Sunday, March 4, 2012

138> Imagine

There is a problem with the PRT business model. It is not scalable enough to really make an impact, because it is inherently a multifaceted local endeavor. For the foreseeable future, each new project will tend to dominate the PRT provider’s attention, at least until it is up and running. That is just how construction and development based projects are. This is not to say that a PRT provider cannot grow big enough to handle multiple projects at once, but rather to say that such growth cannot be rushed.

There are models that offer at least partial remedies. For example franchising might have potential, and partnerships offer another avenue for more rapid growth. The normal way rapid, revolutionary change usually occurs, however, is from the bottom up, where many self-serving actors can chip away at a problem independently. So how can this be done in the PRT world? 

Well, for one thing, whatever oversight is required must be kept to an absolute minimum. McDonalds didn’t get so big by trying to manage the day-to-day affairs of individual restaurants from the central office! So what would this minimum be? Let’s start with a process of elimination.

First, the track - which certainly would involve a lot of local collaboration in any case. It is my belief that track can be installed for under 2.5 million USD per mile, and that the lifespan is such that only a small fraction of the fares would be required to pay down these costs. So can this constitute a viable, stand-alone business? Let’s run some numbers. Imagine we are counting passing vehicles on a one mile stretch of track and on average, during a sixteen hour day, there is just 1 passing vehicle every ten seconds. If the track provider gets paid just 12 cents each, that is $691 daily, or over $252,000.00 annually. That is enough to pay the track off in about ten years. The track should have a life span of many decades, so after it has been paid off, it represents a pretty nice little cash flow! So far, so good.

Let’s turn to stations, and let’s assume that private land is involved. If landowners can make a small piece of the fare, say 20 cents per passenger, and station construction is a turn-key proposition, (probably by being an add-on contract for the track guys) then perhaps this too can be a standalone business model. Let’s assume a low volume, bus stop style station that can be built, including some feeder track, for $150,000. It has an average usage of only one passenger per two minutes with the station getting 20 cents of the each fare. That’s over $35,000 annually, so the station could be paid off in under 5 years. (To make this still more lucrative, local property tax inducements could be offered as well, something that most cities could pull off without a lot of opposition. Also, let us not forget the value of the increased pedestrian traffic to the landowner.

The vehicles are probably best made by a consortium of really big companies that want to gain good will and free advertising while making a buck in the meantime. Once again, a piece of the fare would go to this effort. I say consortium because, at least as I envision it, the part of the vehicle that is not the passenger compartment is essentially a mobile robot, and might fall better into the expertise of the people that build the automobile assembly line equipment than the vehicle maker per se. Readers of this blog will appreciate that my vehicles seem quite ambitious; however even a few cents per mile buys a lot of vehicle over years of daily service. For example, at 11¢ per mile (100 daily miles) and $0.45 per passenger, (say 50) a vehicle would generate $33.50 daily, which comes to $12,227 per year. At, say, $60,000 each, that is still only a five year payoff cycle, and these vehicles ought to have much, much longer lifespans than that.

So what are we up to? $0.65 to board and $0.23 per mile?  I guess we better add 13 cents a mile and a nickel for station maneuvers to pay for electricity. OK. Now we’re up to $1.06, and we haven’t included maintenance or monitoring, or even finance costs, but this is not supposed to be anything like a real feasibility study, and I want to get on to the next part, so bear with me.. (I’m not sure that some of that can’t be passed off to the local transit authority anyway, but let’s not deal with that now…)

As I said in the beginning, the way to make a system rapidly expandable is to allow bottom-up, decentralized growth, by minimizing or even eliminating the responsibilities at the top. Obviously there is a lot of coordination involved in PRT deployment, and this area alone could be the subject of many, many posts. Let me just say, though, that I envision the top of this totem pole to be a non-profit  organization. (NPO) Such an organization would develop the standards necessary to allow compatibility between the disparate corporate players and work to improve the system over time. The organization would also work with local transit authorities, provide training, etc. I would note here, for those not familiar with NPOs, that they can behave very much like for-profit companies, except they do not pay taxes. They have salaried management and staff, can award contracts, etc. It is my assumption that there is some way to levy a fee from PRT fares to help support such an entity, either directly or indirectly. Any lawyers out there? The NPO would play a key role in developing the system by soliciting help from academia and industry, as well as fund raising and promotion.

If all of this seems complicated, compared to just forming a PRT company, let me point out that an NPO has a definite advantage when it comes to raising funds and issues of trust. Person(s) seeking to create a for-profit PRT company can still do so while being affiliated and perhaps even drawing a salary from the NPO, although conflicts of interest must obviously be carefully avoided. Right now PRT companies are starved for R&D money. That is because they want to have all of the profit for themselves, and the result is products that look like they were… er… starved for R&D money. I would suggest getting a smaller part of a much bigger pie, divesting one’s self of the parts of the PRT effort one doesn’t want in the first place. A great deal of this stuff is, after all, clearly in the public interest. But government and private grants have a real problem going into PRT development projects since there is no entity to receive them, except for-profit corporations whose fiduciary responsibility is the enrichment of their shareholders.

Standardized Multi-axis Automated Rail Transport - (SMART) - That is my take on what is worthy of public research and development funds. The concept is simple. We need an all- weather way to move objects longer distances in full 3D rapidly and efficiently. 3D because our surface world is too crowded to permit non-stop movement, and getting to and from ground level needs to be as easy and straight forward as possible. This is not just about moving people, but rather the transit solutions are a sub-set of SMART development. Other areas of development could include warehousing and freight delivery, for example. The common denominator between all such subsets is the multifold increase in energy and time efficiency, something all responsible citizens and their respective institutions should want to support. 

Movement of people and freight is at the very foundation of society itself and the efficiency of our means of transportation are paramount to the prosperity of every one of us, not to mention the sustainability of our, and every other, species on this planet. I can see no other effort so worthy of philanthropic,  government, and corporate support. Now I know the numbers I throw out above are hardly worth the paper they aren’t written on, but the ridership numbers are, you will agree, very modest, and I was, after all, just trying to get readers thinking. To make this work, the independent business models have be so lucrative that they are like taking candy from a baby. Independent businessmen need to have enough to gain that they will relentlessly pursue each available lucrative route. The object is to iron out every legal, fiscal and technical challenge and lay the opportunity at the feet of free enterprise. I know this is a huge challenge, but what other scenario is out there that would enable hundreds of cities, worldwide, to start building PRT infrastructure at once?
Imagine that. 


Juho Laatu said...

I liked the stronger role of freight. If/when we one day get a working interconnected PRT network, freight delivery might be one of the obvious uses for it. (We might even forget the P of term PRT and replace it e.g. with L, Light.)

Both business-to-business and business-to-private delivery may be important. Just count the number of delivery trucks on the roads today and reduce the salaries of those drivers (sorry, drivers).

In order to get the deliveries I'd have to build my own station or go to the nearest station and order the delivery there (probably already waiting at the nearest side track or garage). Also I would have less need to drive around, collecting stuff.

Asko K. said...

Finnish Post (Itella) has 24h automated packet delivery system, as presented in this somewhat annoying video (we don't have such amazingly big eyes, and the lips don't seem to be in sync):

Anyways, I don't think PRT (Parcel Rapid Transit ;) would lead to our front door. But combine it with the SmartPost approach and voilá - it works both ways. And the parcel operator is already there.

No, I'm not in talks with Itella yet.

p.s. OpenID integration no longer seems to work for comments.

Sean said...

I'm surprised by the two comments on shipments.
Overall I have to agree with the premise of this post. In Detroit we have the proposal for a regional transit authority in the state legislature right now. It is basically for BRT but what is to say it can't be for PRT? I'm confused about asking a NPO to participate in the promotion yet I can't get my mind around a good (or better) business solution.

Dan said...

Dan The Blogger cannot respond...
Sorry guys, I tried, but I really have more to say about both the freight and the non-profit than I can really fit in here. This calls for a new post! It'll take a little while though... I've got a few projects going right now. Thanks for commenting... hopefully I will come up with something that you will find worth the wait!

Dan said...

P.S. Asko, I'm afraid I don't have a clue about the Open ID integration. I have never used it.