Building the Wider Black Sea Area Railway land bridge

Providing frameworks for a seamless transport from Far East to Central and Eastern Europe

Railway Days; 8 October Bucharest, Romania Ivan Petrov, Chairman, CLECAT Rail Institute

CLECAT – Who do we represent?

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• Brussels based organisation representing the interest of logistics service providers and freight forwarders

• National federations and confederations

• Associate and Related interest representatives

• 19000 companies: Global players, SMEs and regional operators

• Business coverage: ≈ 90% of Customs, 70% maritime, 90% air, 50% road and rail operations in Europe – but in general LSP do not own the truck, ship, railwagon, etc…

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Policy Considerations

• EU White Paper 2011 ambition: Revitalisation of Rail Freight

• Railway’s liberalization realized slower than in other sectors

• Target: more goods to rail is not reached

• 2013: rail freight transportation still faces serious problems

• EU members show stagnation, the level of market share is still below target figures with a 10-year delay.

• Different degree of development in East-West comparison

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Modal split EU Freight Transport, % of tkm

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Air and sea: only domestic and intra-EU 27Source: EU transport in Figures, 2012, p. 36

Policy Considerations (2)

• A single European rail market is conditional to increase competition, reduce costs and improve transparency with regards to rail shipments. Full unbundling and interoperability are required to create the necessary level-playing field.

• Policymakers have to further develop the railway policy in Europe and offer support for the 4th Package, without delay.

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Market Considerations

• International trade flows have surpassed global GDP growth for decades. Increasing trade across borders is supported by transportation improvements and increasing ICT, lowering costs and providing transparency.

• For Europe, growing markets are moving East and/or South, potentially increasing distances and number of countries to cross.

• The share of rail freight transports in the EU has been decreasing in recent years, but opportunities, in particular on the East-West corridors, are big.

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Market considerations: Evolution of the market in the East

• intense industrial activity in Russia and in Central/Western China• rising domestic consumption/new consumer markets in Russia, in China

and in Central Asia • increasing direct foreign investments, especially in the eastern side of the

WBSA• Delocalization still in-progress (Russia) and in China (from the coast to

Central and West China) - logistics service providers need to follow • Exploitation of natural resources (Russia: wood, oil, gas/ Kazakhstan: oil,

gas/ Uzbekistan: gas, uranium/ China: ore) boost in trade volumes on the East-West axis, these are the main

factors that trigger railway development opportunities

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Market for multimodal business between Asia and Europe

• Huge volume between Asia and Europe 15 million TEU by sea

• A big potential for multimodal business A lot of existing and developing flows: between Europe and the region of

Moscow on corridors from Russia to Central Asia: China, Kazakhstan

• The competitiveness of the rail in terms of prices and transit time Big interest in rail in the Eurasian market need for multimodal products and partners in this area

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Comparing the options (1)

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• Railway Solution

Transit time: 3 weeks

High frequency of shipments

Fewer containers per shipment

High level of flexibility

Terminals at the border stations

• Air Freight Transit time: 5-10

days

Limited frequency/Flexibility

Low weight capacity

Very high costs in general

• Deep Sea Vessel

Transit time: 4-6 weeks

Slow/super slow steaming

Unstable rates08/10/2013

Comparing the options (2)

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Price: • rail costs 20-30% more than sea Transit time: • rail is about 30 days faster than sea transportTrends in prices: • In short-term: increasing prices for sea transport, closing the gap between sea

and rail prices • Additional huge capacity in sea container vessels will force down freight rates

in maritime transport - rail will face new challenges in direct competition • In the long-term: sea and rail transport prices will be closer again partly due to

higher energy prices and additional costs Trends in transit times: • In shortening transit times for rail due to infrastructure, technological

developments and further enhanced cooperation

Result: relative competitiveness of rail will improve 08/10/2013

Basic rules for the Competitive Rail Option • Price: Competitive pricing, based on market prices • Time: Time as key differentiation of rail to sea • Reliability • Flexibility and frequency• Quality: SLA’s • A total integration in the supply chain • Identify return flows: to reduce empty loads

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Interoperability is key! • Further development of ports and hinterland connections for railway

transport will allow for increase in cargo volumes in the WBSA region.

• All intra-European corridors, those linking Europe to Asia and Middle East, need improvement, because they boost interoperability. But also need for real interoperability between continents and modes:

need for provision of information several times for different purposes

lack of information on multimodal availabilities

lack of integration of information from tracking and tracing technologies and intelligent cargo applications

• harmonisation of technical and administrative rules both in Europe and Asia which will facilitate and ease cross-border operations

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Challenges along the Rail Corridors

• Customs • Identification of return flows

Imbalance in trade flow: 55% westbound, 45% eastbound – economic interests in strengthening exports

• CIM/SMGS single consignment note• Lack of e-Documents• Lack of real Single Windows in support of:

faster release of goods predictable and efficient description and implementation of rules more transparency

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Multimodal Challenges

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Complexity of freight transport information exchange in an multimodal transport context:

• lack of interoperability along the supply chain

• inefficiencies, costs, reduced visibility of freight, perceived complexity for multimodal transport, sub-exploitation of multimodal transport, non-optimized use of existing transport infrastructure, etc.

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Thank you for your attention!