Railway freight charges have been cut again this year, yielding a cumulative profit of nearly 7 billion yuan.

 Railway freight charges have been cut again this year, yielding a cumulative profit of nearly 7 billion yuan.

It is understood that there is a high proportion of highways in the freight market in China. Data show that from 2008 to 2017, Chinas road freight volume increased from 74.1% to 78%, while railway freight volume increased, but the proportion decreased from 13.2% to 7.8%.

In the future, under the policy support, how much development space will railway freight market have?

In October 2018, the Three-year Plan of Action for Promoting the Adjustment of Transport Structure (2018-2020), issued by the General Office of the State Council, proposed that compared with 2017, the volume of railway freight transportation in China increased by 1.1 billion tons and 30%, of which Beijing-Tianjin-Hebei and its surrounding areas increased by 40%, the Yangtze River Delta region by 10%, and the Fenwei Plain by 25%.

From the data point of view, since 2017, the railway freight volume has indeed recovered significantly. Railway freight volume increased by 8.2%, 2.2%, 2.3% and 10% year-on-year in the first four months of 2019. Except in February, where the Spring Festival is held, it also maintained a growth trend.

Railway transportation is the main mode of transportation in China. At present, railway freight transportation has experienced a process from low-trough oscillation to slow recovery. In my opinion, the situation of railway freight transportation will gradually improve and develop in the future, which can also be seen from the data. Because large quantities of long-distance goods are suitable for railway transportation, especially over 600 kilometers, I think railway transportation is more reasonable than road transportation. Qin Jin said.

Is the future of railway freight really bright?

Facing the problem of high transport costs, the head of the relevant departments of the Railway Headquarters introduced that since 2017, the Railway Headquarters has taken a series of measures to reduce the cost, with a cumulative reduction of more than 20 billion yuan.

Will tariff reduction help railway freight to regain market?

Niu Xueqin, deputy dean of Shijiazhuang Railway Universitys Transportation Engineering Branch, told 21st Century Economic Reporter that in terms of transportation cost, the consumption of railway in the transportation process must be smaller than that of automobiles, but the price advantage is not reflected, because the railway still needs to pay back the huge construction cost.

However, some experts believe that the freight charges for railway freight transport are lower than those for road freight transport.

From the point of view of pricing, the price of railway before 2005 was on the low side, so it experienced many rounds of price increase. But can we say its higher now? Qin Jin said, I think the price of road freight transportation is on the low side. There are many news that road transportation, more than 1,000 kilometers, can not earn much money by changing a few tires, and even lose money in some accidents. So, is the highway competitive at a low price?

In January 2019, the China Railway Corporation (CRC) proposed at the 2019 Railway Construction Work Conference to further promote freight increment. Focusing on Six Lines and Six Regions, we will continue to intensify the transportation of coal from west to East and from north to south, undertake the transport volume of materials from port to port, and vigorously develop the multi-modal container transport business, so as to achieve an annual freight increment of 250 million tons. The growth rates of container, commodity vehicles and cold chain logistics are 15%, 10% and more than 10% respectively.

However, this requires further transformation of railway transport equipment and terminal equipment. Zhao Jian believes that Chinas railway freight transport capacity is inadequate. In order to develop high value-added transportation such as containers and automobiles, it is necessary to further reform the relevant equipment and lines.

Taking high value-added automobile transportation as an example, a railway transport industry research report of Yangtze Securities pointed out that rail transportation is the most important mode of transportation in the American automobile logistics market, and the market share of railway transportation is continually expanding. In 2018, rail transportation accounted for more than 50% of the U.S. automobile logistics market.

Behind this, price advantage is the key to railway competition. Three years ago, the average freight rate for trucks in the United States was about four times that for first-class railways.

For China, railway freight prices need to be more market-oriented. In 2019, the joint stock reform of China Railway Corporation will accelerate the pace. On May 28, the founding meeting of China Railway Special Goods Flow Co., Ltd. was held in Beijing. All shareholders and representatives of intermediary agencies of the joint stock company participated in the meeting, which marked important progress in the reform of the joint stock system of China Railway Special Goods and preparations for listing.

CITIC Securities pointed out in the above-mentioned research paper that market-oriented pricing and effective competition mechanism are the key to the success of American railway reform experience or provide a better reference. It is expected that the reform of China Railway General Stock System will take substantial steps in 2019, further deepen the reform of railway management system and operation mechanism, and further promote the marketization of railway freight rates.

Source: Responsible Editor of 21st Century Economic Report: Han Yukun_NBJ11142