Thursday, September 30, 2010

China sets a new speed record for their high speed trains-but there is a catch

The International Business Times reports that the speed record for Chinese trains has been smashed! The latest high speed rail line, which runs between Shanghai and Hangzhou, has achieved speeds of over 415 km/hour. This line will open in a few weeks, and now China has about 7,000 km (4,300 miles) of high speed rail tracks.

Now for the bad news. From the story:
China, which has currently 7,000-km of high-speed railway lines, the most of its kind in the world, is not appealing to passengers due to prohibitively priced ticket charges and the long journey time for non-direct trains.

A first-class train ticket to travel between the two cities is estimated to cost more than 100 yuan ($14.90), which is twice the existing fare, Jiefang Daily reported.

Travellers believe that the high-speed train between Shanghai and Hangzhou make take longer than the two-hour drive on road if the train stops at all the nine stations along the route, seven of which are newly built in suburban districts of Shanghai and some cities of Zhejiang.

A number of non-direct high-speed trains running between Shanghai and Hangzhou may stop at these stations, with the goal of furthering economic development in these areas, China Securities Journal reported.


Shanghai and Hangzhou are about 200 km apart. This new train will (potentially) get passengers from station to station in 40 minutes. Assuming the article is correct, that's a savings on 1 hour 20 minutes from driving station to station (and few travelers only travel station to station. Most travel to a destination beyond the stations on both ends of the trip, which is travel time that ought to be included in the time savings.), and a 40 minute advantage from the previous train service. If passengers have to pay and additional $7.50 to save that 40 minutes, their value of time is about $11.25 per hour. That's a really high VOT for China, and not far off form what US researchers typically use for evaluating time costs on US systems. (See this report from VTPI for value of time details.) No wonder people are staying away. If you build it, they will come, but only at the right price.

On a related note, is there a kink in the demand curve for high speed rail? Tanya Snyder of Streetsblog DC suggests there is. In this post she writes:
Tomorrow morning, I’m getting on a train from Washington, DC to New York. It’s going to take me almost three-and-a-half hours to get there.
Image: Transport Politic

Amtrak envisions a new path for 220 mph high-speed rail on the Northeast Corridor.

Sure, I could pay more for an Acela and get there in less than three hours.

But why can’t it take 90 minutes?


What I take away from this is that she is unwilling to pay the additional fare to save time now, but in the future she is willing to spend more if she can save even more time. Perhaps she assumes that the cost of the proposed HSR service will not be any more expensive than the current Acela tickets. Or maybe the first hour she saves is not worth as much as the subsequent hours saved, meaning there is little value in saving an hour but there is a lot of value in saving two. I can imagine situations where this is the case, as faster service may mean that you can travel to and from on the same day, thus saving on hotel costs. This may help explain why the Chinese trains are having trouble attracting passengers, too.
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