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Faster speed and lower costs – why has the China-Europe rail line been such a success?

Increased speeds and falling costs could see the China-EU land bridge handle more freight, some 2m teu a year, while IMO 2020 has the opposite effect on sea freight.

Head of Russian Railways Oleg Belozyorov told delegates at the International Railway Congress in Vienna that new projects would boost transit times and create a better service for shippers.

“A few years ago, we could only speculate that around 600,000 containers would travel through Russia. Now, this has been achieved. We have seen an increase of an additional 30% on the previous year. We could reach 2m teu a year or more,” he said.

With trade between China and the EU worth some $5trn, Mr Belozyorov pointed out that the two economies were now connected via the land bridge – but the service could be improved, he believed.

Russian Railways plans to reduce transit time from China to the western border of Russia to seven days, while increasing the speed of the trains so they can cover 1,500km a day, up from 1,150, following the completion of infrastructure projects.

He added that construction of the 1,520mm gauge Košice-Bratislava-Vienna railway line would also add efficiencies.

“This project will bring the work of the railways to a new level,” said Mr Belozyorov. “We will try new technologies to speed up border crossings and unify legal issues. We need to focus our attention to ensure that it takes place as soon as possible.”

But he also called for “a unified regulatory framework”.

“Much has been done as part of the International Union of Railways, but more work is necessary. We need to quickly cross borders. We can cover long distances quickly, but the cargo sits at the border under customs clearance two whole days,” he said.

One way would be to increase training and add new technologies, he argued.

“We are accustomed to traditional railway professions, and we need to create new professions based on the use of new digital technologies. These will be the real railway workers of the future,” he said.

Another key aspect would be digital technologies,

“Tools such as blockchain and smart contracts can allow us to make decisions in a matter of seconds and save billions of dollars.”

Rail is gaining more traction in the market, with its combination of speed and price attracting some shippers. Last year, costs fell, while speed increased, according to a Drewry report.

2018 saw 370,000 teu transported by rail between China and the EU, up 35% on a year earlier. Some 75% of that was routed via Kazakhstan, with gross transit volumes up 59% as the number of trains grew as well as the number of containers per train. The imbalance also improved – there was a 90% increase in eastbound trains compared with a 37% increase in westbound trains.

Drewry also noted that the rates were less volatile than in ocean freight, and that costs had fallen.

Sea freight, meanwhile, is expected to see a significant rise in costs following the implementation of IMO 2020 fuel regulations, while ships are also expected to opt for more slow-steaming. Rail costs, however, will fall while speed increases.