Russian version

How to make a billion dollars a day

Railway track (passenger only) Vyborg-Blagoveshchensk.



"Are you saying that a person can lift himself/herself up
by his/her hair? — Sure! An intellectual
is obliged to do this from time to time."
Grigori Gorin


High-speed railway line Beijing-Hong Kong was commissioned

From Beijing to Hong Kong it is now possible to reach less than 9 hours, having overcome about 2 thousand kilometres, for about $ 150 in economy class. A trip from Hong Kong to Guangzhou takes 47 minutes after opening of the new section of high-speed rail.
https://vz.ru/news/2018/9/23/942961.html


How to apply it in Russia

Apparently, HSR Vyborg – Blagoveshchensk can be built through Moscow, Kazan, Yekaterinburg, Novosibirsk, Krasnoyarsk, and Chita exactly according to this technology. The length of the HSR will be about 8 thousand km long, at which at a speed of 400 km/h (normal speed for modern HSR) without the stops it will be possible to reach the destination for 20 hours and, accordingly, $ 600 in economy class, which is quite competitive in price and time with the flight Beijing-Helsinki.

Through the lens of economics, it is possible to create a Pan-Eurasian passenger railway track allowing European tourists (Germany, France, England, Italy, etc.) to visit Asia, and Asian tourists (China, Japan, Korea, etc.) to visit Europe.


Comparison with existing projects in Russia

Existing projects of the High-Speed Railway St. Petersburg-Moscow-Kazan were initially doomed to commercial failure, since the haul distance is about 1 400 km was focused on the population only about 30 million. The proposed project HSR Europe-Asia with a haul distance of about 12 thousand km is focused on a population of up to 3 billion people, which increases the specific efficiency of the project by 10 times. It is also necessary to consider that the HSR Europe-Asia project is based not only on apparent demand, but is 90% focused on external demand, that is, on exporting services.

Route Length (km) Total population along the route in two-hour availability (million persons) Financially reliable population along the route in two-hour availability (million persons) The ratio of effective demand to the length of the route (thousand persons /km) The ratio of the entire population to the length of the route (thousand persons /km)
The All-Japan Shinkansen 2 000 120 100 50 60
Beijing - Hong Kong 2 000 700 100 50 350
St. Petersburg - Moscow - Kazan 1 400 30 15 10 21
Berlin (Europe) - Beijing (Asia) 12 000 3 000 1 000 83 250

Traffic capacity

The basic parameter is the time of emergency braking of the train following at a speed of 400 km/h in the event of an emergency, such as the destruction of the track. It is this time interval that will determine the maximum frequency of movement of trains. In the calculation below, this time is taken for 7 minutes.

There are 24 hours in a day, 60 minutes in an hour, therefore, 1,440 minutes in a day. With an interval of 7 minutes, you can skip more than 200 trains (routes) per day.

If each locomotive (or coupling gear) pulls 40 cars, the traffic capacity will be 8,000 cars per day in one direction.

Since the HSR, as all roads, will be double-track, the number of cars must be multiplied by two. That makes 16,000 cars.

This number of cars is calculated for an interval of 7 minutes. If you change the interval, the traffic capacity will also change.

Capacity Check

Currently, the official capacity of the Trans-Siberian Railway is 100 million tons per year.

At the same time, the fast train travels 7 thousand kilometers only in 6 days, that is, in 144 hours, which means an average speed of movement just below 50 km/hour.

When a high-speed rail line with a speed of 400 km/hour is created, the capacity will increase by 8 (eight times) and will be 800 million tons per year or about 2.2 million tons per day.

Even if we take the weight of one car with 100 passengers of 50 tons, we get 44,000 cars per day, which is more than twice the previous calculation.

Revenue assuming 100% PPHPD economy class

  • In the usual car with reserved seats, there are 54 seats.
  • Since double-decker trains are becoming the norm, we’ll assume a double-decker car with 100 seats in a car with reserved seats.
  • Accordingly, with a ticket price of $ 600, revenue from one car will be $ 60,000.
  • With 16,000 cars, revenue will be $ 960,000,000 per day.
  • Almost a billion dollars a day.
  • 1,600,000 people a day.

  • In the usual compartment car with reserved seats, there are 36 seats.
  • Since double-decker trains are becoming the norm, we’ll assume a double-decker car with 60 seats in a compartment car.
  • Accordingly, with a ticket price of $ 1,500, revenue from one car will be $ 90,000.
  • With 16,000 cars, $ 1,440,000,000 per day.
  • Almost one and a half billion dollars a day.
  • 960,000 people a day.

  • 30% * 1,440,000,000 = 432,000,000
  • 70% * 960,000,000 = 672,000,000
  • 1,104,000 in total
  • Quite realistic billion dollars a day.
  • 288,000 passengers in a compartment car and 1,008,000 passengers in a car with reserved seats. Only 1,296,000 people a day.

A car with passengers will generate revenue from $ 60,000 to $ 90,000 per trip. Delivery of non-perishable goods by this route by sea now costs up to $ 3,000 per container, conditionally equal to the car. Accordingly, the profitability of transportation of non-perishable goods is 20-30 times lower than the transportation of passengers, which indicates a poor economy of goods traffic, unlike PPHPD.

1,296,000 people a day with 365 days per year means 473,000,000 passengers per year.

Will there be almost half a billion tourists per year?

If we assume that 70% will take a round-trip ticket, then you need to find only about 300 million passengers per year.

More than 200 million tourists per year travel only from China.

Potential of the whole Asia is estimated at 400 million tourists per year. But not all of them travel to Europe and not all of them go by train.

It will be realistic to accept a market of 50 million tourists per year in the short term, with growth up to 200 million per year in the long term.

The total population of China, Korea, Japan, and Vietnam is about 2 billion people.

Potential of the whole Europe is estimated at 400 million tourists per year. But not all of them travel to Asia and not all of them go by train.

It will be realistic to accept a market of 50 million tourists per year in the short term, with growth up to 100 million per year in the long term.

Domestic market

If there are stops in St. Petersburg, Moscow, Kazan, Yekaterinburg, Krasnoyarsk and Chita, we can assume the domestic Russian tourist travel market and especially businesspersons of 30 million per year in the short term, with an increase to 100 million trips per year in the long term.

Other markets

In the presence of abundant and high-quality advertising, the production of movies such as "Panevroaziatsky Express" (Pan-Eurasian Express), etc. it is possible to create a demand from the US market and the Middle East market.

It will be realistic to accept all the other markets of 50 million tourists per year in the short term, with growth up to 100 million per year in the long term.

Total occupancy

Market (region) Short-term perspective (passengers per year) Long-term perspective (passengers per year)
Asia 50 200
Europe 50 100
Russia 30 100
Other markets 50 100
Total 180 500

Occupancy check

According to the latest ICAO long-term forecasts in terms of air traffic, the number of passengers transported in 2017 (4.1 billion people) will increase to about 10 billion people by 2040. https://www.icao.int/annual-report-2017/Pages/RU/the-world-of-air-transport-in-2017.aspx

Despite the fact that the air transport market in Europe and Asia is now 53% of the world, by 2040 the number of transported passengers will be at least 5.3 billion people, even assuming that the share of Europe and Asia will not grow, which is unlikely.

Thus, for a full load of high-speed rail lines connecting Europe and Asia, less than 10% of air traffic passengers are required, which is quite realistic.

CAPEX comparison

According to the forecast of Airbus for the transportation of passengers in 2033, 31,400 new passenger aircraft are needed (100 seats and more) with a total cost of 4.6 trillion dollars. http://avia.pro/blog/prognoz-razvitiya-rynka-aviaperevozok-2014-2033-gg

Assuming that in 2033 the number of transported passengers will be at least 8 billion people, to transport 500 million people will need about 2 000 new passenger aircraft (for 100 seats and more) with a total cost of $ 300 billion.

With the cost of high-speed rail lines connecting Europe and Asia, at $ 150 billion (including railway stations, transfer hubs and rolling stock), traffic economics looks very optimistic. And given the many times the service life of the high-speed rail system compared to passenger aircraft, the economy becomes even more impressive.

Financing

This project is optimally created using the scheme ''Our gas - your pipes'' previously used in the construction of the Yamal - Western Europe gas pipeline.

In this case, with a group of investors-builders from China, Korea and Europe, one can pay with tickets. This encourages them to invest in advertising and distribution of ticket sales.

Deadlines

Considering that the entire Trans-Siberian Railway was built 100 years ago for over 25 years, and that only China came to the construction of 1 thousand km of the HSR per year, the project may be done in 10 years.

Moreover, it is crucially important not to have any budget funding, since it will attract a huge amount of "thieves from the bureaucracy" and slow down the project for a long time, or, as in the case of Moscow-St. Petersburg High Speed Railway, destroy it.

  • Purchase of land from non-state owners.
  • Resettlement of a number of villages and towns.
  • Ecologists, archaeologists, extortionists, acting under the guise of "national defenders", "ecologists", "archaeologists", etc.
  • The confrontation of businesses losing revenues from the very existence of such a railway track, for example, airlines serving European-Asian flights.

  • Income from transit tourists (especially Chinese) in hotels, restaurants, shops, tourist excursions in Russia.
  • Income from foreign investment (primarily Chinese) in railway stations, hotels, service and maintenance enterprises, industry and transport in Russia.
  • Income from the movement of perishable goods (fish and seafood, vegetables, fruits).

Further development

For the west there is an opportunity to build Moscow-Brest branch with a further exit to Berlin and the rest of Europe.

For the east there is an opportunity to build Blagoveshchensk-Vladivostok branch with a further extension to Seoul.

  • Exports increase by at least 100% (from $ 386 billion to at least $ 700 billion over the next 15 years (10 years of construction plus 5 years of promotion).
  • The fundamental change in the structure of exports in the sense of the absence of dependence on the price of oil. "Getting off the oil needle."
  • Increasing the level of tourism to Russia no less than five (5) times.
  • Creation of at least 10 million work places not only in transport, but also in services for tourism.
  • Attracting foreign investment in both infrastructure and services worth at least $ 200 billion.
  • Take-off in economy caused by cheaper and faster movement of tourists, businesspersons and a number of perishable goods.
  • Release of existing low-speed railways to increase freight traffic.

05.02.2019

 


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