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Economy , Investing , Travel

When Old Becomes New – Investing In Railways (Plus a video)

October 9, 2018
investing railway

On May 10th, 1869, the final spike of the first US Transcontinental Railroad was driven into the ground by Leland Stanford. This spike was made of pure gold to signify the importance of the completion of this rail route, that would eventually lead to a mass migration of new residents to the West Coast of the United States.

By 1876, the trip from New York to San Francisco took just over 80 hours to complete. This was a game changer in speed and safety, compared to the months it would take to travel across the country via covered wagon, or the weeks it would take to sail around South America.

Although Stanford had an integral role in completing the Transcontinental Railroad, he is mostly known as the founder of Stanford University, where some of the world’s top tech talent has graduated (or dropped out of).

Ironically, Leland Stanford’s original tech pursuit – railroads – may be coming back to popularity.

South Florida is currently home to the only US privately owned and operated higher-speed train, called Brightline. And guess what? It’s clean, efficient, on time, and offers a variety of luxuries.

If you’re from Europe, you’re probably thinking, “So what?”

Well, here in the US, transportation via rail is, um, horrible. Not only are most rail routes surprisingly expensive, but they are often dirty, mismanaged, and not exactly a pleasurable experience. Perhaps that has something to do with Amtrak being a government run venture…

For example, in 2008, the California Zephyr train was off schedule 95% of the time. No wonder Americans have ditched rail travel.

Brightline, on the other hand, is a completely different experience. And while they are only operating in Florida at the moment, the next route they’re looking at building runs between Los Angeles and Las Vegas.

Internationally, new train technology is also starting to gain traction. Siemens, Hitachi, and Bombardier are just the big names among dozens of companies developing efficient high speed trains.

With a predetermined route and limited human input necessary to operate rail networks, many rail systems already operate autonomously. This not only decreases the chance of error, but it also makes rail operators more profitable, and therefore more motivated to make great railways that serve their customers.

The downside of all of this is that these projects require a massive amount of capital. Not only do the actual trains cost a pretty penny, but the land, rail, and infrastructure that the trains operate on are enormously expensive. Still, if run properly, they can be profitable, as Brightline is trying to demonstrate.

I just took a ride on the new High Speed Railway between Hong Kong and Futian. There is a video here that you can check out about the experience.