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Republic of Korea Korean National Railroad Review of Operational Report No. 6692-KO Republicof Korea KoreanNational Railroad Public Disclosure Authorized Reviewof OperationalEfficiency June25, 1987 AsiaRegional Office FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank Thisdocument has a restricteddistribution and may be usedby recipients onlyin the performanceof theirofficial duties. Its contents may not otherwise bedisclosed without World Bank authorization. CURRENCY EQUIVALENTS Curency Unit - Won (W) US$1 = W 870 (as of December 1986) US$1150 = W 1 million FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.2808 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 kilogram (kg) = 2.205 pounds (lbs) 1 metric ton (m ton) = 2205 pounds (lbs) ABBREVIATIONS AND ACRONYMS USED AAR - Association of American Railroads ATS - Automatic Train Stop BPR - Bureau of Public Roads CTC - Centralized Traffic Control EDP - Electronic Data Processing EPB - Economic Planning Board COK - Government of Korea hp - horsepower KEPC - Korea Electric Power Company KHC - Korea Highway ,orporation KMPA - Korea Maritime and Port Administration KNR - Korean National Railroad KRIHS - Korea Research Institute for Human Settlements km/hr - kilometers per hour MIS - Management Information System MOC - Ministry of Construction MOER - Ministry of Energy and Resources MOHA - Ministry of Home Affairs MOT - Ministry of Transport SMESRS - Seoul Metropolitan Electric Suburban Railway System TPC - Train Performance Calculator FOR OFFICIAL USE ONLY KOREA KOREAN NAT.ONAL RAILROAD - REVIEW OF OPERATIONAL EFFICIENCY Table of Contents Page Nooe EXECUTIVESUMMARY .. ................ ............. iv - ix I. THE TRANSPORT SECTOR .................................... 1 A. Background ......... .............. .............. 1 B. Sector Issues and Objectives ...... *..4................ 2 C. The Bank's Role in the Sector ....................... 3 II. KOREAN NATIONAL RAILROAD ........... *. .............. .. , 5 A. Organization and Management ......................... 5 B. Institutional Development ........................... 5 C. Railway Facilities . 6 D. Traffic ....... , 77.....* E. Future Focus ....... 9 F. Staffing and Training ............................... 9 C. Railway Subsector Issues *........................... 10 III. SEOUL-PUSAN CORRIDOR *...............* ................... 11 A. Importanceof the Corridor *........................ 11 B. Passenger Train Operations .......................... 11 C. Freight Train Operations ............................ 12 D. Train Scheduling .. .......... ****.............*...... 13 E. Traffic Demand and Dist,ibution among Modes ......... 13 F. Capacity Limitations and Possible Solutions * ........ 15 G. Alternative Strategies .............................. 16 H. Conclusion ...........*..*.... ... .*. *..*. .... *...... 18 This report is based on the findings of a mission which visited Korea October 9-30, 1986, to review the operations of the Korean National Railroad and on discussions of a subsequent mission (May 3-10, 1987) with the Govern- ment of Korea, including the Korean National Railroad. The earlier mission comprised Messrs. M.S. Parthasarathi (Leader), R. de Silva (Senior Loan Officer), M. Melrose (Mechanical Engineer/Consultant),K. Watkins (Electric Locomotive Expert/Consultant),P. Reistrup (Operations Expert/Consultant), I. Silverman (Passenger Services Expert/Consultant)and B. Rollins (Financial Analyst/ConsuLtant). The later mission incItLdingMessrs. Parthasarathi, de Silva and W. Thompson (Consultant). This document has a restricted distribution and may be used by recipients onlyin the performance of their officialduties. Its contents may not otherwise be disclosed without World Bank authorization. -Iii 'ae No. IV. FREIGH'TOPERATfONS AND FIXED INSTALLATIONS.... 19 A0 General . .. .0 0 . ae0......00.0. 0 0.0 .. £9A B. Main TrafficCommodities and Services ........ 1.o9o9 C. Fixed Installations .0.....00 00 o0000 e0e0o000 o0 22 XD. Recomrnmendations ....... .0000,0.0..*,ooo.. *.o0..0..00. 24 V. ROLLItNGSTOCK AND WORKSHOPS.............0 .......oo....... 26 A. Introduction .. .oo...eooo*oo***e,e .000o e+ 262 6.. B. Locomotives.. o.. .I 0...90.. .000.00.0000000..... .00.26 C. Passenger Cars .........00.0 ............ 0000000000 28 D. FreightCars .. .. .. 00000. 0* .a0 000. 0.0.0..0..... 29 E. Workshops .e .0,0.....0.,.0O 30 F. Suggestions for Improvement/Rehabilitation.......... 32 G. Summaryof Recommendationso..........O..........O. 34 VI. ELECTRIFIED OPERATIONS 000............. ........ o 35 A. The Electrified Network .,...............0......000.00.35 B. Operations on the Electrified Sections .............. 35 C. ElectricLocomotives 0000.........o . 00o0** 36 D. ElectricLocomotive Repair and Mai.tenance........ ,. 36 E. Unit ExchangeSystem o 38 F. Future Electrification .............................. 40 G. Summaryof Recommendations#.......................... 40 VII. FINANCES ........... ................ .... 41 A. Accounting ...... ........................ 41 B. Operating Results .......... ......... 41 C. Traffic Costing e 42 D. Projections 43 VIII. ORGANIZATION AND MANAGEMENT IMPROVEMENTS ................ 45 A. KNR's Present Legal Status ... *s.....*....**.*.*.. o*. 45 B. Management Organization 45 C. Staffing, Trainingand Staff Development . 46 D. Commercial Approach ....................... 47 E. Management Information System ... 48 IX. RECOMMENDED ACTION PLAN..* .... 51 ANNEX 1. Railway InvestmentProgram: 1987-91 I)r ot Fit, If. fII i I a i I c I, / TY I,T*' Imns ThVr iC' 2i;t s ielg r TrI£i ) o I ';trainq in Si.Žouts llusareCri id)r' OR)aI y Sc:ui oI Dpi- t) ' iAJ 3 2 Kyuingbu Lince (Soout-Pusan) Rai) T(raffics -i.l Kyongbu Llne (Seoul-P'usan) PaqsengerTraffic (1974-85) ('000 p~?ts :1.4 Kyongbu L.ine (ScoulIl.usarn) 1eer Tra£ffic(19/4-85) (mill ion pas•senger-krmi) 'j - KyorngbuLine (Seoul-Pusani)Passetig,er Traffic (,1974-85) Average Distance (lun per passeniger) 3.6 KyoxigbuLive (Seoul-Pusan) Freight Traffic (1974-85) 5.1 lnventory of MoLive Power and Rolling Stock 5.2 Selected Operating Statistics 7.1 - Operating Statements 7.2 - Balance Sheets 7.3- Traffic Revenues and Costs 7.4 - Traffic Forecast: 1987-91 7.5 - Projected Operating Statement 7.6 - Projected Balance Sheets 7.7 - Projected Cash Flow 7.8 - Comparison of Cost and Revenue per Traffic Unit CHARTS 31024 - Ministry of Transportation Organization Chart 31116 - Korean National Railroad Organization Chart ?APS 20224 - Republic of Korea 20225 - SignallingSystem, Workshops and Sheds 20226 - Track Classification and Freight Traffic Density in 1985 KRI FA '<1lsl 1;EJwI1NA -~ gl+.Vri*W 0i 0Is,ll'RA'0N.f EFFICIENCY-NA, 1 IP..,8. II.,nh mnilslol ivire (wtd the operational 1-.! ',-i li5 N!:iiIl 14Xji Iroad, particularly as it pertains to I I ) 1 I4I 'ui1 1>tUrIln cortidor where Lrack capacity has :1.v z : , Ki; eeli'dtrogc'mc'c1t.i to p' iotlb o additional container I W (K linpI I h. I (co a tr-ainr operat ions in the eastern Iod' U't w ,i. : aid! ! ' (3t3;,, hr t rr.n operat ions generally; (,t -]!I' 1 (I l1llt t t1u, titI i Imni oX l 613it'Sel and elcctric locomotives and I o 11W i'VCIecti;. Sttt sS udi ed briefly the need for 1 * .- .i i./!-i I,. <,)( 11W I5fIu1 rpl1,roVeqlcr1s t o c*nabi e KNR to operate on a more ;,!j orn2 rlln-. ;i rd KNR f i nanc cila. situat ion to identify areas N5si . illin K liUr -v )IliiI il as.[fl[flay bec! called for. 'lThe findings are )If-I ^ne 3;0 N ioal I' Irod carried aJno9t 500 mil lion passengers ,3'1Ii r e i ghi in 1985 ovcr its network of 3,100 route-rou te - Ic.t.qv 1e i! l1or . nis a I 9 il o erated 1 8'J4 trains a day on he average, of 'ih, 1I3O9 h ;0n<rc< seu §1r-ains ji (including 583 Seoul suburban trains) and C,(t,3 1reignCl- Lraills, wiLth 60 passengers per train in inter-city service, 1,600 paitfsev,eri per train illSeoul sub,uibnrb commuter service and 270 tons per frotig)hI trail. 3. KBNEKhas a well trained workforce and its track, locomotives and ro.ling stock are well maintained,with availability of 90% for diesel Iocomrotives, 87% for electric locomotives, 95% for passenger cars and 96% for freight cars; the latter two figures are very good and the others fair. Utilization of rolJing stock, hos-ever,is relatively low: under 200,000 km per year for diesel loconmotives;130,000 km for electric locomotives; 222,000 km for passenger cars; and only 32,000 km for freight cars. 4. The financial performance of KNR has bean mixed; what is potentially a profitable railway system is adversely affected by one large uneconomic element in its passenger services, the ordinary (Pidulgi) train service. Pidulgi trains are operated essentially at government behest to provide a minimum transportation service in thir.lypopulated areas; the service accounts for as much as 18% of KNR's cost but for only 5% of its revenues. In order to fully compensate for Pidulgi train losses, KNR would need a profit margin of 17% over costs on the rest of its railway operations. Excluding the Pidulgi trains, KNR's profit margin is only 8% because losses are also made on its baggage services and on certain of its freight operations, namely coal, fertilizer and military traffic. KNR has operating surpluses in its other passenger services--its air conditioned express (Mungunghwa) services (which - v - producethe largestmargin of profit),the Saemaulor super-expresstrains, and the Tongil ordinaryexpress trains. 5. On the freightservices, container trains produce the biggestmargin of surplus,with generalfreight, oil, cementand
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