Out of Control Policy Blog

Shanghai High Speed Rail Line Shuts Down

In an apparent nod to reality, a high-speed rail line opened just a few days ago was closed abruptly on July 11th. According to Mass Transit magazine, the line was a victim of low ridership even though it was fast tracked with Chinese stimulus money to meet expected demand to attend the World Expo in Shanghai.

Critics of high-speed rail, however, shouldn't look at this case as the inevitable failure of intercity rail. On the contrary. The story seems to be that rail serves specific transportation markets, just like all other transportation modes, and the Chinese missed the market. They developed a luxury rail line, priced it at luxury levels, and found the demand wasn't there to support it. The Chinese at least had the good sense to close the line down.

Moreover, the trains fell off the market in terms of time savings. According to Mass Transit:

"Most [high-speed train] trips stop at intervening cities and can take as long as two hours and seven minutes - just one minute quicker than the existing D-class express trains, which are much cheaper.

"Standard-class, high-speed rail tickets from Shanghai to Nanjing cost 146 yuan, 57 per cent more than the 93 yuan it costs to buy a D-class ticket. Trains on the new route have a maximum speed of 350km/h, but do not actually reach that during commercial operations. Non-direct trains travel at around 200km/h for most of the route, only exceeding 300km/h for a few brief periods.

"Shanghai rail officials have blamed the slower-than-anticipated speeds on the complicated route taken by the specially constructed line, which passes through the heart of a number of cities.

"High-speed rail services ridden by South China Morning Post journalists on Thursday and during the weekend were reasonably busy but well below maximum capacity, with empty seats in most carriages. Shanghai media reported yesterday that 94,000 passengers travelled on the high-speed line on Thursday, followed by 138,000 on Friday and around 130,000 on Saturday. The city's official media portal, Eastday.com, reported that "close to half the seats were empty" on a Sunday service while "several hundred tickets remained unsold" for other trips that day. By contrast, D-class trains - which were cut back when the high-speed line went into service - were almost all fully booked."

The line's closing is a stark reminder that wishing for something to happen doesn't mean it will. In the end, any program or activity's success depends on patrons to be successful. Fads do not create growth, even when the latest technology is used to promote it. Trains without riders do not generate economic growth, add value to the economy, or even sustain income. Trains that are more expensive than alternative technologies, but do not provide meaningful time savings or increased value to customers do not add to economic growth or productivity.

Samuel Staley is Research Fellow


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