China raises railway freight rate to relieve high fuel and labour costs

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CHINA'S Ministry of Railway and National Development and Reform Commission have announced an increase of domestic railway freight rate by CNY0.01 (US$0.0016) per tonne per kilometre, namely an average growth of 9.5 per cent, to CNY11.51, in order to relieve pressure from higher fuel and labour cost, Xinhua reports.

The increase this time covers coal, grain, fertiliser, iron ore and many other kinds of cargo. Industry opinions pointed out that the raise will pass the pressure on to the industries that are heavily reliant on railway transportation, like steel plants.

Shanghai Steel Service Trade Industry Association Secretary Ye Liming said the increase will have severe negative effect on the steel trade industry which is already gloomy. Though the industry has expected a rate increase, the timing and extent of the increase will put "unbearable" pressure on some companies, Mr Ye said.

Steel, cement, timber, coke and iron ore are the types of product that takes up the largest percentage in railway transported freight. Now the rates of these cargoes have gone up by 13 to 14 per cent. Experts from the industry said the increase of raw material transportation cost will push up the prices of final products.

But estimation shows that even after the increase, railway freight rate is still one fourth to one third of road cargo rate.

Sun Zhang, a professor of railway from Shanghai's Tongji University, said that the railway cargo capacity is still to be expanded in order to lower transportation cost. The building of more high-speed railway can release capacity from current railways for cargo transportation.

But some experts points out that railway departments should think of more ways to optimise their operating results instead of only levying rate increases.

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