Russia Proposes a Disruptive Innovation That Could Change How We Travel

By Markets Fool.com

Trick question: Can you to travel from Alaska to London -- by car?

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Trick answer: Not yet. But if Russia gets its way, you might someday be able to.


Source: Flickr.

Earlier this week, Russian Railways president Vladimir Yakunin reportedly floated a plan to build the world's longest superhighway, stretching from London across the English Channel to Europe, over to Russia, across Siberia, and then crossing the Bering strait to Alaska. (At which point it would presumably hook up with North America's highway system.) All of which raises a very important question:

Has Russia gone completely off its rocker?

Crazy Ivan?
Branded an international pariah for its invasion of Crimea, and currently embroiled in a war in Ukraine that's brought additional sanctions, Russia's suggestion that investors might want to sink new money into its economy (Russian Railways puts the estimated costs in the "trillions" of dollars) seems pretty... out there.

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But it may not be as crazy as it sounds.

Consider: A hypothetical "trans-world" superhighway stretching from London to Alaska (by way of Russia, natch) would run a little over 8,000 miles in length. At a top highway speed of 85 miles per hour(the fastest legislated in the U.S.), that suggests a round-the-world highway travel time of just under 95 hours. That's roughly four straight days of driving, or only a little bit longer than what your average summer vacation road trip to the Grand Canyon feels like, with kids.


Are we there yet? Photo source: Flickr.

That sounds like a stretch, but if anyone can make it happen, it's Russian Railways. And it actually sounds like they've put some thought into this project.

According to CNN, RR aims to build Russia's portion of this global superhighway -- which it calls the Trans-Eurasian Belt Development (TEB) -- along the rights of way accompanying its own Trans-Siberian Railway. It's terrain RR is familiar with, already flattened and graded, so almost certainly suitable for laying asphalt. (Well, aside from the wet portions.)

As for the non-Russian portions, well, most of Europe is pretty well-developed, and once the highway reached Alaska, it would have access to the Canadian and American networks of interstate highways stretching down to the 48 continental United States and points south. Essentially, by that point, "TEB" would enable highway access to most of the globe.

"If we build it, [will they] come?"
But is the project even feasible? Can Russian Railways really build a global superhighway of this size?

That's the real question. Politics come and go, and eventually, Russia will straighten itself out and come back in from the international cold. Once it does, Russian Railways' idea may get more serious attention from investors than it's likely to today. Here's what we know right now:

Russian Railways bills itself as the third biggest transportation company in the world. It's not exactly clear what metric RR uses when making this claim. But according to data from S&P Capital IQ, RR is certainly "up there." Its annual revenues approach $31 billion, which is not all that far off from the $47 billion in annual revenue that FedExdoes every year, or the $58 billion that UPSrakes in.

Union Pacific, on the other hand -- America's biggest railroad by revenue -- did only $24 billion last year, while Warren Buffett's Burlington Northern Santa Fe railroad barely tops $23 billion. All of which goes to show that Russian Railways is a big business.

Even it, however, may be dwarfed by the "trillions" that Russian Railways estimatesthe TEB would cost to build. Fortunately, they might be overstating the case.

Billions vs. trillions -- more different than three letters suggest
According to the American Road & Transportation Builders Association, the cost of constructing a mile of six-lane interstate highway runs from $7 million to $11 million in the U.S. (Bridge and tunnel costs would add to the tally.) But all costs would be cheaper in Russia, where the collapse of the ruble has dollars buying twice as much today as they did about a year ago.

Times 8,000-odd miles of TEB, that suggests a total highway construction cost of anywhere from $56 billion to $88 billion. Building underwater tunnels to link the continents would add to the cost. At its narrowest, the Bering Strait between Russia and Alaska, for example, stretches 51 miles. It cost England and France about $21 billion to build the 31-mile Chunnel connecting those two countries -- $33.8 billion in current-day dollars. This suggests that digging a Bering tunnel might add $55 billion or so to the total project cost -- call it $143 billion all-in, roads and tunnels included.

That's certainly a hefty sum for a $31 billion enterprise to take on -- especially with Russian Railways already carrying $11.5 billion in debt -- but it's not unattainable, especially if other countries and companies pitch in to help cover the cost. To reach the "trillions" figure that Russian Railways initially posited, you'd probably have to add in the cost of a network of oil and gas pipelines and an upgraded train network -- both of which Russian Railways says it would like to build, and certainly could be built, but needn't be.

Long story short? The disruptive innovation of a TEB sounds like a crazy idea. But it's not so utterly crazy-expensive that it couldn't work.


Russian highway for sale. Needs some improvement. Photo source: Wikimedia Commons.

The article Russia Proposes a Disruptive Innovation That Could Change How We Travel originally appeared on Fool.com.

Rich Smithdoes not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 293 out of more than 75,000 rated members.The Motley Fool recommends FedEx and United Parcel Service. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.