Wang Yongli
President, National Express Group
People’s Republic of China

Practices of Network Operation of the National Express Group of China

The National Express Group is a new-type road transport enterprise which was directly approved for establishment by Ministry of Transport in 2001. Its operational scope mainly includes regular routes of passenger transport, tourist transport, buses, taxi, logistics, vehicle repair and rent services. For the seven years since its foundation, the National Express Group set an objective of becoming the number one of road transport enterprises in China and establishing a national network with focus on inter-provincial road transport. By now, the National Express Group has established 60 branches in 14 provinces/cities in the East and Middle Areas of Mainland China, with nearly 6000 vehicles for operation and more than 1000 operational lines. It has established a road transport network covering the East and Middle China and built a large-scale modern road transport enterprises based on the traditional industry.

This article is talking about three themes defined by the conference, namely client relations, cost management practices and coach tourism with combination of the practices of network operation of the National Express Group 

The road passenger transport enterprise, belonging to the third pillar industry of modern service, is an economic organization which provides public passenger transport for travelers. The enterprise should improve service quality, transport safety and profits to realize the maximum social and enterprise values. Since its foundation, the National Express Group has been adhering to the principle and exploring the network operation of road transport so as to realize the unification of quality, efficiency and profits.

The National Express Group is the only road transport enterprise with network operations in China. By means of networks, the network operation is market-oriented and client centered and emphasizes the analysis of operational environment and market expansion. The network operation is divided into three layers in the National Express Group.

The first layer is network transport extension. Transport is the basic function of network; without good passenger transport function, no operation of passenger transport network can be established. The guiding idea of road transport extension is to realize a “door-to-door” service. The second layer refers to the network service expansion. The transport industry belongs to the third pillar industry. Under the premise of passenger transport, it should adapt to the market and meet the requirement of other services. The expansion of network services means the expansion of routine lines of passenger transport to vehicle hiring passenger transport, tourist transport, taxi, and renting services; the expansion to express transport of small packages and less-than-trunk-load express transport and even third-party logistics; and the expansion to safety examination, vehicle maintenance, operation accounting, and information feed back and coordinated evacuation. The third layer refers to the extension of network system. We should not only establish the concept of “big transport” or integrated transport, but should cooperate with other departments or organizations not belonging to the transport sector, so as to provide multiple transport related services to customers.

The National Express Group provides star-level services for passengers during the whole process of traveling, from the ticket purchase to waiting time to getting-on and off the bus. According to the market requirements, it bought luxury coaches equipped with GPS, airplane chair or bed, VCD, special lights, washrooms, and air conditioning. In the initial period of foundation, the National Express Group did not have its own stations. At that time, although there were relatively low service ideas and levels in bus stations in China, the National Express Group cooperated with the bus stations in Tianjin, Cangzhou and Jiangdu and had special zones within these stations as its own bus stations for ticket selling, bus waiting, pick-up and extended services. It unified VI and service standard and provided comfortable and warm services for passengers. Bus hostesses reflect the image of passenger transport enterprises. In order to improve service quality, the National Express Group employed professional service managers from famous hotels in Beijing and a director and air hostess of one air company to recruit and train the bus hostesses.

For many times, bus hostesses of the National Express Group provided services for big events at home and abroad. The Final section of 54th World Miss Competition was held in 2003 in China. The National Express Group sent out a group of servicemen totaling 30 persons to provide travel services for the World Miss in Hainan province, Beijing, Shanghai and Xi’an. The image and professional services of servicemen of the National Express Group really match the beauty of the World Miss and reflect the international level of road transport servicemen of China.

Moreover, the Group has divisions of market promotion and client service. It records the information of clients and improves the loyalty of clients through mark accumulation; it improves continuously the service quality though efficient management on client complaint. By now, the service system of the National Express Group has passed the ISO 9000 Quality Certificate and publishes “The Training Material on the Professional Capacity of Bus Hostess” by People’s Communication Press. The book filled gap of training materials for bus hostess in China.

Questions:
What would be the impact of the 2008 Olympic Games in Beijing on the bus, coach and taxi business in China and, in particular, on your own company?

• The Olympic Games in 2008 is one of the biggest challenges on the economy and even the whole society in China. We will prove to the world that China has been the right choice as the site of the 2008 games. China government has attached high importance on the Beijing Olympic Games and carries out “Spiritual Civilization” activities in all sectors. The road transport industry will certainly play an important role. Under the promotion of Beijing Olympic Games, China builds more expressways, urban roads and rail transit (including underground and light railways),establishes more monitoring and information center and improved the intelligent level of transport; and strengthens the training and supervision to improve the service conscious and level of the whole industry.
  
  As one of the most famous transport enterprises in China, the National Express Group will actively participate in the transport service of Beijing Olympics. In Beijing, we have 100 tour coaches for commuting athletes and audience between stadiums and living places, of course with high economic benefits. The Group will also be in assistance with Ministry of Transport to select 500 coaches from outside Beijing. It will also apply for the qualification of tourism coaches in Shanghai, Sanya, Guangzhou, Nanjing and Jinan. Organizing the transport capacity from other cities to Beijing could not only meet the transport demands of Beijing Olympics but avoid the attack on the transport market after the Olympics. Meanwhile, the Group has made good preparations of transport capacity to bring athletes and tourists to go to other sight-seeing cities like Tianjin, Jinan, Nanjing, Suzhou, Shanghai, Hangzhou, Huangshan, Fuzhou, Shenzhen, Sanya and Guilin.
  In a word, Beijing Olympics will effectively facilitate the development of the transport industry in China, improve the service level and strengthen the self-elegance and cohesiveness of China.

2. Cost Management Practices

Every year road transport consumes 28% of the total amount of oil consumption in China. According to the requirement of establishing energy saving and environmental measures, Ministry of Transport fully recognizes the importance and urgency to promote the energy saving and emission reduction in the transport industry and the development of modern road transport service, thus to facilitate the transition of road transport development from extensive to intensive growth and realize the energy saving and green development of the road transport industry.

Starting from points of energy saving, cost reducing and market competition improving, the National Express Group adheres to the principle of being market oriented and customer centered and reorganizes the management flow to effectively reduce the management focus and improve the working efficiency. It established a complete evaluation system for the performance efficiency of single vehicle in 2006, which raised enthusiasm of all staff to save energy and reduce emissions. Shenzhen Branch of the National Express Group achieved a great deal. Based on the surveys, it set up different consumption quota standards on oil consumption, tyre wearing and repair expenses according to different routes, vehicle types and seasons, which directly affects the monthly income of drivers. If below the quota standard, drivers can be awarded and if above, drivers’ income will be reduced. With analyses on the data before and after the implementation, the evaluation system in Shenzhen achieved good results. Cost indicators like oil consumption, repair expenses and tyre wearing are reduced accordingly. The oil consumption in 2006 reduced 1.13 liter per hundred kilometers per vehicle, with 3.6% reduction compared with that in 2005. 410,000 Yuan was saved due to oil saving in 2006 and the cost was reduced by 3.9 % not including the factor of oil price rising.
“Safety means profits” in the transport sector. Besides strengthening education of transport safety and implementing the safety working responsibility, the National Express Group sets GPS and traveling recording equipment on all vehicles and builds the monitoring center to strengthen the safety supervision. In addition, the Group establishes and optimizes the vehicle operation safety guarantee system by means of drivers rest, vehicle repair and safety examination.
What’s more, the Group has adopted collective purchasing of vehicles, insurances, oil and vehicle accessories and collective disposal of old vehicles and waste accessories, thus to reduce the purchasing cost and raise incomes; it also improves the use efficiency of vehicles to reduce the production cost.

Besides the traditional cost management, the Group also holds that innovative transport organization mode is the best way to reduce the cost and improve the efficiency.

Node transport is a scientific organization way for the distance passenger transport and is one of three important factors during the foundation period of the Group. The Group follows the direction of Ministry of Transport that the road passenger transport must develop towards being integrated, intensive and network operating. So at the very beginning, the Group puts the development of national network company focused on inter-provincial road transport as its technical embodiment and network operation as its soul for stride development. In November 2001, the first station of the Group was formally established in Tianjin. In April 2002, Ministry of Communications issued the “Notice on Carrying out Pilot Study of Knot Feeding Transport in Jinghu Expressways”. The Group adopted advanced technologies such as internet ticket sale and GPS to realize the “seamless connection” and achieved good results. According to the statistics, in 2002, the 8 stations along the Jinghu Station received 29745 person times of travelers, occupying 40.45% of the total passenger transport and 33.34% total incomes that year. In 2003, although affected by SARS, the above mentioned 8 stations received 14989 person times of travelers, occupying 21.9% of the total passenger transport and 30% of the total income. All these real figures showed clearly that the node transport had active effectives on the organization level and transport efficiency of the road passenger transport, improved the passenger capacity of long-distance road transport, raised the operational incomes and reduce the transport cost.

With good results in Jinghu Expressway, the Group also extended the node transport to other lines. Intensive operations were carried out in expressways like Shanghai-Wenzhou, Nanjing-Maanshan, and Taizhou-Nanjing. Surveys were also conducted in Ji-rong highway and intensive operation was carried out through purchasing and cooperation. Meanwhile, regulations of network operation were established. Within the network, each enterprise should follow the principle of integrated operation and business and strengthen the business operation. Line network and circular network of passenger transport are connected gradually and frame network and regional network are connected thus to realize whole-scale connection.

The operational objectives of the National Express Group include:

• each route within the road transport network should be equipped with regular coaches of passenger transport；
• each route of passenger transport within the frame network should be connected and provide service for the passengers from one knot to other freely selected knot；
• some major knots in the frame network should be connected with regional network and provide service from one knot within the frame network to other freely selected knot within the regional network (or verse);
• some important knots within the frame network (especially where central cities are located) could provide door-to-door service for passengers;
• according to the principle of “resources-sharing and network operation”, the Group provides small package express mailing service for customers and gradually provide service of “door-to-door” service;
• important knot within the frame network (especially where central cities located) could provide coach renting services;
• customers could enjoy services like regular routes of passenger transport, small package express, tourist vehicle hiring, coach renting by means of electronic commercial website of the Group；
• besides classified bus stations, new stations should be established to provide services like passenger and freight transport ,safety checks, vehicle maintenance and repair, drivers on and off duty, and information feed back;
• through ways of “Internal connection and external cooperation”, important nodes in the frame network can cooperate with other road transport enterprises and other transport modes (mainly railway) to provide multimodal transport services for customers;
• important nodes in the frame network can cooperate with other service industries to provide services like food and drink, accommodation, shopping, entertainment and travel related with transport.

Network operation is the core of development strategy of the National Express Group. Network operation could meet the requirements of passenger traveling, and also save the travel capacity resources and cost and improve the transport efficiency. The Group is now making special plans for network operation and exploring a development approach for best benefits in the road transport industry.

Questions： 
Chinese living standards and consumer purchasing power are rapidly growing. Even under circumstances where there is an abundant supply of workforce, like in China, every industry should make efforts to acquire qualified workforce. Is this the case of coach transport in China?

• In China, the labour market is characterised by ...
  
• To be a coach driver in China represents a certain social status. The tools we use to acquire new qualified workforce such as drivers and keep the best of them for a long time in the company are the following: ...
  As the acceleration of building a well-off society, per capita GDP in China will grow from 1000 to 300o US dollars in a time. People’s living quality will be improved correspondingly. There is some kind of workforce shortage in some seaside and inland provinces in China, but it is mainly reflected as the structural shortage, including ① shortage of high-level talents, ②shortage of women labor; ③shortage of certain enterprises, especially those with poor working environment, high working intensity and low salary; ④rise of spending power of peasants from the East to the West due to the rise of industrial development in middle and west China. Throughout China, there are still problems of surplus labor, with newly added labor in cities and towns and a large amount of unemployed. There are 12 million more unemployed each year. Last year the new undergraduate reached 4.13 million, increased 750,000 persons compared with the year before and 30% have not yet found employment. So currently in China, the supply of labor exceeding the demand is still the major contradiction.
  Human resource is the key for the success of an enterprise. Only the first-class talent could do well and establish the top level work. Human resource has been the top one resource in the National Express Group. The Group has an excellent team. Five managers have doctorates, 43 have master degrees, and 324 persons have a bachelor degree or above. More than 120 people with middle or high professional titles. The team with good spiritual，cultural, technical, physical and psychological qualifications set the guarantee for the success of the Group.
  
  As the Group has established a national road transport network, we can recruit drivers and bus hostess from all around the country. The Group also set “the Management Colleague of the National Express Group” to give training and establish a scientific evaluation system on the staff. The Group also puts forward the concept of “staff priority” and strengthens the cohesiveness of enterprises through colorful civilization.
  The staffs feel proud and elegant as a member of the Group and the Group becomes more attractive and beautiful through the contributions of the staff.

3． Coach Tourism - the Efficient & Customer-orientated Alternative

Just as several speakers mentioned in the first round of discussions that if the client relations are dealt with well, coach tourism is more efficient and attractive compared with railway and air transport.

Within the integrated transport system comprised of railways, highway, waterway, aviation and pipeline transport, each transport mode has its own organization pattern, transport routes and vehicles, economic performance and application scope. The effective connection and the exertion of integrated efficiency and advantages of different transport modes are important symbols of the modernization level of the transport industry.

Compared with other transport modes, road transport has a comparative advantage of broad coverage, high accession and mobility. It is a separate transport mode that plays a role of “big artery” in trunk road transport, and also provides a collection and distribution service for other transport modes which play a role of “micro circulation” through feeder transport. Therefore, road transport is the core factor of integrated transport and will play a more and more important role in the integrated transport system.

In 2006, the passenger transport volume undertaken by the National Express Group was 91.91%, the turnover volume of passenger is above 50% (See Table 1: Passenger Transport Volume in 2006). The supply capacity and service level of the Group has become an important measurement of the transport sector. Of course, these comparative advantages will vary as the socio-economic development and the technical and management improvement. But the basic contents, special equipment and technical and economic features are steady. China is a developing country. The per capita GDP is below the average level of developing countries and only one fourth of the world average. Therefore the road passenger transport suits fully to the current situations of relatively low economic value and affordability, low consumption level, and large gaps between city and rural areas in China

Table 1: Passenger Transport Volume in 2006

Transport volume indicator unit		Society total	Railway total	Road total
Passenger transport volume	100 million persons	202.42	12.57	186.05
Percentage of the whole society	%	—	6.20	91.91
Turnover volume of passengers	100 million persons km	19197.21	6622.12	10130.85
Percentage to the whole society	%	—	34.50	52.77

Data sources: “China Transport Yearbook” (2007), and statistics of road transport by Road Department of Ministry of Communications

Of course, coach tourism should avoid effectively avoid the competition with trains and airplanes in some special markets. According to the market requirements, the coach dispatching frequency can be closer and flexibly dispatched; it can also choose times for traveling when there is no train service. In space arrangement, select routines where there is no train service or short travel distance of trains; in terminals of airport, rail stations and port, coach tourism can be connected with other transport modes.

Currently, the transport network has been established in the East seaside areas and the plan of coach tourism was formulated last year. The Group established service production bases in Huangshan Mountain, Sanya, Wutong Mountain, and Guilin, set up branches in cities with high economic development and rich tourism resources, like Beijing, Tianjin, Shanghai, Nanjing, Suzhou and Hangzhou. A new production chain of tourism is established with tourism site as production bases, transport as means and branch companies as the frontier for sale. Taking Huangshan Mountain for example, the Group invested nearly 100 million Yuan to establish the traveler distribution center. For the 13 kilometer from the foot to cable cars, there are special operating coaches of the Group which have a good reputation.

Question:
I wonder whether cheap airlines take off the ground in China as is the case in many parts of the world? If yes, coach operators face a dangerous new competitor. How do you see this development?

• There are a number of Chinese airlines offering already cheap tickets on a first-come, first-served basis. The competition they create towards coach operators can be characterized by speed, time and higher advantage with longer distance. In long and medium distance travel, our major targets are peasant workers and small commodity operators. Although there are many air ticket discounts, the price is still higher than the road passenger transport and not accepted by the peasant workers. What’s more the transport cost and convenience from departure site to the airport and then to the destination is also an important affecting factor. The small commodity operators usually prefer road transport; the reason is that they could bring their commodities with them but the package price is rather high by air transport. As for residents in town and rural areas, they normally prefer to door-to-door transport mode, even with convenient transfer. Therefore, the low price of air ticket is the major competitor of railways but has little effects on the road transport.
• The National Express Group will learn from the mode of “cheap airlines” and provide “low ticket of tourism” for the backpacker tourists and help them realize the dream of traveling around China by taking coaches of the Group.

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