- 13 Jan
High Speed Railway – transforming the Passenger Rail industry?
What you will learn:
Digital innovations are transforming the world. Makes you feel sad (if not more than a little concerned) to be associated with an “old economy” industry like Passenger Rail. Or is it?
New Sam Wilko Advisory Blog by Peter Wilkinson
Digital innovations are transforming the world. In the post-2000 “tech wreck” suspicions were confirmed concerning technology based companies with no earnings history and bubble-based market valuations in an overall US market valued at 29 times earnings. Today’s market is closer to 20 times earnings and the most successful tech organisations are profitable, with proven business models based on technology that has evolved exponentially since 2000. Makes you feel sad (if not more than a little concerned) to be associated with an “old economy” industry like Passenger Rail. Or is it?
High-speed Passenger Rail (as suggested by the name) operates significantly faster than traditional rail traffic on dedicated tracks. The system originated with the Bullet Train, which commenced operations in Japan in 1964 on what became the Shinkansen network.
Some relevant facts:
- Over the years since 1964, many countries have developed high-speed rail to connect major cities including Austria, Belgium, Britain, China, France, Germany, Italy, Japan, Poland, Portugal, Russia, South Korea, Spain, Sweden, Taiwan, Turkey, the United States and Uzbekistan;
- The transport technology is mature (read “trusted”) and the cost base is set to be revolutionised by major Chinese railway companies with the opportunity to exploit economies of scale based on huge domestic demand. China’s high-speed rail plans are ambitious, aiming to invest $300 Bn to construct a 30,000 km network as the largest, fastest, and most technologically advanced high-speed railway system in the world by 2020. There was plenty to see on this subject at the (soon to be merged?) China North Rail Corporation and China South Rail Corporation stands at the 2014 Innotrans Exhibition;
- Passenger train services, whilst traditionally regarded as “second class” transportation by some sectors of the population, are set to be revolutionised by technology that improves reliability and punctuality and enables customer interaction with services via mobile technology in ways that will satisfy what is rapidly becoming our “business as usual” expectations;
- Whilst Brisbane, Sydney and Melbourne are not amongst the largest metropolitan areas in the world, the distances between these centres makes high-speed rail transport a competitive option with air travel when taking total origin to destination times into account. This assertion is based on the experience of high speed rail in Europe, which has proved to be an effective competitor against aircraft for travel times up to 3.5 hours / distances up to 750 km. As a further interesting fact, the 713 km Sydney-Melbourne air corridor is currently one of the busiest in the world by passenger volume;
- As a peek into the future, the Australian Bureau of Statistics predicts that Melbourne and Sydney will each grow to a population of 8 million by about 2050, with consequent increases in travel demand and pressure for emissions reductions;
- High-speed transport links on the East Coast of Australia could enable people to live in cities like Shepparton and Goulburn and commute to Sydney or Melbourne for work. This would make living in these regional areas far more attractive;
- With the independent role of the Reserve Bank in managing monetary policy endorsed by successive recent governments, the Federal Government is left with fiscal policy as its major lever of economic management. High-speed Passenger Rail would be a major investment in economic infrastructure that would require long-term planning but represent a prime opportunity for nation building.
With our economy in a comparatively strong position from a net debt perspective and with a maturing local market for private sector infrastructure finance, one senses that only the short-term nature of politics stands in the way of such an investment in Australia.
Do you agree?
Has this article been helpful? Please comment below or send me an email. I am always excited to hear from people making it happen!
BE (Mech), MBA
About the Author
Peter Wilkinson is a Director of SamWilko Advisory, a company that provides specialist consulting and coaching services to businesses in the transportation, construction and technical services industries. Peter believes that “business, like many of life’s challenges, is all about luck. The best business people work hard and smart and are well prepared for when the luck comes along”. Peter brings 25 years’ plus experience to helping entrepreneurs, business leaders and senior managers who wish to "get lucky" by implementing smart, effective and innovative strategies to better manage time, increase revenue and improve return on equity. Peter's expertise is in developing, implementing and managing transportation and construction businesses and major projects. He specialises in outsourced services and has extensive experience in both private and Government funded infrastructure involving procurement across the full spectrum of contracting methodologies. Peter has applied his asset and systems development and management expertise in the mining, transportation, defence, utilities, property and infrastructure industries both locally and overseas. Peter has refined his project development skills both locally and internationally. Peter has held Executive Management positions within Transfield Services, GHD Pty Ltd and Serco Asia Pacific and has previously held positions with UGL and in the Public Sector with NSW State Rail Authority (now Sydney Trains).