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The expansion of high-speed railway (HSR) has opened up new freight capacity on traditional railway (TR) lines in China. In order to increase China’s railway volume of containers transported to port terminals, this paper estimates the HSR and TR modal splits for passenger transport. Then, the TR capacity used for passengers is calculated via traffic assignment model, and the number of passenger trains on TR lines is estimated and then deducted from total TR capacity. The remaining balance gives the freight capacity of a TR line. Moreover, a bi-level programming model is built to optimise the location of railway freight terminals and the corresponding train dispatching frequencies in a case in which trains on TR lines and trucks on highways are both used to transport containers to port terminals. The ports of Shanghai and Ningbo with their hinterlands are used as a case study for numerical analysis. [ABSTRACT FROM AUTHOR]