting transit service.

With the implementation of reform, state transportation managers oversee a portfolio of transportation assets. The MBTA’s budget gap must be closed, but wise stewardship requires that those managers do so with an eye toward the impact on the larger system as they make decisions about fare hikes and service cuts.

originally published: March 31, 2012