February** Dynamic Incentive Program
Like a silver dragon shuttling through the clouds, it soars on the Beijing-Shanghai Railway at an average speed of 350 kilometers per hour, covering a distance of 1,318 kilometers. It departs from Beijing South Railway Station, spans four provinces and three cities, and finally lands at Shanghai Hongqiao Station. The line creates a fast connection from the Beijing-Tianjin-Hebei region to the Yangtze River Delta Economic Belt, which can be traversed in just 4 hours and 48 minutes, reflecting the technology and speed of China's high-speed railway.
The Beijing-Shanghai high-speed railway has not only won two honors for its spectacular construction scale and advanced technical standards: the world's longest and highest standard high-speed railway built at one time, but also the largest investment construction project since the founding of the People's Republic of China. After more than ten years of development, it has become the most profitable railway line in China and even in the world. In the first three quarters of this year, its net profit was as high as 891.4 billion yuan, an average daily profit of 33 million yuan in 18 hours of daily operation, that is, a net profit of 1.83 million yuan per hour. In the context of economic pressure on many high-speed rail operations, how to achieve this profit miracle of the Beijing-Shanghai high-speed railway has become the focus of attention in the industry.
The starting point of all this can be traced back to 1978, when *** during his visit to Japan, he personally experienced the speed and convenience of the Japanese Shinkansen, which not only made him feel the gap between China and the world in the field of railway transportation, but also inspired his determination to reform and open up. After returning to China, he resolutely promoted the modernization process of China's railways, marking the beginning of a new era in the development of China's high-speed railways.
In March 2006, the Beijing-Shanghai high-speed railway project was officially approved, marking the official launch of the project. The objectives of the project are very clear, including five world-class standards: top operating speed, excellent engineering quality, advanced technology and equipment, efficient operation and top management level.
Under the guidance of these high standards, the construction of the 1,318-kilometer Beijing-Shanghai high-speed railway began on April 18, 2008 and was opened to traffic on June 30, 2011. It spans Hebei, Shandong, Jiangsu, Anhui provinces and Beijing, Tianjin, Shanghai, and has a total of 24 stations along the line, such as Tianjin West, Jinan West, Cangzhou West, etc., with a total investment of 220.9 billion yuan, surpassing the Three Gorges Dam project, which is known as the "Chinese miracle", and becoming a benchmark for China's high-speed rail construction.
Since its opening, the Beijing-Shanghai high-speed railway has safely delivered more than 13 passengers500 million people. From 65.53 million passengers per year in 2012, it increased to 2100 million person-times, reflecting a significant improvement in its service capabilities. At present, the Beijing-Shanghai high-speed railway has an annual passenger volume of nearly 200 million passengers, with an average daily passenger flow of more than 540,000 passengers, and operates at a minimum frequency of 4 minutes, making it one of the fastest high-speed railways in the world.
The efficient operation of the Beijing-Shanghai high-speed railway not only meets the travel needs of passengers, but also has significant economic benefits. As of 2014, the project has fully recovered its investment costs and is becoming profitable. By 2018, its annual profit exceeded 10 billion yuan, with a profit margin of more than 30% of total revenue, demonstrating its great success in terms of economic benefits.
In April 2023, the Beijing-Shanghai high-speed railway announced its 2022 financial report, revealing that the total revenue reached 1897.2 billion yuan, an increase of 34 compared with the previous year24%。The announcement immediately sparked widespread discussion and skepticism, with many expressing doubts about the past profitability of the Beijing-Shanghai high-speed railway. However, it should be pointed out that 2022 has been an extremely difficult year for the entire transportation industry, with almost all businesses being severely affected by the pandemic, with passenger traffic falling by 32% year-on-year7%。In this context, the performance of the Beijing-Shanghai high-speed railway is not isolated.
By 2023, the Beijing-Shanghai high-speed railway has quickly achieved strong performance**. The latest quarterly report shows that the total operating income of the Beijing-Shanghai high-speed railway in the first three quarters was as high as 3088.1 billion yuan, with an annual growth rate of 10283%, while the net profit attributable to the parent company was as high as 891.4 billion yuan, a year-on-year surge of 576427%, a remarkable jump, returning to pre-pandemic levels in just a few months.
It is worth noting that even in 2021, when the epidemic was severe, the Beijing-Shanghai high-speed railway still recorded 43With a net profit of 4.7 billion, an average of 12 million per day. In contrast, other lines such as the Guangzhou-Shenzhen high-speed railway are facing continuous losses, such as a loss of 5 in 20205.8 billion, and the estimated loss in the following year is more than 1 billion.
In fact, this loss is not unique to the Beijing-Shanghai high-speed railway, and most of China's railway lines are also facing financial difficulties. It has been suggested that 12 of the 18 railway bureaus under the China Railway Group have recorded losses. Many of these losses are rooted in high construction and operating costs, such as the Sichuan-Tibet Railway in the western region, which is difficult to make a profit in the short term due to its technical difficulties and huge investment. In addition, a 26-kilometer high-speed rail in Hong Kong, for example, has a total investment of 73.3 billion yuan, with an average cost of about 2.8 billion yuan per kilometer, resulting in a persistently high asset-liability ratio.
The reason why the Beijing-Shanghai high-speed railway has been able to achieve profitability is behind a series of carefully planned strategies. First of all, the Beijing-Shanghai high-speed railway passes through 24 cities, connecting the two economically developed regions of Beijing-Tianjin-Hebei and the Yangtze River Delta, and the high population density and economic activity of these two regions provide a stable and large source of tourists for the Beijing-Shanghai high-speed railway. According to statistics, although the Beijing-Shanghai high-speed railway accounts for only 1% of the total railway mileage in the country, it attracts 569% of passengers, the average annual occupancy rate is stable at around 80%.
Secondly, the Beijing-Shanghai high-speed railway competes effectively with air travel in terms of speed and convenience, with a design speed of up to 380 kilometers per hour and a minimum running time of only 4 hours and 48 minutes, which makes many passengers who choose air to choose high-speed rail as a more efficient mode of travel.
In addition, the Beijing-Shanghai high-speed railway has introduced the operation mode of "local train" and "cross-line train". "Local trains" refer to trains running on the entire Beijing-Shanghai high-speed railway, while "cross-line trains" refer to trains that use the Beijing-Shanghai high-speed rail line on some sections. By charging a certain fee to cross-line trains, the Beijing-Shanghai high-speed railway not only maintains its own revenue, but also provides other railway companies with necessary road network services, including line use, grid contact, passenger services and ticketing, etc., which has become another important part of its income**.
Since 2016, the number of cross-line trains has increased by 50% in four years, although the train volume of the Beijing-Shanghai high-speed railway has remained stable, which not only proves the core position of the Beijing-Shanghai high-speed railway in the domestic railway network, but also shows the continuous expansion of its service scope and influence. The clever layout of this series of strategies has enabled the Beijing-Shanghai high-speed railway to transfer some of the risks to other railway companies under unfavorable conditions such as the epidemic, and maintain its own profitability.
Since the end of 2020, the Beijing-Shanghai high-speed railway has innovatively introduced silent carriage services, which has immediately become the focus of the market, and the occupancy rate of silent carriages has increased by 23 percentage points compared with other carriages. Then, the Beijing-Shanghai high-speed railway continued to promote service innovation and launched a regular ticket service, which greatly facilitated the travel of passengers.
In terms of staffing, data from 2019 revealed that the Beijing-Shanghai high-speed railway team is streamlined and efficient, with a total of 67 people, including 25 seconded personnel. Despite the small size of the team, the total assets under management of the Beijing-Shanghai high-speed railway are as high as 18707.9 billion yuan, with per capita assets under management of nearly 2.8 billion. This management model demonstrates how the Beijing-Shanghai high-speed railway can use the advantages of technology and management experience to optimize operating costs, setting an example of efficiency first for the railway industry.
So, what can other high-speed rail companies learn from the success of the Beijing-Shanghai high-speed railway? First of all, the Beijing-Shanghai high-speed railway has achieved a significant reduction in operating costs by entrusting transportation management tasks to Beijing Railway Bureau, Jinan and Shanghai, as well as delegating traction power supply and power facility management to China Railway Electric Group, while ensuring transportation safety and stability and maximizing benefits.
In addition, the Beijing-Shanghai high-speed railway attaches great importance to technological innovation and service upgrading, adopts advanced technologies such as drone inspection and bridge monitoring in operation and maintenance management, and cooperates with Internet companies to provide high-speed rail pick-up and drop-off services for passengers, efficiently combining high-speed rail services with digital technology to improve passenger experience.
The Beijing-Shanghai high-speed railway not only provides passengers with convenient travel options, but also promotes the economic growth of the regions along the line, and has become a bright business card for China's high-speed railway construction. Its success story provides a valuable reference for the rail industry, showing that through innovative management and services, high-speed rail can not only meet the mobility needs of the public, but also achieve sustainable economic benefits. It is hoped that China's high-speed rail network will continue to learn from the experience of the Beijing-Shanghai high-speed railway to achieve sustainable development and innovation.