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Eurasian Rail Corridors STUDY STUDY Eurasian rail corridors What opportunities for freight stakeholders? Content Background 3 Study objectives 4 Status of Eurasian rail cargo transport 5 Potential of Eurasian rail cargo transport 9 Trade volume distribution between Northern 10 and Southern routes Gap analysis in Eurasian rail transport 12 Recommendations for Eurasian rail stakeholders 15 Warning: STUDY - Eurasian rail corridors: what opportunities for freight stakeholders? No part of this publication may be copied, reproduced or distributed by any means whatsoever, including electronic, except for private and individual use, without the express Author: Roland Berger permission of the International Union of Railways (UIC). The same applies for translation, adaptation or transformation, Design: Marina Grzanka arrangement or reproduction by any method or procedure whatsoever. The sole exceptions - noting the author’s name and the source - are "analyses and brief quotations justified This brochure is a publication of the by the critical, argumentative, educational, scientific or INTERNATIONAL UNION OF RAILWAYS (UIC) informative nature of the publication into which they are 16 rue Jean Rey, F - 75015 PARIS incorporated" (Articles L 122-4 and L122-5 of the French Intellectual Property Code). www.uic.org © International Union of Railways (UIC) Paris, October 2017 ISBN 978-2-7461-2653-4 Background Given the continuing global and regional economic development, cargo traffic flows between Asia and Europe have steadily increased in the last two decades and are expected to rise still further. Ocean shipping accounts for more than 90% of these services. Rail transport on the Asia-Europe route is growing fast but its share remains limited. Disadvantages in border crossings, reliability, infrastructure and other factors are still impeding the growth here, while falling sea freight rates aggravate the competition. Nevertheless, business initiatives to improve the competitiveness and quality of rail transport are becoming more numerous on the Northern Eurasian rail routes and, more recently, on the Southern routes, too. China, Iran and Turkey are investing particularly heavily and promoting the Southern infrastructure links to Europe along the former Silk Road trading routes in a development that would seem to indicate a wish to promote alternative routes for future business. At the same time, Europe is investing in its cargo rail by creating common standards for the interoperability of networks in the nine RFCs1 and the Trans- European Transport Networks. As the worldwide railway organisation, UIC is particularly committed to supporting the successful implementation of international rail freight services linking Asia to Europe. Indeed, that is why the ICOMOD2 study was commissioned back in 2011 to evaluate the possible potential of these services. Now, six years on, the development of intercontinental rail freight corridors is increasingly becoming a reality. Every week sees the public announcement of new initiatives and logistics services linking Asia to Europe and vice versa. 1. (Rail Freight Corridors as defined in Regulation 913/2010) 2. International Combined Traffic, UIC Study commissioned to Roland Berger Eurasian Rail Corridors 3 Study objectives In continuation of UIC’s earlier initiatives and to follow up on ICOMOD, this study aims to assess the viability of the Eurasian rail freight routes, including the Southern routes, and the interconnection of these corridors with the European RFCs. The study has three main objectives: Provide Assess Recommend an overview of the traffic the key success factors, best how stakeholders can improve volumes, market players, practices and impeding factors or reset their business activities infrastructure and performance for the initiatives. and market the new alternatives; of the rail routes, plus forecast and set up a migration plan for their development and potential UIC to support its members. until 2027. 4 Eurasian Rail Corridors Status of Eurasian rail cargo transport Eurasian rail cargo transport has grown significantly in recent years. The number of operated trains rocketed from ~300 in 2014 to nearly 1,800 in 2016, while the transport volume grew from 25,000 TEU to 145,000 TEU (Figure 1). Despite this strong development, rail transport still has a low intermodal market share of ~1% in the trade between Asia and Europe. The bulk of freight is transported by ship (more than 90%). 4% 1,777 ~145,000 40. +1 R AG C 815 ~65,000 308 ~25,000 2014 2015 2016 2014 2015 2016 Figure 1: Development of rail freight transport between Asia and Europe from 2014 to 2016 # trains (left) and TEU (right)3 3. 2016: Roland Berger calculations based on interviews with key market players or stakeholders of the transport chain Eurasian Rail Corridors 5 Khabarovsk Interviews with relevant stakeholders 4 Amazar Suifenhe Vostochny confirmed that : Helsinki Zabaykalsk Vladivostok Irkutsk Manzhouli 2 Malaszewicze Moscow Yekaterinburg Novosibirsk Ulan-Ude Zamyn-Uud Chop Omsk Naushki Increase in Brest Beijing Dobra 3 Erenhot destinations to 15 in Zahony Iletsk Astana Reduction of freight 7 Shanghai Europe and more than Kandagach Dostyk rates thanks to Chinese Alashankou 16 in China Svilengrad 1 Urumqi subsidies Poti Aktau Istanbul Khorgos Almaty Kars Baku 5 Tashkent Tabriz Mary Tehran Mazar-e-Sharif 6 Sarakhs Bafq BandarEmam New Delhi Reduction of transit Interviews with relevant Targeting of suitable time and increased BandarAbbas Mirjaveh stakeholders confirmed customers and regions, punctuality that a number of e.g. Western China improvements have Mumbai driven the volume 2,000 km development on Significant Eurasian rail routes: Ease of border decrease of theft and crossings through the damage rates to a level common consignment now lower than sea note, Eurasian Customs shipping Union and local Upgrading improvements and extension of infrastructure, e.g. in Kazakhstan However, the market development and competition Nevertheless, the countries along the Silk Road from other transport modes have prevented rail have invested significantly in the last few years in transport from achieving a higher share of the market. infrastructure and the promotion of Eurasian rail Freight rates for container shipping by sea have fallen transport to facilitate competitive services and significantly since 2011, with the price of rail transport transport growth. China’s “One Belt, One Road” now 3 to 4 times higher than ocean shipping (the (OBOR) initiative is a particularly strong driver of the SCFI Shanghai–Europe ranged at around USD 900 development of existing and new Eurasian rail routes. per TEU in the first half of 2017). China’s economic China launched OBOR in 2013 to better integrate growth has cooled down, and overall trade between different parts of Asia, Europe and Russia, citing plans Asia and Europe stagnated in 2015 and 2016. Finally, for a “Silk Road Economic Belt” and a “Maritime Silk there is still room for efficiency and quality gains in Road of the 21st Century”. Currently, OBOR supports areas such as waiting times and processes for border rail cargo projects by financing activities on the crossings and customs, and in reliability and client existing Northern routes (e.g. subsidies for trains and information to increase the attractiveness of rail new destinations) and making investments in railway transport for logistics service providers. infrastructure and terminals along the Southern routes. 4. Shanghai Containerized Freight Index 6 Eurasian Rail Corridors Khabarovsk 4 Amazar Suifenhe Vostochny Helsinki Zabaykalsk Vladivostok Irkutsk Manzhouli 2 Malaszewicze Moscow Yekaterinburg Novosibirsk Ulan-Ude Zamyn-Uud Chop Omsk Naushki Brest Beijing Dobra 3 Erenhot Zahony Iletsk Astana 7 Shanghai Kandagach Dostyk Alashankou Svilengrad 1 Urumqi Poti Aktau Istanbul Khorgos Almaty Kars Baku 5 Tashkent Tabriz Mary Tehran Mazar-e-Sharif 6 Sarakhs Bafq BandarEmam New Delhi BandarAbbas Mirjaveh Mumbai Track gauge 2,000 km 1,520 mm 1,435 mm 1,676 mm Figure 2: Main Eurasian routes with track gauge (schematic – conical projection to minimise visual distortion of distances, numbering based on route usage for Eurasian rail cargo transport) The vast majority of container trains use the Northern In addition to the Europe-Asia routes already in place routes via Russia and Kazakhstan (Figure 2) with in North Asia, new routes via Iran and Turkey are being well-established operations, high reliability and good developed for rail cargo (no. 5 – 7). For Eurasian rail infrastructure. The Kazakh routes (no. 1) with border cargo as referred to in this study, the Southern routes crossing at Khorgos or Alashankou/Dostyk have include the countries of Kazakhstan, Uzbekistan, a length of ~10,000 km and a transit time of ~16 Turkmenistan, Iran, Azerbaijan, Georgia and Turkey days; the Trans-Siberian route (no. 2) via Manzhouli/ before reaching Bulgaria in the EU via Svilengrad/ Zabaykalsk is 11,000 km in length with a transit time Kapikule. The rail routes (including a shipment by of ~17 days. These two routes are the fastest and ferry) have already been established but ongoing offer sufficient capacity, while possible alternatives infrastructure projects have a number of gaps to (such as no. 3) require improvement. close to enable a convenient service. The terminals along the Silk Road in particular show a number of deficiencies and require considerable investments in the future. Making the new routes a success will necessitate significant changes in operations, pricing, tariffs
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