Business strategy for high-speed rail in the express delivery sector: A case study of China using a bilevel programming method

Abstract

The aim of this paper is to identify a business strategy for high-speed rail (HSR), including market positioning and price strategy, in the Chinese express delivery market using a bilevel programming model. Three routes were selected for case studies. The results showed that parcels with a high value of time (VOT) are mostly distributed to self-owned airlines. Compared with highway and conventional rail transport, HSR is relatively competitive for parcels with high VOT in both long- and middle-distance transport and parcels with extremely high VOT in middle-distance transport. Highway transport is the dominant mode for parcels with extremely low VOT in both long-distance and middle-distance routes. The freight rate of HSR must be more than 30% lower than that of air to be more competitive. Additionally, a sensitivity analysis considering increased speed and relocation of parcel distribution centres was performed to identify factors that affect the competitiveness of HSR in the express delivery sector. The results showed that the competitiveness of HSR for parcels with high VOT is improved significantly in middle-distance routes when either measure is adopted. However, there is no remarkable change in the performance of HSR for long-distance parcel transport and parcels with low VOT.