Key insights
- The author expresses strong conviction in the future of high-speed rail but notes its poor execution globally, except in China. They cite cost overruns, delays, and land acquisition challenges as major obstacles. The author uses Alstom as an example of a company that should be a good investment if high-speed rail was a good play, but it is not.
I mainly invest in ideas and what I think will be big in the future. One of the theme's I feel very strongly about is high speed rail, for the following reasons:
- Its clean
- Its obviously very fast
- There is a lot less hassle in getting a high speed train then there is a plane - long check in before, a big amount of security, and very weather dependent (yes weather and security can also affect trains, but not as much)
- you pay airport taxes, and you just know a train will be cheaper - first class on a high speed train would probably be the same cost as economy on a plane
- high speed trains are way more comfortable to travel in, nice seats, and barely any vibration or noise
- the US, which is a big market, hardly has any high speed rail infrastructure currently. They don't have any plans to change that soon, but its a big market if and when they do
I am sure there are many more pros I haven't put here, but that's enough for me. I'd rather get a 250 mph train than mess around with a plane, and that's the bottom line. I also think that high speed is, and will be the future.
High speed rail at the moment however is a total mess. Only China has done it well, every other country in the world has messed it up - projects exceed budgets massively and there are always long delays. Many projects overrun costs so much that they have to scale the high speed track back massively, so instead of a track being 100% high speed rail capable, its only 40% if that. Its also hard for governments to acquire the land for the tracks/routes.
Because high speed rail is executed so badly, its basically a no go when it comes to investing. Look at Alstom for example, if high speed rail was a good play, Alstom would probably be up there as a pick, but even with a giant backlog, its still not even close to being a good buy. They did purchase Bombardier a while back, so they are still feeling the headwinds from that, but even when those pass, I don't think it will be a good investment.
I just think its a shame there is no good way to invest in high speed rail currently. The only thing I found worth investing in to try and get exposure to it is Siemens.
Anyone else strongly believe in high speed rail and frustrated?