CHINA, RAIL, WORLD BANK

China has opportunity to increase intermodal rail

World Bank suggests there are lessons to be learned from North American rail industry.

By Chris Dupin |Friday, March 20, 2015

   China could grow its intermodal rail traffic substantially, suggests a new research paper by the World Bank.
   The agency said China could benefit from adopting operating practices and regulatory reforms similar to those that have boosted intermodal rail in North America.
   The paper “Customer-driven Rail Intermodal Logistics: Unlocking a New Source of Value for China” says China’s freight transport demand over the past several years has primarily been facilitated by the highway and waterway sectors at the expense of the rail sector.
   Between 2008 and 2013, the World Bank said China’s freight ton-kilometers transported over the road “grew at an average annual rate of 16.7 percent — nearly double the rate of growth of the economy and nearly three times the rate of growth of rail freight ton-kilometers, which stood at a comparatively low 5.8 percent.”
   In 2008, rail sector accounted for 22.8 percent of all freight transport activity, highway 29.8 percent, and waterways 45.6 percent
   By 2013, the rail component dropped to 17.4 percent, while highway use increased to 32.1 percent and waterways to 57.3 percent.
   Lack of capacity to accommodate more freight has been a key the mode shift.
   “A more intense use of rail as part of the country’s containerized freight delivery logistics system could be a game-changer for Chinese manufacturers and consumers alike, as we have seen in North America,” said Luis Blancas, a World Bank Senior Transport Specialist and lead author of the paper. “That’s because more and more manufacturing has moved to China’s western provinces, which increases the distance of international and domestic shipments. At the same time, China’s highways are becoming more congested, making it difficult to deliver goods and get value-for-money in trucking services.”
   The paper cites research that found “in 2010 only 1.3 percent of China’s maritime port container throughput was moved to/from ports via rail. By comparison, 85 percent of all containers handled entered or left the ports mounted on truck chassis on the highways, while the remaining 14 percent used the waterways.”
   The paper adds, “China, and its national railway operator China Railway Corporation (CRC), are in the midst of a particularly favorable environment towards reforming the rail intermodal sector.”
   High-speed rail investments over the past several years have freed up freight rail capacity and “on-going reforms at CRC, and broader economic reforms in China, which have called for the market to play a decisive role in the allocation of resources, are thoroughly consistent with the type of reforms that allowed the North American intermodal sector to modernize,” according to the paper.
   Deregulation, and other reforms in North America have given rail operators the ability to “tailor service offerings including pricing, routing and delivery time to client needs," said the World Bank. Companies in the railroad industry have also specialized, "allowing rail operators to focus on the things they are good at.”