Update on China’s Roads and Railways

Published on Author fielda17

In the first couple weeks of class we’ve discussed Chinese transportation frequently, focusing closely on the roads and rail lines within the country. Interestingly, the Beijing Railway Administration has enacted a new program to combine the two. This week, China is celebrating its National Day and during the festivities the China Tourism Academy estimates that 480 million will be traveling. Looking to cash in on the large number of tourists, up 13% from 2013, the Beijing Railway Administration is offering to ship cars via the railway to Hangzhou, a city popular for holiday travel. The price tag for such a service, however, is understandably large. Round trip, the Beijing Railway Administration is charging between 3,000 and 4,000 yuan, while rent-a-car businesses in Hangzhou charge on average 600 yuan a day for a vehicle.

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This isn’t the first attempt Chinese railway administrators have made to increase revenue by introducing new shipping opportunities.  The China Railway Corporation recently began carrying e-commerce shipments on its Beijing-Shanghei and Beijing-Guangzhou lines.  The CRC’s decision to provide e-commerce companies with this service came as a result of recent trends in the shipment of goods in China.  In the first six months of 2014, the CRC toted 1.525 billion tons of cargo, a 3.6% decrease compared to January-June last year, while in the same stretch the Ministry of Transport reported a 9.2% jump in shipments by road.  The CRC’s attempts to attract more customers appear to be working, with courier companies now looking to railways to provide cheaper cost for moving goods (shipments via trains are roughly 25% cheaper than those made on the roads and 50% cheaper than those made through the air).

Having continually studied the rail systems and roadways in China, the current trends in transportation remain important and intriguing.  With the vast improvements China has made to the two systems becoming more and more apparent, it is interesting to notice the growing competition between transportation and shipping companies.  In the near future, this increasing competition could pay large dividends to the Chinese economy by decreasing the cost to move people and goods from place to place.




One Response to Update on China’s Roads and Railways

  1. This is an interesting issue. It will be interesting to see whether the RRs can cut into road-based transportation. In Japan package delivery (Kuroneko = Yamato Takkyubin) started in part because the rail system was not flexible, and an entrepreneur began running trucks between Osaka and Tokyo. That expanded over time into a firm that makes UPS and FedEx look old fashioned.

    So which track for China? one that is flexible? – to my knowledge no RR in Europe has managed that, and US RRs don’t compete either. But those in China may be less, er, wedded to a one-track business model? One piece of information would be exactly that: whether routes are double-tracked. In general that’s not true of the US, severely limiting flexibility, so that US RRs stick to their bread-and-butter of bulk commodities such as coal and wheat and (now) new-source petroleum. It’s not viable to run short trains, which also works against flexibility in loads and schedules. If in China routes have two tracks…or high-speed trains can add cargo cars?