According to the CRC, in the past couple of years, rail
freight has steadily declined as air and truck transport became the preferred
methods despite higher rates. This change in modal preference was because of
the railroad’s extra fees, complicated booking procedures and poor service.
In June, the CRC undertook reforms to make the railroad more
competitive. The results, according to the group were naturally positive. For
July, almost 260m tons of cargo was transported via the country’s railways, a
2.5% increase over July 2012.
As one of its first initiatives was the introduction of door-to-door
freight transport. Shippers can arrange to have freight collected at their door
either by contacting CRC customer service or via online. This new option eliminated
complicated procedures including liaising with various departments for
transport and loading, and submitting request plans. Included in this program
is small parcel delivery. The intended plan is for small parcels to be
transported on the first high-speed train of the day to allow for same day or
next day delivery to final destination.
The reforms that are underway with China’s rail should
eventually help ease the country’s high logistics costs particularly as it
continues to develop its domestic transportation network. Intermodal options
combining rail and truck solutions will likely be encouraged to further promote
efficiencies and provide alternative options much like what has occurred in the
US. Companies that offer road freight solutions such as CEVA could likely
benefit from this possibility.
Perhaps what is most interesting is the CRC’s attempt to
compete within the express industry. According to China e-Business Research
Center, 80% of the domestic express parcels are moved by truck, 15% by air,
those by other means including rail come in at less than 5%.
According to an industry expert, for shipments over 1,000
kilometers, rail is not as good as air and for those over a few kilometers road
is more flexibility. Still, another expert from Beijing Jiaotong University
said that while the reform is a good start, it exposes the railway authority to
problems. First it must update its information system to enable customer
real-time tracking. Second, it must provide flexible rates to meet changing
market conditions. And lastly, it must offer scheduled services to enhance
reliability.
Reform within China’s rail industry is seen as a positive
move and one that if done correctly, should help lower the country’s high
logistics costs. While no one questions the benefits of moving bulk items such
as coal and grain, the movement of small parcel is raising some eyebrows.
Ambitious, certainly, and one that could definitely link China’s various
regions together much like ecommerce company, Alibaba, hopes to achieve with
its own logistics plan. However, it has a long way to go to prove itself as
trucks remain the transport mode of choice.
