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North America key to China rail growth

BEIJING: The World Bank says moving containers by rail in China could grow substantially if the country adopts North American operating practices and regulatory reform.

Between 1998 and 2013, China's freight transportation sector grew at an average annual rate of 10.4 percent, faster than the rate of economic growth of 9.7 percent. In volume terms, exports and imports grew 15.5 and 15.0 percent respectively per year, generating significant transport demand in the process. Between 1990 and 2008 exports contributed between 15 and 30 percent to China's GDP growth.

China United International Rail Containers Co LimitedHowever, while container traffic by ship and truck has grown faster than the rate of economic growth since 1998, the use of rail has fallen. By 2013 only 1.3 percent of container traffic through China's ports involved trains, with 85 percent of all containers entering or leaving on trucks and the rest on ships.

In response, the China Railway Corporation has begun reforms to improve operational efficiency and customer service, provide more flexibility in setting rates and offering services based on supply and demand.

"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.

Noting the rapidly rising production costs along China's Eastern seaboard, Blancas said this makes an even stronger case for the country to fully develop the rail intermodal sector: "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 World Bank report says the challenge for China is how to modernize and develop its rail intermodal sector in a way that matches the improvements made in road transport and terminal handling: "In this respect, the experience of improving intermodal rail services in North America can be a useful parameter, not least because, for a significant share of China's containerized exports, the North American rail intermodal network is a continuation of the same supply chain."

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