Total Costs

Southeast Asia might have its first high-speed rail (HSR) project in the next few
years. Located in Indonesia, this project is expected to connect Indonesia’s capital
Jakarta with the neighboring city Bandung in around 150 kilometers of distance.
Proponents and critics have been addressed to this plan but only small amount of
research has been conducted to examine HSR’s operating system in Asia and Europe
and the rate of success of HSR implementation in Indonesia. The objective of this
paper is to provide an estimate of the total cost of building, operating and
maintaining a HSR with technical characteristics and the supply and demand
conditions based on Asia and Europe experiences. Although the calculation formula
provides a lower bound to the actual cost, this expression summarizes the critical
factors that must be taken into account when analyzing the costs of HSR lines. These
include the line length, the number of trains needed to respond to the demand, train
capacity, average distance and the corresponding unit costs. This understanding is
very important and meaningful for Indonesia’s future projects as it will lead to a
better analysis of the expected construction and operating costs.

Southeast Asia might have its first high-speed rail (HSR) project in the next few years. Located in Indonesia, this project is expected to connect Indonesia's capital Jakarta with the neighboring city Bandung in around 150 kilometers of distance. Proponents and critics have been addressed to this plan but only small amount of research has been conducted to examine HSR's operating system in Asia and Europe and the rate of success of HSR implementation in Indonesia. The objective of this paper is to provide an estimate of the total cost of building, operating and maintaining a HSR with technical characteristics and the supply and demand conditions based on Asia and Europe experiences. Although the calculation formula provides a lower bound to the actual cost, this expression summarizes the critical factors that must be taken into account when analyzing the costs of HSR lines. These include the line length, the number of trains needed to respond to the demand, train capacity, average distance and the corresponding unit costs. This understanding is very important and meaningful for Indonesia's future projects as it will lead to a better analysis of the expected construction and operating costs. Moreover, the number of passengers to be transported that are differentiated by economic and geographic conditions, and becomes the urgently service delivery to the nation people. This paper also provides suggestions and recommendations toward the government in considering the total service community.

While these studies illustrate generally the effect of transport on trade flow patterns and the importance of transport costs to trade success, some use distance as a proxy for transport costs in their analysis. High transport costs, however, can be explained by many other factors, such as lower cargo volumes, trade flow imbalances, inadequate infrastructure, onerous border and cargo processing procedures, and port inefficiencies. Port costs, for example, represent about 8-12 percent of total transport costs from product origin to destination. Shippers, who consider port costs as one of the very few, if not the only, controllable costs in the logistics chain, make shipping decisions in part based on those costs. To the extent that port costs are a proxy for port performance (efficiency), efficiency influences shippers' choice of markets.