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.


Infrastructure Yes, But Not Just Any Infrastructure

The American public is routinely bombarded with messages about the need to spend vast sums of money on infrastructure, drumming the subject into the public consciousness, promoting an often rehearsed-sounding catalog of new capital projects. The need is indeed great, but so is the importance of spending wisely. That means emphasizing the lifecycle management of infrastructure assets.

President-elect Trump says his plan to spend $1 trillion on infrastructure projects over 10 years would be paid for by leveraging public-private partnerships and encouraging private investment through tax incentives. Infrastructure spending is a priority Trump shares with congressional Democrats, who have said they believe they can work with him on the Augean task of renewing America’s infrastructure.

What is often overlooked is that infrastructure spending is not just about new construction, but the maintenance of existing assets. Timely lifecycle management and maintenance is needed to extend the service lives of infrastructure assets in a state of good repair and significantly reduce overall costs. The rationale is to avoid the high cost of reconstruction and replacement that results from deferred maintenance.

Political leaders frequently say that stewardship of infrastructure assets is essential for economic growth. But the evidence suggests that many of them don’t believe it. They are predisposed to defer maintenance because their concept of the future extends no further than the next election cycle, and initial timeframe for infrastructure assets to show the effects of irreversible deferred maintenance is much longer than their likely terms in office.

Consider, for example, that large sections of the Washington D.C. transit system are out of service because maintenance has been shortchanged over decades. Service quality declines substantially when maintenance is deferred. Here in Boston, MBTA maintenance has been underfunded for so long that it will take years to eliminate a $7.3 billion maintenance backlog even though the T plans to devote $870 million to the cause this year.

Also, public officials all too frequently understate the true costs of infrastructure projects by focusing on what they cost to build and ignoring operation and maintenance.

Another factor contributing to the failure to maintain infrastructure assets is that highway funding arrangements, for example, traditionally favored capital expenditures for new construction. As originally established by Congress, the Federal-Aid Highway Funding Program specified that Federal Trust Fund grants would cover up to 80 percent of the cost of new construction and subsequent reconstruction or replacement.

But state and local governments had to bear operating and maintenance costs. When highway links inevitably wore out before their time, state and local governments only had to worry about coming up with 20 percent of the total sum from their capital budgets since federal construction grants covered the rest, so maintenance was not a priority.

All but forgotten in this dubious calculus were costs incurred by motorists who had to struggle with increasingly decrepit highways, as well as plenty of congestion when highway lanes were closed for restoration; an inconvenience, any driver knows, that always last much longer than advertised.

Although later reauthorization bills made federal funds available for rehabilitation, renewal, and reconstruction at levels comparable to new construction, the damage had already been done. Today the advanced deterioration of the nation’s highway system is testament to the consequences of deferred maintenance.

The price tag for renewing America’s infrastructure is astronomical, and comes at a time when a federal funding regime dependent on insufficient fuel tax revenues is least able to afford escalating construction and maintenance costs.

Going forward with a big infrastructure package and setting aside, for the moment, the issue of finding the cash to do it, there needs to be an emphasis on the lifecycle management of infrastructure assets. The health care industry understands that it is far less expensive to keep a patient well than to treat them once they become sick; the same is true for our nation’s infrastructure.

Originally Published: December 10, 2016

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