Railway-Comparison Assignment 2 Group Presentation Slides PDF

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Subject Code: OMGTSubject Name: Transportation and Freight LogisticsLocation & Campus RMIT Vietnam, HCMCGroup 2Student name Do Nguyen Anh Thu - sDao Le Minh Nhat - sLe Hoang Trong Minh - sDoan Bao Chau - sDoan Thuy Thien Phuc - sLecturer's name Majo GeorgeTopic Comparison between China Railway a...

Description

Subject Code:

OMGT2279

Subject Name:

Transportation and Freight Logistics

Location & Campus

RMIT Vietnam, HCMC

Group

2

Student name

Do Nguyen Anh Thu - s3757273 Dao Le Minh Nhat - s3752384 Le Hoang Trong Minh - s3764675 Doan Bao Chau - s3694621 Doan Thuy Thien Phuc - s3713148

Lecturer's name

Majo George

Topic

Comparison between China Railway and US Railway

I declare that in submitting all work for this assessment I have read, understood and agree to the content and expectations of the Assessment Declaration.

TABLE OF CONTENT

Executive Summary

2

Description

2

Container/Freight Tonnage of China and USA Railway

4

Container/Freight Operations a. China Railway

5

b. USA Railway

5

Container/Freight Facilities Utilized a. China Railway

6

b. USA Railway

7

Challenges & Recommendation a. China Railway

7

b. USA Railway

9

Conclusion

10

Reference

10

Appendix

13

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1. Executive Summary This report compares two of the most modern railway networks which are US and China railways. Description of background is clearly demonstrated in this report including length, technology applications, achievement, and capacity. This report also makes a deeper comparison by analyzing freight tonnage, operations and facilities of the two railway systems. It is concluded that freight tonnage of China is higher than that of USA. Likewise, China's investment in facilities is also higher than US's investment. Furthermore, US railway’s operation is private while China’s operation is state-owned. In this report, we also point out the challenges and recommendations of the two countries. China is facing a threat caused by the high cost of high speed rail, in which case it is suggested that collaboration with construction infrastructure planning corporations and private entity should be implemented to help improve the overall quality of their rail systems. Meanwhile, the USA has to confront a challenge in improving safety in its railway system. 2. Description a. China Railway China railway systems was built in 1965 with the length of about 81,400 miles and is expected to reach 93,200 miles (Travel China Guide 2019). China has the longest highspeed railway lines in the world with the total length of about 18.000 miles (Railway technology 2014). Moreover, China railway system has applied a multitude of advanced technologies such as Intel Rapid Storage Technologies (IRST), Intelligent Client Service System (ICSS), Intelligent Train Control and Dispatching system (ITCD) and Intelligent Emergency Rescue and Safety Supervision system (IESS) (Ning et.al 2006). The capacity of China’s railway system is about 410 million passengers during 2019 (Travel China Guide 2019). This figure shows the popularity of using railway systems in China. Based on the China railway network map (see Image 1), it can be seen that rail lines go through most places and operate in most cities in China. There are a small number of cities in China where railway systems are yet to cover but, in the near future, the government would plan to build up a wider railroad network through these cities and improve the railway industry.

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Image 1. China rail network (Ma 2011) b. USA Railway USA railway system was built in 1974 with the first name of that time being ‘gravity road’ (Library of Congress n.d.). USA railway system has the length over about 140,000 miles (230,000km) (Infrastructure Report Card n.d.). Hence, USA rail lines have become the world’s longest domestic railway network (Railway Technology 2014). Similar to China Railway, there are many innovative technologies applied such as smart sensors using big data, drones, specialized computer software, anti-idling technology, etc. These technologies help to improve rail operations or to optimize freight rail’s carbon footprint (Association of American Railroads n.d.). Moreover, USA railway system has capacity of up to 5 million tons of freight and 85,000 passengers each day (Infrastructure Report Card 2018). According to this USA railway network map (see Image 2), it can be seen that rail lines cover all regions and all cities in USA even small cities or suburban areas. Therefore, this has become one of the biggest advantages for USA in freight and transportation industry.

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Image 2. US railroad map (Maps of world n.d.) 3. Container/Freight Tonnage of China and USA Railway Figure 1 demonstrates the railway freight traffic of China and the U.S in the year of 2016 and 2017. Based on the findings, the U.S is proven to have experienced weaker growth in freight traffic with the amount only accounts for 50% of one in China. Specifically, during the time period, U.S’ freight traffic level increased less than 2 billion tonnes, whereas the development evidenced in China’s case was up to nearly 3 billion tonnes. This can be explained by the drastic expansion of freight capacity in China. China has been operating heavy-haul traffic since 2006, serving tremendous amount of oversize loads through longdistance travelling routes. By contrast, U.S railway system places its focus on domestic railway system, thus, the freight capacity is lower, leading to less development in freight traffic.

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Figure 1. Container/Freight Tonnage of China and U.S in 2016 and 2017

4. Operations of each railway system a. China Railway China State Railway Group Co Ltd, a wholly state-owned enterprise, is responsible for almost all railway systems’s operations handling, construction and safety in the country. The company is run by the central government and the Ministry of Finance who, on behalf of the State Council, carry out the responsibilities of the investors (Keju & Nan 2019). China’s railway system operates mainly by transporting heavy, low value commodities over medium to long distances in bulk. Particularly, coal and ores comprise the largest portion of the commodities transported (IBIS World 2019). Moreover, China State Railway Group’s recent restructuring is said to focus more on international freight operations in partnered economies partaking in the Belt and Road Initiative. An unprecedented number of 6,300 cargo trains were sent to Europe by China in 2018 as demand for such services continues to soar. Since 2011, China has sought to expand China’s trade and operations to over 80 countries throughout Europe, Asia and Africa. It is, therefore, obvious that China’s railway operations have increasingly revolved around international markets, particularly Europe (Suokas 2019). b. USA’s Railway In the USA, nearly the entirety of freight railroads are owned and operated privately. Contrary to barges and lorries, American freight railroads predominantly operate on the infrastructure that are owned, built and maintained themselves. Coal took up 70% of the commodities transported. Its railroads also carry enormous amounts of produce, fertilisers, crude oil, and many other petroleum products. Altogether, American railroads deliver an average of 5 million tons of goods to distribution centres, ports, etc. on a daily basis. The primary operation is carried out by the country’s 7 Class I railroads stretching over 44 states. For final delivery, Non-Class I railroads, shortline and regional operators, then take over and receive traffic from the Class I (Association of American Railroads 2018). With more efficient operation in mind, railways in the USA might also reach agreements with one another to share infrastructure or operations on a line. Specifically, a railway may obtain trackage rights to operate its trains over the lines of another railway. Many non-safety-related rail operation issues, including service, entry and exit, rates, and transactions are regulated by The Surface Transportation Board. The Department of Transportation, however, is the

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safety operation regulator of the railway industry in the USA chiefly through the Federal Railroad Administration (Smith et al. 2019). c. Implications American railway systems are mostly private, whereas those of China are state-owned. Therefore, while the USA’s railway operations are subject to regulatory supervision from some government bodies, China’s strictly follows the Railway Law of The People's Republic of China. Furthermore, both railway’s operations are exercised efficiently. However, China’s involve more complicated procedures such as custom clearance as there is an increasing trend to operate internationally under the Belt and Road initiative. 5. Facilities utilised by each railway system a. China’s Railway Currently, there are more than 81,400 miles of rail track in operation in China. The majority of them comply with the standard track gauge specification of 1,435 millimeters in width, which is used by 60% of the world’s countries. This specification unification is beneficial for operation of every rail system in the globe, especially when Belt and Road is ever developing. However, a lack of cranes to transfer containers to rail cars with the correct gauge and insufficient storage space prove to be major setbacks for China’s railway infrastructure (Whelan 2018). Chinese railway operational administrations are also under constant attempt to develop new technologies and services to continue enhancing cargo shipping efficiency and reducing operating

costs.

Notable

facilities

used

include:

locomotives,

track

maintenance

technologies, track/vehicle detection and monitoring technologies; and equipment electromechanical systems (Export.gov 2019). b. USA’s Railway The USA freight rail network is widely regarded as one of the most dynamic railway freight systems worldwide. The $60 billion industry comprises 140,000 rail miles operated by 7 Class I, 21 regional, and 510 local railroads. The USA freight rail carriers are private businesses accountable for their own maintenance and improvement efforts. In comparison with other major industries, their share of investment accounts for one of the highest percentages of revenues in terms of maintenance and capacity enhancement (U.S. Department of Transportation n.d.).

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The USA rail freight industry investments are facilitating significant technological advancements and innovation. From positive train control (PTC) implementation to capitalisation on data analytics, emerging software, autonomous driving technology and artificial intelligence, among other things, U.S. railroads infrastructure are continually under development to make the rail network safer, more efficient and productive (McGurk 2018). c. Implications Both railway systems of the two countries have already been using advanced railway facilities. Although both parties are ever seeking improvements for their systems, China’s may see more substantial investment in the future since its demand, especially due to the Belt and Road Initiative, is much higher than the US’s. 6. Challenges & Recommendation a. China Railway Challenge The implementation of high-speed rail (HSR) is deemed a top priority program in China, which has become the most frequently used transportation system in the world. However, the debt carried by China Railway has never ceased going up over the years (Murayama 2017). In the decade to 2016, the total debt jumped from 100% of gross domestic product to 190%. According to Li Hongchang, 80% of the company's debt burden is leveled on HSR construction. Furthermore, considering the policy to maintain fares at a fixed price, sales do not have a tendency to rise despite the developing economy (Murayama 2017). Indubitably, there are a plethora of detrimental impacts caused by high costs of HSR. First of all, there are still millions of people living in poverty in China. This sumptuous amount of investment, moneywise, could be used in a more effective way to improve people's lives, thus prompting people’s complaints and dissatisfaction of high-priced railways (Facts and Details n.d.). Moreover, China Railway is developing grandiose projects of only high speed railway, whose cost is two or three times that of traditional railways but these high-speed rails are capable of merely transporting passengers, not goods. Therefore, such railways are yet to fully tailor to the demands of a transportation service. In view of the low transportation density and continuous constructions high-speed network with gigantic debts, this poses a significant risk to the Chinese economy (Jian 2019). Recommendation

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Based on the above-mentioned information about China’s railway, it is believed that the country has been excessively utilizing its financial resources for HSR program. Acknowledging the grand benefits coming along with the project, unsystematic planning will result in dramatic imbalance between financial allocation for railway sector and other economic and social categories of the country. Thus, in order to solve this problem, two solutions are suggested. To begin with, the government is encouraged to collaborate with construction and infrastructure planning corporations in order to gain more insightful knowledge in the area of building the HSR system. These companies will support the government with allocating resources, and ascertaining the infrastructure complying with environmental and geographical conditions (Ahmadi & Toghyani 2011). One of the companies nominated is the B&L Gruppe Group. They produce forecasting system for a large number of materials in specific geographical areas (B&L Gruppe n.d). By doing this, they are eliminating the material wastes and enhancing the financial efficiency, thus, helping solve the on-going problems. Interestingly, the firm is planning ahead to participate in the China’s Belt and Road Initiative to expand their business, thus, this is a win-win solution for both parties, strengthening their long-term relationship. Moreover, the Chinese government is encouraged to collaborate with one of the private entities in order to share the financial burden. This recommendation is inspired by actions from Brazillian government (Global Railway Review 2016). However, Brazil has not been able to turn the plan into reality due to the unpersuasive business model proposed by the government. However, it is believed that when China has accomplished the partnership with reputable construction planning firms, they will be open to more opportunities to win the negotiation over private companies. This collaboration does not only provide financial support but also contribute to the exchange of knowledge from multiple experts, thus, reinforcing the strategy. b. USA Railway Challenge Safety of railway transport is considered as the principal element in its operation, which determines the level of efficiency and service quality (Sitarz, Chruzik & Manka 2010). However, USA is facing a formidable challenge in improving safety in railway. According to Bureau of Transportation Statistics, there has been an increase in railway accidents in the US. The reasons are mainly attributed to collision and derailment. In 2018, there was a total

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of 1,836 rail accidents with 193 people recorded to be injured (see Table 1) and more serious property damages (see Table 2) than previous years. It goes without saying that the inefficiency of safety would lead to undesirable casualties including injuries, or worse, fatalities. High rates of accident also incur loss associated with economic and environmental costs in terms of rolling stock loss and compensation paid to the victim, infrastructure and facility destruction (Aher 2018). Recommendation Based on the aforementioned US railway situation, it witnessed a continuous increase of fatal incidents related to speeding derailments and collusions. According to the US Department of Transportation (2019), it is evident that an intensive progress with the enforcement of implementing Positive Train Control (PTC) technology which can fully control the rail speed and prevent train crashes. PTC is communication-based rail system that tracks train’s speed and location, then sends signals to the central office in order to slow or stop the train before accidents caused by human error. Yet, the remaining 41 railways fail to meet the Federal Railroad Administration (FRA) two-year deadline extension of installment (Smith 2019). The delay was due to technical issues in PTC testing systems and unqualified infastrustrutre. In order to cope with this problem, two solutions are recommended. To start with, the government is highly suggested to collaborate with technology and software development corporations in order to gain more insightful knowledge in the area of overcoming the PTC system challenges. These firms will support government in developing and installing several crucial communication technology that supports PTC systems to enhance the optimal safety for railways (Upton 2018). One of the promising partners is DIGI International. They manufacture a prestigious high-speed cellular connection device in which the PTC can always work in a strong radio communication with the network operation center to nearby rail-route (Upton 2018). By applying this, the government will reduce locomotive failures, financial burden and enhance safer railway systems efficiently, thus, solving the current issues. In addition, collaborating with foregin construction and infrastructure planning companies is highly suggested to solve the unqualified railways facilities for PTC systems installation and share the financial burden. According to Quintella (2017), Colombia government has plans for the future railway infrastructure investments collaborating with international parties. Nevertheless, the planning is still on progressing due to the controversial issues about the implementation. This is a great chance for the US to collaborate with credible construction firms and partnership with Columbia over other parties. By establishing this collaboration, it

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will not only share the financial burden but also gain a mutual construction support for both US and Colombia. Conclusion In conclusion, China and US rail networks both have to face a number of challenges to improve their railway networks. It is possible to realize the importance of the railway system for the development of the mentioned countries. The given recommendations include expanding the rail network, improving technology used, and providing safety measures to help these countries improve the quality of rail network. Reference Aher, S.B 2018, ‘Railway disasters in India: Causes, Effects and Management’, Internal Journal of Science and Research, vol.6, no. 2, pp. 125-132. Association of American Railroads 2018, Overview of America’s Freight Railroads , Association of American Railroads, viewed 19 August 2019, . B&L Gruppe n.d, ‘Company’, B&L Gruppe, viewed 20 August 2019, . Bureau of Transportation 2019, Train Fatalities, Injuries, and Accidents by Type of Accident, United States Department of Transportation, viewed 10 August 2019,

Export.gov 2019, China - rail and urban rail, Export.gov, viewed 19 August 2019, . Facts and Details n.d., S HIGH-SPEED TRAINS: HIGH COSTS, SAFETY ISSUES AND CORRUPTION, Facts and Details, viewed 10 August 2019, . Global Railway Review 2016, ‘The challenges of integrating the South American railways’, Global Railway Review, 25 May, viewed 20 August 2019, . IBIS world 2019, Freight Rail Transport Industry in China - Market Research Report, IBIS world, viewed 19 August 2019, . Infrastructure Report Card n.d., Rail, Infrastructure Report Card, viewed 10 August 2019, .

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Jian, Z 2019, Zhao Jian: What’s Not Great About China’s High-Speed Rail? The Debt, Caixin, viewed 10 August 2019, . Keju, W & Nan, Z 2019, ...