Tue, Jun 15, 2004 page12

• China's trains struggle to keep up

  TRANSPORTATION While the economy is steaming ahead, railways are having trouble dealing with the extra load, causing a pileup of goods at train stations

  • REUTERS
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  Crates of car parts, truck tires, bags of fish meal and chemical containers are piling up at China's largest freight marshalling yard with no rail wagons to take them anywhere.

  Development of the railway in the world's most populous nation has failed to keep pace with the roaring economy and what cargo space is available is going first to what helps fuel that economic growth -- coal.

  "Power is running short. Coal is in urgent demand," said Xie Youqiao, deputy director of the National Development and Reform Commission, China's main economic planning body.

  "The satisfaction rate [for cargo transport] has dropped to 35 percent from about 60 percent last year."

  The sprawling Zhengzhou East station in the central province of Henan, built in 1997, reveals the extent of the problems.

  Next to the container terminals in the goods car section, workers rely on tiny, hand-written tags to separate bags of jute, sacks of herbs, metal pipes in straw and bicycles for shipping to the right destinations.

  The central government has also put priority on the transport of grains and fertilizers, meaning that a lot of everything else, including steel, gets left behind at stations or ports.

  Things have gone from bad to worse in recent weeks after Beijing tightened load controls on road trucks which used to carry two or three times their legal limits.

  It has also tried to speed passenger train rail traffic, which has added to the confusion.

  "There's just not enough rail capacity," Zhu Yadong, an official at Zhengzhou East station, said.

  "We don't want goods being stored here, but some cargoes get stuck ... We are already working around the clock."

  grinding to a halt

  Some steel mills and aluminum and copper producers have been forced to wind down production as raw materials have not arrived in time. Grain prices have surged in some provinces as shipments have been delayed.

  At the Zhengzhou East station, where four major rail lines converge, 2,100 workers are wrestling to move a record volume of cargo.

  The station transferred 347,209 containers last year, with domestic distribution growing nearly 10 percent on average a year and international business soaring 35.2 percent.

  Industry officials said massive increases in the iron ore trade were also a cause of the bottleneck. The steel industry was also badly hit, with China now the world's No. 1 steel producer, importer and consumer.

  "As of March 20, 28.64 million tonnes of imported iron ore was in storage at ports, 7 million tonnes more than early last year," said Ma Zehua, executive vice president of COSCO, China's state-owned logistics company.

  "The shortage of railway transport is getting worse," he told a meeting in Beijing.

  Customs data showed Chinese iron ore imports reached 68.32 million tonnes during the first four months of this year, up 44.8 percent from the same period last year.

  The scale of changes in iron ore trade dwarfs shifts in almost any other single trade, including coal, exports of which China is expected to slash by 15 million to 18 million tonnes this year in a bid to meet soaring domestic demand for power.

  VICIOUS CIRCLE

  Calling for more investment in internal transport systems, including waterways, COSCO's Ma said iron ore imports were heading for 180 million tonnes this year.

  "And 2005 will see an additional increase of around 15 percent as long as the inland delivery system can match it," he said.

  Industry officials said China was in a vicious circle, with a power shortage gripping most of the country's 33 provinces.

  "Now the government is in the process of ordering new railways and new wagons. That again is adding to the pressure to produce more steel," said Harry Banga, vice chairman of commodities trading firm Noble Group Ltd.

  China plans to invest 2 trillion yuan (US$242 billion) by 2020 to beef up the rail system, extending the network to 100,000km from 73,000km and partially separating passenger and freight transport.
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