The Transportation of the Future

Peter Harris | UPS

When the Chinese New Year kicked off across China several weeks ago, millions of Chinese citizens hit the road in what is often described as one of the world’s great annual migrations.

The pilgrimage allows families to reunite, and also gives the government a chance to show off its spectacular investments in high-speed bullet trains.

High-speed rail isn’t just a fast and convenient way to travel long distances while reducing carbon emissions – it’s fundamentally changing economic integration around China.

Today, China’s rail system transports twice as many passengers as Chinese airlines, and officials hope to lay an additional 10,000 miles (16,000 km) of track by 2020 – the equivalent of building America’s first transcontinental rail route five times over.

This infrastructure investment generates enormous economic spinoffs. The coastal city of Guangzhou – the capital of rapidly growing Guangdong province – is expected to see an increase of GDP of more than half a trillion dollars by 2030, facilitated, in part, by high-speed rail. An analysis by the World Bank found that when linked to other cities by high-speed rail, business productivity rose by 10%.

Undeniable benefits

As cities, especially in China, grow in population and economic prominence, the connections between them are vitally important. Oxford Economics’ analysis of the world’s top 750 cities found that many Chinese cities are set to see huge booms in both population and GDP. In fact, 17 of the world’s top 750 cities by GDP will be in China in 2030, up from eight today.

And as former industrial powerhouses likes Beijing and Shanghai become space-constrained and expensive, industry will attempt to move to smaller, less-developed cities away from the crowded coasts.

At the same time, Beijing and Shanghai will shift their focus to the financial and business services sectors. As Chinese cities make these industrial shifts, developing better connections between cities grows even more important.

High-speed rail linkages don’t just generate economic growth and increased productivity; they also promote workforce mobility. The World Bank found that nearly two-thirds of passengers on the high-speed rail line between Beijing and Shanghai were business travelers.

A 2013 study from the National Academy of Sciences found that high-speed rail networks promote cross-city economic integration because they give workers more choices about where they work, reduce congestion and pollution, and stimulate growth in second-tier cities.

That’s not to say such rapid development doesn’t take place without difficulties. Corruption, accidents, and budget overruns are not unheard of, and after a deadly high-speed rail accident in 2011 the deputy chief of government’s former railway ministry, Liu Zhijun, was given a suspended death sentence for corruption in 2013.

Investing for the long term

But the Chinese government isn’t scaling back any time soon. Fixed-asset investments in high-speed rail are up 17% this year, and by the end of the year the country will boast nearly 12,000 miles of high-speed rail.

In addition, the government has floated plans to build networks across Central Asian and Middle Eastern countries, and recent accounts report that the Chinese government is in talks with 28 countries about helping them build out their own high-speed infrastructure.

Of course, UPS is also no stranger to rail. We have been using rail in the U.S. since the 1960s and we are today the industry’s biggest user. Rail can be up to four times more energy-efficient than trucking for each tonne of freight shipped over a given distance.

That generates savings of roughly 800,000 tonnes of carbon dioxide emissions annually, as a result of our use of rail versus carrying the same shipments by road. What’s more, we now offer a rail service from Europe to China, thereby providing a lower-emission alternative to our customers compared to air.

So rail can be as important for freight as it is for passengers. And given that more than 70% of UPS’s greenhouse gas emissions are in our feeder network (air and ground), this is a crucial contribution.

Rail – it may be one of the oldest forms of transport, but it looks set to carry us into the future too.