Thursday, October 31, 2013

Hyperloop Traffic

This is a huge post, about a subject that may not be terribly interesting. I suspect most of you will want to skim all but the first section, and come back later when I refer to this post from later posts.

Bottom line: If Hyperloop can get daily commuter traffic, at first within the Bay Area and Los Angeles areas, and later between then, then it can gather at least $7b/year of revenue. This is much larger than the $2.2b/year of revenue from the California High Speed Rail projection.

Daily commute traffic is the most important market. The better Hyperloop addresses this market, the more revenue it will get.

The big picture
I have looked at the California High Speed Rail project’s expected traffic volume (example here).  They are expecting an average of 32,600 people/day to take the train between the LA basin and the Bay Area, and another 8,800 people/day between San Diego and the Bay Area.  For comparison, 29,000 people/day currently fly those routes.  So they are expecting everyone who currently flies to take the train instead.  While this is possible, it’s neither likely (door-to-door times using the train will be slower for most people), nor sufficient (it doesn’t bring in enough money), nor interesting (replacing one service with an equivalent doesn’t grow the economy).

The required investment is $68 billion and they expect $2.2 billion/year in revenue.  That’s just not enough revenue.  The goal is apparently to break even on operating costs and not need government subsidy, which I find appalling.  Of what use is a train if it doesn’t get anyone anywhere faster and it doesn’t make money?  About the only other thing it might accomplish is removing traffic from some other system that would otherwise have to be expanded.  The trouble is that the overcrowded system most in need of relief is local highways, and the HSR doesn’t do anything about that.

I think Hyperloop should have three goals:
  • Most Californians should see decreased travel times and improved travel flexibility.
  • 6% return on capital invested.
  • Massive new economic activity beyond the billions spent on the transport system directly.

To bring in an order of magnitude more revenue, Hyperloop must be used by a lot more people a lot more often.  There is only one way to do that: Hyperloop must significantly improve the daily commutes of a million Californians.  Just as the freeway system allows drivers to bypass most surface streets for journeys longer than 20 minutes, Hyperloop must allow drivers to bypass most of the freeway system for journeys longer than 40 minutes.

The average California commute is about 30 minutes.  12% of Bay Area and Los Angelino commuters accept commutes at least an hour long.  There are two opportunities here.  The first and more immediate is to cut 20 or more minutes out of hundreds of thousands of existing commutes within the Bay Area and Los Angeles.  The second is to enable daily commuting between Northern and Southern California, and over larger distances in general.

Practical commuting over distances like this will cause massive changes, just as the automobile disrupted the previous shapes of cities.  Hyperloop can bring together the labor markets in Northern and Southern California, open up gigantic new areas of real estate, save Californians perhaps a hundred million hours a year, and attract a half million passengers a day. (Em, my numbers don't actually support a million per day.)

As detailed below, I project revenue of at least $7b/year.
  • $2.8b from existing north/south traffic
  • $2.3b from existing commuters
  • Eventually, at least $1.9b from new long distance commuters, and perhaps multiple times this much.

The key to faster commuting is quick transitions between Hyperloop and ordinary car travel, so I have diverged from Elon Musk’s proposal.  I will summarize here and leave the details to another post.

  • The capsules I envision have no seats at all -- they are primarily car ferries.
  • Security would be the same as on our freeway system -- open access and zero delay, along with police surveillance.
  • The time between capsules while underway would be 1-2 seconds, similar to that of cars on the freeway.
  • I envision routing the tubes underwater.  I just don’t see voters accepting massive overhead tubes in cities.
My last point of departure is that I propose to carry truck traffic for more diversified revenue.

Northern California to/from Southern California non-commute traffic
The following analysis leads me to expect that, perhaps five years after initial operation, the north-south link would carry 26 thousand one-way revenue-generating capsule trips per day, from the replacement of trips that people take today.
  • 10k/day replace I-5 truck traffic
  • 8k/day replace I-5 car traffic
  • 7k/day replace flights and subsequent car rentals
  • 350/day replaces flights which are segments of longer flights

To be attractive to truck traffic, a north/south capsule ride must be priced around $300, which makes a car ride $75 and a bus ride under $20.  North/south revenue will be around $2.8b/year.

Why Trucks?

Carrying 18-wheeler trailers will require a substantially bigger capsule and tube than carrying sedans, and so substantially more capital investment.  I don’t have an estimate of how much more capital investment, but I do have an estimate for the expected revenue from truck replacement traffic: about $1b/year from 10k capsules/day on the north-south link.  This is perhaps 15% of the total revenue stream.

Nationally, people spend one-third as much on truck freight as on car travel, but they spend twice as much on truck freight as air travel.  This leads me to believe that truck replacement revenue for Hyperloop will eventually be more like 20% of the total revenue stream.
ca. 2009
tonne-km freight
2010 user costs
(billion $)


Intercity Rail
$  50

The decision to carry trucks will hinge on the return off an incremental billion dollars of revenue versus the incremental investment for bigger tubes.

I-5 Truck bridge case: 10k capsules/day

A fleet operator with tractors in both LA and SF can move freight between the two more cheaply over Hyperloop than over I-5.

Over-the-road truck drivers (the ones on the road for two weeks at a time) are paid $0.19 to $0.25/km.  The vehicle depreciates $.06 to $.07/km.  They burn $0.27/km of diesel.  This adds to around $0.55/km in 2013.  Trucks averaged 11.3 cents per km-ton in 2009, which suggests the average load was around 5 tons, which seems reasonable.

So, the 600 km from SF to LA costs a truck operator around $330.  It’s possible for Hyperloop to charge a premium, because the capsule trip gets the load to the destination 5 hours sooner.  But the premium will only be paid for a small number of loads.  In order to get most of this business, a capsule trip will cost around $300.

The current truck traffic on I-5 is 10k trucks/day (one-way).  10k capsules/day is more traffic than I expect from air traffic replacement.  Because the truck bridge case will also be more price sensitive, it will probably set the capsule trip price for long-distance routes..


The initial payloads with the greatest revenue potential are cars and 18-wheeler trailers, and eventually busses and container freight.

Max weight
Frontal area
10.5 tonnes
1.7 m x 2.0 m
21.0 m
30.8 tonnes
4.12 m x 2.43 m
16.15 m
(just the trailer)
23 tonnes
3.5 m x 2.6 m
13.7 m
32.5 tonnes
2.9 m x 2.5 m
13.7 m

The containing capsule will have a payload diameter of 4 to 5 meters.  The larger number is if we wish to back standard 18-wheelers directly into the capsule.  The smaller number is if we are willing to take the wheels off the trailer first.

Tube diameter will be 6 to 7 meters, about 2x that of the Hyperloop-alpha proposal.

I-5 Car bridge case: 8k capsules/day

Here’s an interesting statistic: more people drive from northern to southern California than fly: Caltrans: 2011 California Traffic Volumes

There are currently 30k cars/day travelling between LA and SF, each burning $60 of fuel and 6 hours of driver time.  As above, four cars can share a Hyperloop capsule, with an amortized ticket cost of $75/car.  The driver can save nearly a day for $15.

I’ll assume nearly all drivers will take the Hyperloop, and traffic may increase due to greater convenience.  This would be 8000 capsules/day.

Flight+rental case: 7k capsules/day

Consider someone taking a flight down to LA, then renting a car for 5 days.
Shuttle $70 1 hour (at one-way, might have to pay 2-ways, or pay parking)
Security 1 hour
Flight $138 1 hour (one way)
Car $188 30 min (5 days, compact)
Total $396 3:30

8 million people do this every year between the Bay Area and Los Angeles or San Diego.

The Hyperloop is a total win, even if only a single car takes a capsule.
  • 4 cars share a $300 ticket, $75 each, about 5 times cheaper, and you get your own car.  And, you don’t have to pay to park your own car at the airport.
  • Assuming it takes 30 minutes to drive to the Hyperloop station, and an hour to get to LA, you’ve saved two hours in each direction.  
  • If there are more people in the car (say, a family of 4), you must buy extra plane tickets and shuttle fares.  The Hyperloop option costs nothing more.

Assume Hyperloop gets all of this traffic.  Assume average vehicle loading is 1.5 people/car, this is 22,000 people/day and 14,800 cars/day.  Assuming an average of 2 cars/capsule (many people will want their own capsule), that’s 7380 capsules/day or $800m/year in revenue to Hyperloop.

At 20% to 75% of the price, and less than half the time, we should expect an increase in this traffic volume, and Hyperloop will see all that additional traffic.

Airport Shuttle flight case: 350 capules/day

Not all the people flying between the Bay Area and Southern California are renting a car.  For 2.5m people per year, this hop is one of at least two.  For instance, when flying from San Francisco to Phoenix one generally stops in LAX along the way.

Airports could run a bus-over-Hyperloop service between airport pairs to move all this traffic off airplanes.  They win in two ways: first, they open up runway slots to more profitable longer-distance routes.  Second, the airports essentially get into a high-margin local airline business.  Finally, the airlines win because they can pack their airplanes better, since passengers may be more willing to accept a one-Hyperloop, one-plane trip instead of a nonstop, if the Hyperloop-using hop gets them to the destination sooner.

It’s about 7000 people/day.  Assuming busses with 20 people (⅓ full), that’s about 350 capsules per day.  This would be incredibly convenient for passengers, as there would be a bus leaving from each of the three major airports in each area about every 20 minutes.

Commute traffic

Just the traffic from replacing portions of existing long commutes is huge:
  • 105k/day Bay Area commute capsules (half of all existing >50 minute commutes)
  • 125k/day Los Angeles commute capsules (¼ of existing >50 minute commutes)

Capsule rides would average about $60 and carry four cars.  Yearly revenue would be $2.3b/year. However, this estimate is sensitive to the distribution of Hyperloop terminal, and the time it takes to get through these terminals.

Quick trips really matter. For every minute saved, per trip, I expect an additional 9k/day commute capsules and $135m/year in revenue. This traffic increase is strongly nonlinear, however. If we could get the trip times down to around 35 minutes per trip, we'd expect to see 40k/day extra commute capsules per minute saved (and $600m/year in additional revenue).

Extra terminals (in the right places) would really matter, especially in inland Los Angeles, Orange, San Diego, and Contra Costa counties, where I expect each terminal to support 16k/day commute capsules and $235m/year in revenue.

Because the north/south door-to-door time will be about an hour, it will be possible to have a daily commute between northern and southern California.  Even if just 1% of commuters use Hyperloop over long distance runs, this is a colossal amount of traffic: 25k capsules/day, bringing in $1.9b/year.

Existing Bay Area commuter case: 105k capsules/day

The Bay Area has the largest fraction of long distance commutes in the nation.  2% of commuters travel at least 50 miles and 90 minutes, each way.  About 12% of commuters travel 60 minutes each way, and the average commute is 30 minutes.

Using the 2011 U.S. Census ACS data, I predict there are 420,000 commuters in the Bay Area with at least a 50 minute commute.  As shown in the map below (created with Trulia’s excellent tool), at least half of these commuters could be within 15 minutes of a Hyperloop terminal, and so could reduce their commute by 20 minutes and 15 miles with a Hyperloop jump.  So a local Hyperloop (with 21 terminals as shown) would have a market of around 420k car trips per day.  At four cars per capsule, that’s 105k capsule trips per day.

20 miles of commuting costs around $4.05 each way (using AAA’s $0.27/mile incremental cost for medium sedan in 2013).  20 minutes of the person’s time is worth something as well, at least $6.  Each local car trip could be sold for $10, so yearly revenue for trips within the Bay Area would be $1.05b.

Existing Los Angeles commuter case: 125k capsules/day

The Los Angeles commute market is both more lucrative than the Bay Area’s (620,000 commutes are at least 60 minutes, 1,100,000 are at least 50 minutes) and more problematic, as more of the population is farther from the water.  Nonetheless, a Hyperloop can be run down the coast and reach perhaps ¼ of the population in 15 minutes or less.
Again using ACS data, I predict there are 1 million commuters in Los Angeles with at least a 50 minute commute.  The core 8 Hyperloop transfer stations shown would service 250,000 of these commuters and bring in $1.25b/year.

The map above shows a terminal in the southern San Fernando Valley, which would require a 10 mile tunnel bore through the Santa Monica mountains.  There are several other places where tunnel bores or perhaps cut-and-cover through lower-cost real estate could get to lucrative markets.  The map above also shows 5 terminals in Santa Barbara, Ventura, and San Diego, which are not currently suburbs of Los Angeles for many commuters.

Tunneling cost is not necessarily prohibitive: A 5 mile x 15-foot diameter tunnel was recently completed under San Francisco Bay for $286 million. The tunnel imagined above would be three times the diameter and twice and long, so perhaps four times the cost. A $1b capital outlay to bring in $150m/year seems quite reasonable.

There is a significant externalized benefit: these 250,000 commuters would no longer be on the 405 freeway for most of their trip.  The Hyperloop would unload a huge amount of traffic from the freeway system, which should speed up even those commutes that can’t be serviced by Hyperloop.