1
Railway Connectivity : A Hub and Spoke Model of
GSH-XRL
Dr Edward Yiu
Founder of REDBRIC
Date : 26/9/2017Course: Introduction to Urban Studies
Programme: Public Policy and Politics, CityU HK
Why Connected? Benefits of Connection
• Theory 1: David Ricardo’s (1817)
Comparative Advantage Theory
• Theory 2: Johann Heinrich von Thȕnen’s
(1826) Isolated State Model
• Theory 3: William Alonso’s (1960) Bid
Rent Theory
• Theory 4: Mark Fishman et al.’s (2013)
Idea-sharing Networks Theory
2
Comparative Advantage Theory
• Connected to Trade
– If two countries capable of
producing two commodities
engage in the free market, then
each country will be benefited by
exporting the good for which it has
a comparative advantage, while
importing the other good.
3
For details, read David Ricardo (1817) On the Principles of Political Economy and
Taxation, http://www.economicshelp.org/blog/glossary/comparative-advantage/
Isolated State Model
• Connected for Accessibility
• Locational rent depends, among
others, on the transportation
cost to the market;
– Farmers prefer farmland
closer to the market, or lower
unit cost of transportation;
– Transportation cost includes
freight cost, and time cost
(opportunity cost)
4
For details, read Colin Clark (1967) Von Thunen’s Isolated State, Oxford Economic
Papers 19(3), 370-377,
https://www.jstor.org/stable/2662333?seq=1#page_scan_tab_
Bid Rent Theory
• Connected for Profitability
– Different land users will
compete with one another for
land close to the city centre;
– Land uses require highest
accessibility to be profitable will
bid other users out from the
centre
5
For details, read William Alonso (1960) A Theory of the Urban Land Market,
Regional Science 6(1), 149-157, http://onlinelibrary.wiley.com/doi/10.1111/j.1435-
5597.1960.tb01710.x/abstract
Idea-sharing Networks Theory
• Connected for Idea-sharing
– Key nodes in the informal
network are better at sharing
ideas and resolving difficulties
6
For details, read Mark Fishman, Robert Cross and Brigitta Tadmor (2013) Informal
Networks are Key to Idea-sharing, Nature 493 (7434), 709-710, 10.1038/nj7434-
709a
How to Measure Connectivity:
Gamma Index
7
FT
HK
SZGZ
𝛾 =𝑒
3(𝑣−2)=
3
3(4−2)
= 0.5
For details, read
https://en.wikibooks.org/wiki/Transportation_Geography_and_Network_Science/Ch
aracterizing_Graphs
FT
HK
SZGZ
𝛾 =𝑒
3(𝑣−2)=
6
3(4−2)
= 1.0
Why Not Connected?Costs of Connection
• Cost of Building Network
Infrastructure
• Cost of Operating and
Maintaining Network
Infrastructure
• Unwanted Sharing:
– Unwanted goods
(Customs, C)
– Unwanted persons
(Immigration, I)
– Unwanted diseases
(Quarantine, Q) 8
For details:
http://slideplayer.com/slide/11587750/
Optimal Connection: BCA
• Saving Network Infrastructure Construction
Costs;
• Saving Network Infrastructure Operational and
Maintenance Costs;
• Saving CIQ Costs.
• By Hub-and-Spoke Networks (Shuttle)
9
Point-to-Point (P2P) Network v
Hub-and-Spoke (H&S) Network
10
P2P v H&S
11
P2P H&S
Minimizes travel time.
Convenient for passengers
without getting on and off,
and wait for transit.
Significant cost saving, coz
less routes are needed to
serve the network. Spoke
stations can be smaller.
No interdependency of
flights and hubs, so delays
are unlikely to cascade
through the system
railways can schedule more
frequent trains along each
route and make full use of
the capacity of each train
But all stations have to be
big enough to accommodate
the routes
Centralizing operations at
the hub leads to economies
of scale
Read further: https://blogs.cornell.edu/info2040/2011/09/14/hub-and-spoke-vs-
point-to-point-transport-networks/
Cross-Border P2P v H&S
12
P2P H&S
CIQ facilities to be provided
at all stations
CIQ facilities to be provided
only at the two cross-border
stations
Or a colocation check point
to be provided
Or a colocation check point
to be provided at the hub
Require continuous high
volume of passengers with
high fares to breakeven
A shuttle: more flexible to
accommodate fluctuations of
number of passengers
Hub and Spoke Model is the Current
Market Norm in Mass Transit Systems
13
Empirical Analysis of H&S
14
• H&S promises a bunch of efficiency
improvements
• Reduce wastage due to vicious competition
New Trend of P2P
15
• If the cost does not depend on economies
of scale, then smaller carriers may be
good for P2P
The Boeing B787 Dreamliner
Criteria to be a Hub
• Geographically it is surrounded by
cities (nodes)
• Railways are built to connect it
with cities (edges)
• Economic strength justifies
enough traffic demand
• Collaborations among cities16
Guangzhou Shenzhen Hong
Kong Express Rail Link
(GSZ XRL)
• https://youtu.be/QuvUSg6islk
17
GSH-XRL H&S Design
18
Alignment The Hong Kong Section of the Express Rail Link runs
from the terminus in West Kowloon, heading north to
the Shenzhen/Hong Kong Boundary, where it
connects with the Mainland Section.
Route Length Approximately 26km in Hong Kong
source MTR XRL homepage
GSH-XRL H&S Design – No.
of Railways
19
Station lines
Shenzhen North
(SZN)
5
West Kowloon
(WK)
1
GSH-XRL H&S Design – No.
of Platforms
20
Station Platform
SZN 20
WK 15
GSH-XRL H&S Design – No.
of Trains
21https://www.thestandnews.com/politics/深圳轉車選擇更多-何必堅持西九過關/
Via SZNVia WK
Desti
nati
on
s
GSH-XRL H&S Design – No.
of Long-Haul Trains
22
Via SZNVia WK
Destinations
GSH-XRL H&S Design – % of
Short Trips (Govt Est)
23
2018 2021 2031
深圳北及福田(SZN & FT)
62% 62% 62%
虎門及廣州南(HM & GZS)
21% 20% 18%
短途服務合計Short Trip
83% 82% 80%
長途服務Long Haul
17% 18% 20%
HKSAR Govt (2015) % Estimates of XRL Passengers
XRL Passengers per Day
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Est in 2009 2016 2021 2031
Pax 89,300 107,600 144,200
Est in 2017 2016 2021 2031
Pax 109,200
http://www.legco.gov.hk/yr09-10/chinese/panels/tp/tp_rdp/papers/tp_rdp1116cb1-503-2-c.pdf
Trips Breakdown by No. of Pax
25
SZN &
FT
HM
GZS
Tot
Short
Tot
Long
Total
Total No. of Cross-Border
Passengers per Day (Govt Est)
26
Means 2015 2009 est 2017 est
XRL 0 99,000 109,200
Through Train 10,400 5,200 7,300
East Rail 316,000 315,900 315,800
Bus 235,200 250,300 275,100
Ferry 15,200 27,600 31,200
Total 576,800 698,000 738,600
https://www.hk01.com/港聞/107712/政府最新預測-高鐵每年港客下調200萬人次-大削商務客400萬
16% increase by 12 years! No drop
in pax of other means after XRL!
Operational Income of XRL
27
Destination Unit Share Daily Pax Total p.a.
Short Trips $31 69,000 780M
Long Trips $45 28,600 470M
Total 1, 250M
Based on 2009 est of 2015 operation
Operational Profit of XRL and
Payback Period
28
Est 2015 HKD
Operational Income pa 1,250M
Operational Expenditure pa 960M
Operational Earnings (EBITDA) 290M
Interest, Tax, Depreciation (10%
say)125M
Operational Profit 165M
Payback Period (Year) =
84400/165512 years
Based on 2009 est of 2015 operation
Social Benefits of XRL
29
2015 HKD
Construction Cost 84,400M
Social Benefit (transportation time
saving) – govt est90,000M
Net Benefit (before deducting social
cost)5,600M
Social Cost (environment, etc) ?
Economic Internal Rate of Return 4%
Based on 2009 est of 2015 operation
Case Study of Airport Rail Line
30
HK$M 2012 2013 2014 2015 2016
Total Op.
Income
930 990 1080 1110 1170
Total Op.
Cost
560 590 620 640 650
Deprec. 500 490 470 470 480
EBITA -130 -90 -10 0 40
https://ecyyiu.wordpress.com/?s=%E6%A9%9F%E9%90%B5
Case Study of Airport Rail Line
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https://ecyyiu.wordpress.com/?s=%E6%A9%9F%E9%90%B5
• Construction cost cannot be paid back
• If operational and maintenance costs
cannot be covered, it will go bankrupt or
require public subsidy or loans
• In case the number of passengers drops,
but the operational and maintenance costs
cannot be cut, the deficits would be
aggravated.
Alternatives of Colocation
Check
32
At least 4 Alternatives
1. Colocation in FT
2. Pre-clearance in WK + Check on
board
3. Colocation in SZN + Colocation in
WK
4. Both Colocations in WK (Govt
Proposal)
Colocation Check Point at HK
33
Colocation – Floor Plan
34
35
. B
oth
Co
loca
tio
ns in
WK
(G
ovt
Pro
posa
l)
http://www.takungpao.com.hk/finance/text/2017/0725/99940.html
Why Colocation?
• Long Haul Pax (17%) do not need to get
off to check at the border
• Short trip to SZ Pax (83%) are not affected
• It saves space to build the checking points
in China stations
36
Social Benefit of Colocation
• Who will be benefited!
37http://www.inmediahk.net/node/1039237
Social Benefits of Colocation
38
2015 HKD
Construction Cost of the Checkpoint ?
Social Benefit (30 min saving for
long haul pax) – govt est
~14,000M
<<
90,000M
Social Cost
(undermine Basic Law) ?
Based on Tommy Leung’s (2017/07/31) analysis https://www.am730.com.hk/column/%E8%B2%A1%E7%B6%93/%E4%B8%80%E5%9C%B0%E5%85%A9%E6%AA%A2%E7%9A%84%E6%88%90%E6%9C%AC%E6%95%88%E7%9B%8A-89143
Colocation is NOT Suitable in
HK• Since most Pax are short trip, and long
haul Pax would prefer changing at SZN
(more choices), the benefits of colocation
arrangement is questionable.
• Colocation arrangement undermines the
Basic Law’s protections
• No similar 2-colocation in one city centre
arrangement in the world
39
Colocation Check Violates
Basic Law• Art. 18
– National laws shall not be applied in the Hong Kong
Special Administrative Region ….
• Art. 22– No department of the Central People's Government
and no province, autonomous region, or municipality
directly under the Central Government may interfere
in the affairs which the Hong Kong Special
Administrative Region administers on its own in
accordance with this Law.
40
How the Govt tries to avoid?
• Art. 20– The Hong Kong Special Administrative Region may
enjoy other powers granted to it by the National
People's Congress, the Standing Committee of the
National People's Congress or the Central People's
Government.
• It grants HK a new power to designate part of the WK
station as “mainland port area”, which is legally regarded
as outside the territorial boundary of Hong Kong, so the
stipulations of the Basic Law do not apply.
41
An Area within HK but NOT
Belong to HK?
42
How Other Countries Do
That?
43
• Pre-clearance at both stations
• Shuttle and to be transferred at the Hub
International Examples
44
• Eurostar (London – Paris)
• Allegro (Helsinki – St. Petersburg)
• to be built (Singapore – Malaysia)
45
End
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