A rail alternative for containerised cargo being shipped between two of the world’s most important economic blocs might become a viable reality within two years. Trains hauling containers between China and markets in the EU could start running by the end of the decade and will target a niche of Australasian shippers and forwarders who do not want to utilise airfreight but want a faster container service than shipping currently provides.
Promoters accept that the sheer scale of the traffic flows between the two blocs mean that rail will only take a minor share of the millions of TEU between the two regions, however, following the successful test run of a fully-loaded container train from Beijing to Hamburg, it only requires certain technical and bureaucratic hurdles to be overcome for the service to operate.
Aside from the technical issues, planners of the 10,000km train journey must determine over the next year whether there is significant demand from shippers and forwarders who want to select a third option between expensive but quick airfreight or slower but lower cost seaborne transport.
Breaking new ground When the test train, branded the Beijing- Hamburg Container Express, arrived in Hamburg at the end of January, it had completed a 15-day, 9,954 km journey from Beijing through Mongolia, Russia, Belarus and Poland. The service served as a demonstration of the Eurasian Land Bridge project, jointly proposed by six national rail operators who are looking to develop the competitive alternative.
The container train departed from Beijing’s Dahunmen Station in early January and consisted of 49 flat cars carrying 98 TEU. The rail journey took 15 days and the train arrived in Hamburg almost 20 hours ahead of schedule. This would contrast with a typical journey to Europe of around 40 days by sea.
The service travelled via the Trans- Siberian Railroad line and passed over the rails of China, Mongolia (MR), Russia (RZD), Belarus (BCh), and Poland (PKP Cargo) on its way to Germany. After leaving China the train traversed the Gobi Desert. More significantly for the logistics of the operation, during its journey the train faced two significant gauge breaks. The first occurred at the Chinese- Mongolian border at Erlianhot/Zamyn Ude where the China Railway’s standard gauge (1,435 mm) meets the Russian broad gauge (1,520 mm). The second occurred at the border between Belarus and Poland at Brest/Malaszewicze, where it returned to standard gauge. The equipment used is not pooled, so containers had to be handled on to new flatcars with the correct bogies. In addition, locomotives and train drivers were not in a pool and took the train on their own domestic leg of the journey. The train original 49 flat cars had to be divided in Brest because it was too long for operation on the German railway network.
Economic driver
Rapid growth in the region and major economic potential shown by Chinese industry are the two key drivers of this project. Deutsche Bahn (DB) is determined to snare a share of the Asian transportation and logistics market, especially serving the Chinese market. DB has looked to position itself to take advantage of these developments as well as the rising global flow of goods. However, the global credit crisis that has hit the headlines since this service was plotted could now challenge the economics of the service, as sea lines are likely to slash rates to maintain their box traffic on this route.
Despite this, DB remains keen to further expand its transport and logistics networks towards China to enable its customers to participate in the exchange of goods with the People’s Republic of China.
Hartmut Mehdorn, DB chairman, says: “The excellent cooperation between the railroad employees of the six participating companies is impressive proof that Asian-European freight transport along the Eurasian Land Bridge has a future. If we can overcome further technical and bureaucratic hurdles and upgrade the infrastructure, and if the demand for transport services from Europe to Asia also grows, by the end of the decade we can aim at launching regular freight transport services along this axis.”
Dr Norbert Bensel, DB board member, adds: “The test train was a success. We have demonstrated that we can transport goods by rail between China and Germany safely, reliably and yet twice as fast compared with ships. At the same time, we're considerably cheaper than air freight for many types of cargo. Now is the time to analyse and compare our notes with all partners and to define the next steps.”
The cargo on the Beijing-Hamburg run included consumer electronic equipment, clothing and shoes.
One of the barriers to the project identified by DB is that, in comparison to ocean freight, rail transport is “burdened by price disadvantages caused by additional costs for positioning and leasing containers as well as by running costs for empty, backhaul freight cars.”
The key lever to lower costs is regularly scheduled container circuits running with equal loads of goods, reducing expensive empty car runs. To help achieve this goal, the existing flows of goods being transported eastwards to Russia and Central Asia should be integrated into the plan. In addition, long-term, stable rail freight tariffs will lead to a further reduction in costs, believes Mehdorn.
“The participating countries and their railways want to streamline border clearance procedures. Customs clearance and handling processes at the various borders should be significantly simplified,” he said.
The railway companies intend to standardize the different freight transport formalities by using one set of approved documentation for the entire trip, as well as by introducing an electronic exchange of information. These proposals would eliminate interface points, while various Customs clearance processes should be accelerated by simplifying Customs requirements.
Improvement of reloading capacities at the borders will involve capital expenditure, and significant investment has already been planned to expand the capacities of the re-gauging facilities at the Sino-Russian border.
Three degrees of difficulty According to Mariusz Dubowski, intermodal transport director of PKP Cargo, the Beijing-Hamburg Container Express trial run showed great promise that must not be squandered.
“We see it as a great success. When looking at the outcome of the trial, we have to bear in mind the whole complexity of this project. For PKP Cargo, it was a particularly difficult project as the border passage in Malaszewicze on the Polish- Belarussian border is currently a border in three dimensions.
“It is a technical border between standard and broad gauge. It is a legal border where eastern SMGS consignments has to be replaced by western CIM consignments, which means that all the cargo has to be re-despatched and all the documents re-issued. It is also now a EU Customs border point,” observed Dubowski.
Despite the complexity suffered, PKP is proud that the transhipment and re-issuing of CIM documents took less than four hours and the service had departed the Western Polish border less than 24 hours after arrival in Malaszewicze.
The service could come at a good time for Polish industry as the Polish economy is currently booming and exports growing quickly.
“We estimate that there are at least several hundred thousand containers travelling between Poland and China. The Beijing-Hamburg Container Express is not able to capture most of this traffic. The capacity of the Trans-Siberian is not enough to move several millions of containers per year. The flow of cargo between Eastern Asia and Europe is of such a size that we shouldn’t believe that maritime transport can be completely taken by the railway.
“However, certainly if we think in terms of delivery time, the railway bridge can be twice as fast as sea and there is place for such a product shaped for clients focused on this aspect. This should be our target,” he said.
Russian bear hug
The train was welcomed to Russia in a ceremony led by Vladimir Yakunin, Russian Railway president. The official ceremony was also attended by Mehdorn and the chairmen of Chinese and Belarussian railways.
“After tracking the container train on Russia’s railways, it is clear that there is plenty of scope for increasing its speed considerably. We can reduce the journey time by more than a day,” said Yakunin.
“The sustainable development of Russia’s economy and strong growth in China, as well as the expansion of economic ties and trade between Europe and Asia, require the intensive development of our countries’ transportation systems of. Rail plays a key role here, because it has always been a catalyst for economic growth. Moreover, these conditions create a good basis for implementing multilateral projects, such as the international container train route between Beijing and Hamburg.”
Target groups
The Beijing-Hamburg Container Express is primarily aimed at forwarders and shippers sending goods that have some distinct requirements. Firstly, the service targets goods originating in western and northern China that require long shipping times within China to reach seaports where they are transferred to ships; secondly, goods that have to be shipped quickly but at a lower cost than airfreight. This category includes special sales goods for the clothing industry, electronic goods, as well as project deals for the machinery and plant construction business; and thirdly, goods that can be shipped via the Eurasian Land Bridge instead of air or ocean freight in order to eliminate bottlenecks in the delivery chain or to secure long-term supplier loyalty in supply chains.
DB’s managers believe Asia will also retain its role as an ‘economic locomotive’ in the coming years, with China playing a decisive role as its economy is anticipated to grow by about eleven per cent. China’s trade surplus of US$262 billion in 2007 means that it is well on its way to replacing Germany as the world’s number one exporter. Based on European Commission statistics, exports from the EU to China rose by about eleven per cent in 2006, while the EU’s share of imports from China increased by approximately 19 per cent.
Through the Caucasus
While DB has trialled the future Beijing- Hamburg Container Express, a European freight forwarder has established a China- EU container service to serve the niche markets of Western China. The principal manufacturing centres are located in the southeast of the country. Beijing is determined to develop the sparsely populated Western region of the country.
Istanbul-based freight forwarder Advance International has reached a significant milestone on its Advantage Express Service. Just two years after its launch, this intermodal service is now moving over 100 TEU weekly from China to destinations in Russia, the CIS and Europe.
“The service could not have come at a better time for Chinese exporters faced with increasingly congested seaports that delay export journeys and put unwelcome delay and cost into the supply chain,” claimed Advance International president and CEO Jawad Kamel.
“Our container service along this route is now carrying more than 100 TEU per week from China to destinations in Russia, the CIS and Europe. Not only do the containers reach European destinations in remarkably short times but also they avoid the horrendous waiting times at some Chinese ports that we know are frustrating exporters and causing problems in the global supply chain.
“Using our service helps shippers avoid the problem of trying to find capacity for their export cargoes on overcrowded and increasingly expensive container shipping services, many of which are overbooked at present anyway. It is also a means of avoiding the sky-rocketing charges that shippers are facing. Late last year, one of the shipping conferences slapped a horrendous surcharge on Asian traffic going to the UK,” said Kamel.
Kamel expects that as central China is a long way from the ports of the Chinese Eastern seaboard, the express service will work to open up these areas to the outside world.
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