No Way To Run A Railroad

Eight countries–Australia, Brazil, Canada, France, Germany, Japan, Russia and the U.S.–account for two-thirds of the railway traffic in the world outside China. Each runs their rail system in broadly the same way: a transport ministry with multi-modal responsibilities for coordinating transport; separation of rail policy and regulation from operating services; division of freight and passenger rail; and services delivered by companies, whether private or state-owned.

China is different. The transport ministry has no mandate over rail; that is the responsibility of the railways ministry which both makes policy and operates virtually all services through 18 regional rail authorities. They are part of the ministry, not even state-owned companies, and operate both passenger and freight services. The result is a ministry monopoly over both policy-making and the administration of the railways. In the guise of China Rail, the ministry accounts for 99% of passenger kilometers travelled and 94% of freight tonne kilometers.

A new paper by Paul Amos and Richard Bullock, two transport consultants, published by the World Bank’s Beijing’s office raises the question of whether it is time for China’s system to fall more in line with the rest of the world. Not because the existing system has failed to deliver. Despite some spectacular missteps around high-speed rail, the railways ministry has given China the world’s busiest passenger rail system–it will carry and estimated 235 million passengers during the coming Spring Festival–and second busiest freight network.

Amos and Bullock’s argument for change is instead that the market for transport has changed. Road, inland shipping and air services have improved immeasurably over the past two decades, and are taking market share from rail. Those new competitors are mostly companies, not other government departments. Second, China’s rail system is now of a size where it is too big to be run efficiently as a unitary system. Amos and Bullock note that if China Rail was split into five equal regional operating companies, each would be among the world’s ten busiest rail systems. Third, if China is to make the most of all the transport infrastructure it has built over the past two decades, and that to come, it needs to integrate and coordinate road, rail and internal air and shipping with the sort of national transport strategy that is common in other countries.

Amos and Bullock propose creating a transport ministry responsible for policy across all means of transport. A national railway administration within the transport ministry would be responsible for railways regulation and long-term policy, but not services. Those would be run by a number of large, autonomous regionally-based operating companies, either privately or state-owned, along with smaller specialist inter-regional services and industrial railways such as those that now carry coal and other natural resources.

That would all make the management of China’s rail system look a lot like that of the other big railway nations. Breaking up the railways ministry, and disrupting all the vested interests that it has cultivated over the past half century, would be a huge political undertaking. Yet in the wake of the corruption scandals around the high-speed rail build-out and the Wenzhou accident, the railways ministry may be more vulnerable to dismantling than ever before.

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8 Comments

Filed under Transport

8 responses to “No Way To Run A Railroad

  1. Ramnath Rangaswamy

    Dear Stpehan,
    Interesting blog!
    Seek to understand; how you calculated that 8 countries accounted for 2/3 of rail traffic outside of China?
    China’s freight loading is about 2.9 billion MT. India does 0.99 billion. That implies that outside of the 8 countries, no freight loading is done. Obviously you have used some other metric.
    Regards,
    Ramnath

  2. Ramnath Rangaswamy

    Dear Stephen,
    I am sorry for spelling your name incorrectly. My apologies.
    Ramnath

  3. Ramnath Rangaswamy

    Thank you Stephen, for specifying the metric used and source of your data.

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