- 2 hours ago
Category
🗞
NewsTranscript
00:00Buses are an incredibly important part of America's transit system.
00:043.8 billion bus rides occurred in 2024.
00:08Ed Glazer is an economics professor at Harvard
00:11and co-author of a paper on public buses for the Hutchins Center at the Brookings Institution.
00:16On average, that means an American takes 10 bus rides a year.
00:21But of course, it's not like an average person does 10 rides.
00:24It's more that there are some people who take hundreds and hundreds of rides
00:28and some people who take none.
00:29But as much as people rely on public buses, there is room for improvement.
00:34New York City Mayor Zoran Mamdani certainly thinks so.
00:37We know that for so many New Yorkers, public transit is increasingly becoming out of reach.
00:44That is why at the heart of our campaign was a commitment to make the slowest buses in America
00:49fast and to make them free.
00:52And Harvard's Glazer agrees, at least that we could do more with less
00:56when it comes to our public bus systems.
00:59Lots of love about the bus, and certainly it needs to be cheaper.
01:02How much you could do with more efficient use of the existing bus system in New York
01:06versus adding to the number of buses, I'm not sure.
01:09But in general, I think the future of American public transit should have a lot of buses in it.
01:15We're just paying way, way too much for our buses.
01:18So the average electric bus in the U.S. costs about $1.05 million.
01:24That is an astounding number.
01:26You can buy a perfectly nice 36-foot electric bus from Hyundai for $350,000.
01:31Now, obviously, that wouldn't necessarily be compatible with the American Disability Act,
01:37but it just gives you an idea of just how expensive it is.
01:39And it's not just compared to other countries that our buses seem overpriced.
01:44It's compared to other vehicles.
01:46Between 1995 and 2025, the quality-adjusted cost of a new car dropped by 40 percent.
01:53Because in the automotive industry, right, technological change happens.
01:57We get better at making things.
01:59Not in buses.
02:00The price of a diesel bus is slightly higher now than it was 30 years ago.
02:03Also, the prices are really varying.
02:05We found one 40-foot electric bus in a larger order, costing $450,000.
02:10Another agency that was just buying 10 of them, spending $950,000 per bus.
02:14That's an amazing amount of range there.
02:18The heads of America's transit systems agree that there is a problem.
02:22We serve eight counties, and within eight counties, there's 40 municipalities.
02:27Deborah Johnson is the head of Denver's transit system.
02:30When we're looking at our operative word within our moniker being regional,
02:35there's often an expectation for localized services.
02:40RTD happened to be the first public-private partnership within the transit space
02:44when commuter rail was brought online back in the mid-2000s.
02:50The area that Denver serves is unique, but that very uniqueness may be part of the problem.
02:56Every transit system wants to have its own particular version of the public bus.
03:02The bus agencies will often specify, we want this type of engine, we want this type of seat,
03:08we want this type of other things.
03:09So it's sort of like if you were going to buy a car by sending out a request for proposals
03:13to GM and Hyundai and Toyota,
03:16and you said, look, I'm looking for a four-wheeled family vehicle,
03:20and you've got to make sure you buy the engine.
03:23I want this model from Honda, and I want these tires from Michelin, and please bring me bids on this.
03:29And you can imagine what you would get in terms of the price of a car like that.
03:33The miracles of low cost come from scale economies, right?
03:36That's what Henry Ford told us 120 years ago with vehicles.
03:39And yet that's not what we're getting with buses,
03:41precisely because we're finding roughly 70 percent of new buses in our data are literally unique in our data,
03:48meaning that there's no other bus exactly like it that's being ordered by any other bus agency.
03:54Johnson recognizes that the bespoke nature of public buses doesn't help with the cost.
03:58But at the same time, she says there can be good reasons to provide different buses for different geographies.
04:06Oftentimes, transit agencies want to customize buses.
04:09They want it to be more analogous with their brand of their transit agency,
04:15putting an undue hardship on the bus manufacturer when you want to customize windows, for instance,
04:21or you want to customize seats so you have your logo branded in to the seat, for instance.
04:25Now, keeping in mind that there will have to be some design options taken into consideration,
04:30because if you're operating a transit system in Arizona, you may need a greater cooling system as we look at
04:39HVAC.
04:39But when you think about there could be over 400 shades of white that one is using,
04:45that's not really conducive in reference to cost.
04:48I would say we have to ensure that we are being procurement smart and not procurement first.
04:54And what I mean by that is determining what it is that one needs for the betterment of their operation.
05:02The industry recognizes the problem of standardization and is taking steps to address it nationwide.
05:08We have come, I think, to a terrific set of recommendations that are being implemented now by and large.
05:15They deal with the commercial terms, how we pay the bus manufacturers.
05:19We have used an old procurement model in the industry for many years,
05:23which was one that a customer places the order and maybe a year and a half or two years later
05:28they get the vehicles delivered.
05:31But they don't pay a dime until that happens.
05:33Paul Scutellis is president and CEO of the American Public Transportation Association.
05:39To what extent so far have you seen municipalities step up to your recommendations on standardization and pooled procurement?
05:47Well, I think it's been embraced by our industry.
05:50We've come to some common understanding of what we can do to help each other, agency and producer,
05:57to make sure that we're getting good quality products that meet the needs of the agency
06:00so they can serve their customers reliably, but also provide for a more reasonable price and a more reasonable cost.
06:07Johnson sits on the board of the APTA and has worked on efforts to standardize bus procurement.
06:13And so the purpose of the Bus Manufacturing Task Force was coming together,
06:18thinking about what we could do to streamline to more or less ensure that there was a price that is
06:24consistent in the customization
06:26that will enable a bus manufacturer to have on their assembly line a bus that, you know, RTD and Denver
06:34could leverage,
06:35whereas it could be leveraged, too, in Long Beach, California.
06:40But it's not just standardization that could help bring down the price of public buses.
06:45It's also competition, something that the American public bus system pretty much lacks right now.
06:51So one thing that's critically important as we look at modernizing our fleet
06:56is making decisions relative to leveraging operator dollars and capital dollars.
07:02As it relates to bus purchases here in the United States, over the course of the past several years,
07:09where there was, say, 10 bus manufacturers doing business in the United States,
07:14over the past three years, that number has decreased substantially.
07:19There's a relatively small number of companies that are providing most of the buses.
07:23So 50 percent of buses in the U.S. are currently being produced by only two bus companies.
07:27So it's really not a very competitive industry.
07:30We want a healthy bus industry.
07:31You asked the question a moment ago about other factors contributing perhaps to the higher prices here in the U
07:37.S.
07:37We only have two manufacturers of significant size that produce buses for the public transit systems in the U.S.
07:45today.
07:45That needs to be at least another manufacturer, perhaps even a fourth,
07:49to provide the capacity and provide the competition that I think would be helpful in terms of helping to contain
07:55those prices.
07:55And that's where the federal government comes in.
07:58Far from helping to bring down the cost of buying new buses, the government may be making the problem worse.
08:04U.S. federal money pays for about 80 percent of the cost of buses bought for by local transit agencies.
08:12And that certainly reduces the incentives to cut costs because the federal government is picking up the price tag at
08:18the end of the day.
08:19It also reduces flexibility because, for understandable reasons, the Department of Transportation has rules about how to do bus procurement.
08:26So you can't just make it up as you go along.
08:28The most obvious of this is the Buy American rules, which make it hard to harness the value of foreign
08:33competition,
08:34which means you couldn't, if you're going to use Department of Transportation funds,
08:36you couldn't just order your $350,000 electric buses from Hyundai, even if they did satisfy the EADA requirements.
08:43But so both by funding it, it both reduces the incentives to cut costs,
08:48but also it covers procurement entities with a whole bunch of extra rules that make it difficult to be innovative,
08:54to be smart, to be nimble.
08:57Federal funding and restrictions may be making public buses more expensive,
09:01but Glaser says that there may also be ways to use the federal government to bring prices down.
09:07So the most obvious is just for the federal government to throw in a maximum price per bus that they're
09:15willing to pay.
09:16That might differ across types of buses, so diesel might be different from electric,
09:20but you put in a maximum, you can pull the maximum from what companies, what transit agencies were paying for
09:27buses last year.
09:28So you could take, let's say, the price of one of these buses that was at the 25th percentile,
09:33meaning that three-fourths of the buses bought last year were more expensive, one-fourth were less expensive,
09:37and you sort of put in this cap.
09:40Now, they can still spend more if they want to spend their own money,
09:42but they're not going to get federal money to support something that's lavish.
09:46Number two, encourage agencies to work together.
09:51So, you know, try to get bundles of buses ordered once to avoid the small bespoke orders,
09:57and at least you're getting larger bespoke orders.
09:59And then there's always the possibility of opening the business up for more competition.
10:04Difficult when it comes from abroad, but maybe not impossible if done right.
10:09Well, we do have laws that are on the books now through the Buy America that provide for local assembly,
10:14meaning in the U.S., but we are staunch supporters of protecting American jobs,
10:19making sure that buses that are procured by our agencies using public funds
10:23are in fact buying U.S.-made buses.
10:26We think that's really critical.
10:28Now, we encourage others across the world, if they want to do business in the U.S.
10:33and to set up a bus manufacturing facility here, we welcome them.
10:36We're ready and willing to help them to settle here
10:40and provide them an understanding of our bus industry.
10:43But we think it's critically important as an industry to make sure that we are spending public dollars
10:50for goods that are produced here in the U.S.
10:53I would love to see companies like Hyundai move into having factories in the U.S. to produce buses.
11:00And there are different ways suggested in the paper, in our report,
11:04to sort of make that toehold, make that on-ramp easier for them to do that.
11:08America wants its public buses.
11:10It needs more of them.
11:12And it needs them cheaper.
11:14It's not an easy goal and will require changing the way we buy buses
11:18and maybe even who makes them.
11:20But in the end, it may be the only way we can get what we're paying for.
Comments