"Railways Have Good Opportunities. And They Should Be Used Better!"

14.05.2008 (12:14)

Since motorways, ports and sea lines are overloaded, there appears the demand for railway transport services in spite of less profitable rates in comparison with sea transport and smaller opportunities to deliver goods door-to-door as with road transport. Werner Albert, Chairman of the Board of Directors of TransInvest Holding AG and President of Association of European Transsiberian Operators (GETO), and Hans Reinhard, CEO of InterRail Holding AG, told “The RZD-Partner International” about their vision of developing land routes between Europe and Russia and Europe and Asia.

- Mr Reinhard, your company specialises in railway transportation between Europe, the CIS and South-Eastern Asia. What is your opinion on the prospects of a land bridge connecting Europe and Asia, the main part of which is served by the Transsiberian railway?

Hans Reinhard – We believe there are great prospects, especially in the sector of transportation of expensive goods, since fast delivery is very important for them.

As for the regional aspect, the places where the cargo is dispatched and received play an important role. Railway communication between the sea ports, for example, Shanghai in China and Rotterdam or Hamburg in Europe, can hardly compete with sea carriers. However, if a consignor and a consignee are far from ports, the costs may be similar. For example, land and sea transportation from Urumchi to Nuernberg (Germany) or from Beijing to Vienna (Austria) is always comparable.

There are several common factors, which will seriously improve the prospects of land communication between Asia and Europe. The most important of them is the growth of container transportation, which has left the increase in port capacities behind. Today, a container vessel with the capacity of 10,000 TEU or more may sometimes fail to find a place at the berths in the ports between Antwerp and Hamburg. The infrastructure for receiving and servicing containers in these ports does not fulfil the demand. According to one forecast, container turnover in the ports of the North Sea will grow by 11% annually until 2015. So, it will increase from 34 million TEU in 2007 to 77 million TEU in 2015.

These facts prove that we need not only sea transportation but also a qualitative railway bridge connecting Europe with China, India, etc. Otherwise, we will struggle to fulfil the demands of world trade.

- Mr Albert, you were one of the initiators behind the Coordinating Council on Transsiberian Transportation (CCTT). Has the Council lived up to your expectations?

Werner Albert – When the CCTT was established in November 1993, our target was the resurrection of international transportation. The main idea of the CCTT was to unite everyone interested in the Transsib, so that they could together develop and carry out specific measures to develop transportation. At the very beginning we used to be a small group of enthusiasts. Today, there are 115 individual and associated members of the Council – institutes, railway companies, representatives of customs and other official bodies. 250 delegates from 24 countries participated in the last annual meeting of the CCTT in November 2007. Such figures show how interest in the Eurasian land corridor has increased. So, our activity may be considered a success from this standpoint.

After 15 years of the CCTT’s existence, economic relations in the world have changed. The trade between Europe and Asia increases very fast. And the ports are overloaded because of the container boom. These factors made consignors pay more attention to land routes. The brightest example is the famous demo-train Beijing-Hamburg. After it arrived in Hamburg, a lot of consignors phoned the members of GETO to learn more about the specific terms of transportation. They wanted to get information about the through rate, about the terms of container services, how empty rolling stock is returned, etc. In fact, a lot of companies, participating in trade between China and Europe are waiting for regular railway communication between the two regions.

Unfortunately, we had to say that, although the train had demonstrated an advantage in delivery time, we have yet to reach such targets as a competitive rate, unimpeded transit, unified transport rights, solving of container and wagon shortage and the launch of an economically viable ring route.

In fact, we have been searching for the solutions to these problems since the CCTT was established. And we have done much work towards them. I would be happier if the progress were much more significant, so that there were thousands and thousands containers on the Transsib. But, in reality, European companies have little faith in railway transportation between Europe and Asia, though such a trip takes less time. Much must be done to launch regular cargo trains on the route. And we should use the opportunities presented by the railways better.

- Some Russian experts are sure that the Transsib is not and will not be attractive for transit cargo.

W.A. – For thirty years I have been making efforts and spending time on the development of transportation along the Transsiberian railway. I would never have done it if I had not been sure that the railway had great potential. And all its physical opportunities – the infrastructure, the rolling stock, and traffic channels – prove that I am right. Much is being done now to increase parks of containers and wagons. Handling and logistics terminals for railways and service providers are being constructed along the Transsib. And the goods flows between Europe and Asia are doing nothing but growing!

My own experience is another reason why I am certain of the competitiveness of the Transsib. Since the very start of my professional work, I have dispatched hundreds of thousands of containers on the route, most of them in the early 1980s. My attitude to the railway is one of real practicality. I believe the Transsib is the basis of a strategically important transport corridor between the two continents.

- Could you comment on your experience of servicing cargo flows for members of GETO between Europe and the CIS or between Europe and Asia?

H.R. - Railway transportation to Russia or between Russian and China or Russia and Iran is everyday work for us. As for the demands, terms and peculiarities of each operation, there is little difference between two-sided and transit transportation via the RF territory. And our practical experience in transporting cargo for the motor-car industry in separate wagons proves this. We are sure that such transportation will be serviced by regular trains in the near future.
To sum up our experience in cargo transportation in and via Russia, I can say that the delivery time and the quality of services has significantly improved recently.

W.A. – All the members of GETO are drawn to goods railway transportation between Western Europe and Russia. The brightest example is the block train “Vostochny Veter” (the Eastern Wind) which services the route between Berlin and Moscow and further to the east and other destinations in the CIS. It was GETO that initiated the project in 1995. Later its “opponent”, “Zapadny Veter” (the Western Wind) ran in the opposite direction. Stable container routes have existed for a decade already. And its viability was doubted only during the financial crisis in Russia in 1998. Nowadays, “Vostochny Veter” is dispatched from the Grosberen terminal (Berlin) three times a week and the cargo for it is delivered from all over Germany and neighbour states. The final consignors of many cargoes are in the states in Central Asia, so the containers are carried along the Transsiberian railway.

Also, the members of GETO dispatch plenty of separate containers to South Asian countries. Mainly, the cargoes are carried for specific projects. Unfortunately, in spite of all the efforts made, GETO has still not succeeded in forming a regular train, such as “Vostochny Veter”, to China. As far as I know, one of the members of GETO is developing such a service. But a lot of problems are to be solved before it becomes attractive for potential clients. However, they are not in our remit.

- What are these problems?

W.A. – I believe the difficulties preventing the development of Eurasian railway communication emerge from the investment sector and the different interests of parties from many countries participating in different states. For example, there are a lot of players wishing to benefit from a transit train – railway companies, terminal operators, state bodies, including customs, and sometimes inspectors – but some of them are from several countries. And sometimes progress is hindered by a problem that seems to have nothing to do with transit – the procedures to be completed at borders and the necessity to remove certain formalities. A block train needs the same things as a shipping company: a reliable quality, a competitive rate (including a range of possible payment options), a qualified operator and trouble-free border crossings. Naturally, it is easier to solve such problems for sea transportation than onland. However, preliminary findings from the demo train Beijing-Hamburg showed that, where is a will, there is a way. We need the same mode for regular trains to cross the border. It is, after all, transit, so there is no need to examine each container at each border and check the documents, which have already been filled in and checked!

There are also some other problems concerning not just railways. First of all, the transport flows are unbalanced. Consequently, difficulties arise when returning empty containers to Asian countries. It would be ideal if there were enough cargo to organise a ring route, but such an idea is hardly possible.

Besides, there are a plenty of difficulties preventing railway communication development lately. I have already mentioned the lack of containers, wagons, logistic services and infrastructure on the meeting points of railways with a different gauge width. However, there is some progress. For example, in the sector of railway rights unification. Different legal systems – CIM and SMGS – are working today to create a single freight consignment note.

It is also necessary to prevent the emergence of new barriers, such as the monopolisation of the sector.

H.R. – In China, there is a shortage of container flat wagons and other rail cars and so the transport flows are unbalanced, in spite of the boom in container transportation to Europe. There is a lack of handling capacity at the border of China with Russia, Mongolia, and Kazakhstan, where different types of railway gauges are connected.

For us it means a demand for investment in equipment and container parks (or their rental) and a search for partners, looking for cargo in Europe to be transported to China in order to balance cargo flows and deliver a sufficient number of containers to China. I believe there are promising prospects in the car industry. That is why we are going to purchase containers with a special restraint system to safely carry as many cars as possible. Last March, our company opened a representative office in China. It will allow us to solve a range of problems more efficiently. Naturally, more measures are to be taken to reduce the time spent by transit trains on border crossings, to make document turnover electronic and less bureaucratic and to unify transport law. But I do not consider these factors to be barriers preventing the development of land communication.

I am a member of the secretariat of the CCTT. The organisation is making efforts to solve the problems and I am sure that soon they will bear fruit. For example, the CCTT developed a project called ‘Container Exchange’ that will contribute to optimisation of container turnover. Another observation: the cooperation between railway companies transporting along the Transsib has increased. A good example of such cooperation is the demo train Beijing-Hamburg that made a 15-day trip at the beginning of 2008. It was organised by six railway companies from different countries.

- How many containers can be carried along the Transsib, considering its potential cargo base as well as the technical capacity of the railway?

H.R. – Taking into account the whole railway and re-export, 500,000 TEU could be transported along the Transsib in the short term and, if significant investment is made, the figure will significantly grow in the long term. Russia is a strategic crossing of several transport corridors. And not all opportunities have been realised to unite them into a single unit.

W.A. - In our estimations, the capacity of the Transsib is currently 500,000 TEU and, after some investment, it could reach 1million TEU of transit volume. And, if we take into account the containers transported from China via Kazakhstan that use a part of the Transsiberian railroad on their way to Europe, the figure will be 2 million TEU. But this is just theory. In reality, the situation will be improved if one or two regular block trains are launched between Zabaikalsk or Nakhodka-Vostochnaya and Brest railway stations.

- Could you comment on the activities of the RF Ministry of Transport, OAO RZD, and the CCTT in the development and promotion of the Transsib? What else must be done?

H.R. – I have already mentioned the problems to be solved. What else can be done? We need an enterprise that will control all the operations, including empty container delivery. A shipping company operates its vessels and containers, and a railway operator could use the same scheme, managing regular trains running along the Transsib from Europe to Asia and back. We could invest in fitting platforms for a 1,520 mm-wide gauge, but before that we must find a partner in Russia who can solve operational problems for using such wagons.

There are plenty of problems which are not noticeable at first glance, but they must be solved to make transborder railway communication more attractive. We also must agree about the definition of a block train and the tariff policy applied to it. The minimum length of a container train on the CIS network is at least 50% longer than that allowed in the Chinese and European sectors of the route. Meanwhile, it is regular trains that get tariff preferences on transit via Russian territory. And if there is no preferential treatment, a competitive through rate can hardly be formed. How can transportation be organised where the requirements for a train are different? It turns out that containers need to accumulate at the border to make a train with the minimum admissible length in Russia. It is too complicated. We expect that participants in the CIS Tariff Conference will decide to make an exclusion for transit trains from third-party states.

I will give another example. At the borders of the countries that joined the SMGS agreement, where railways with different gauge widths connect(for example, at the Polish-Byelorussian border), cargo is loaded from the rolling stock operating on one gauge to the wagons used on the other. Thus, there must be at least two container terminals at the border – one in each country. For a businessman it means an unnecessary doubling of expenses, and consequently, less efficiency. We must give up old, inefficient rules and show our flexibility in solving the problem.

Interviewed by Ivan Stupachenko
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