Rail link between Europe and Asia is a big challenge

Jan 18th, 2012 | Category: Articles, Current issue F&L, january 12, Leaders

Interview with  Hans-Georg Werner, Member of the Board of  DB Schenker Rail responsible with the Eastern Region and CEO of DB Schenker Rail Polska

The construction and development of a rail transport system between Europe and Asia have to face a series of challenges to which transport operators have to have a positive attitude to supply an environmentally friendly and efficient transport. For this purpose, companies have to make their strategies target an increase quality, by developing services and infrastructure in a way that would make the business environment competitive and, at the same time, attractive. Programmes on transport modernisation and infrastructure investments, it is mandatory that European transports would keep on developing and investing to preserve their competitive position.

By 2030, the EU plans to shift 30% of the road transport in Europe on distances of over 300 km to railway and inland waterways transport and by 2050 over 50% of road transport, which means not only new opportunities for railway operators, but also new challenges. Under the circumstances, DB Schenker Rail focuses rather on identifying the best solutions to deliver attractive railway services to customers and less on the market share. As for the Polish transport market,  DB Schenker Rail Polska plans to invest, together with the authorities, over EUR 20 Million in terminals, in the construction of new container terminals, especially since the volume of goods from Asia to the Adriatic Sea is increasing.
Mr. Hans-Georg Werner, Member of the Board of  DB Schenker Rail responsible with the Eastern Region and CEO of DB Schenker Rail Polska talks in this interview about the challenges launched by the delivery of an efficient railway transport in the transport market between the two continents.

Railway Pro: One of the topics on the European Union’s agenda is the establishment of the Single Transport Area. What are the challenges and the opportunities that this objective poses to traditional freight carriers?

Hans-Georg Werner: Until 2030 the EU wants no less than 30 per cent of road freight for distances above 300 km to be carried out by rail or inland waterway transport, and over 50 per cent until 2050. At the same time until 2050 the transport sector would like to reduce total carbon dioxide emissions by 60%. These are guidelines which not only create a great opportunity for freight rail carriers but also challenges. First of all, the current safety regulations imposed on rail carriers are disproportionate to the other modes of transport. This leads to the increase of the costs and the decrease of competitiveness on the market. The next challenge is progressive liberalization on the market.
In Europe, in different countries, this process is more or less advanced. Unfortunately, in some countries we are dealing with discriminatory behaviour. For example, in Poland, some key parts of the rail network are managed by the Railway Undertaking, not by a legal entity established for this purpose. It is understandable that granting access to these network elements for other market players, on equal basis, is not in the interest of the carrier. Also the technical aspects are significant. Various railway systems and technical regulations cause additional difficulties at the borders, and this is also produces additional costs. However, despite so many challenges, the direction which has been chosen is right. This is an opportunity to strengthen competitive position of rail freight market in relation to other modes of transport.

Railway Pro: Is reinforcing some of the rail transport activities an obstacle in the development of a liberalised transport sector or is it an opportunity to create new commercial solutions to compete with the other transport modes?

Hans-Georg Werner: The initiatives which are taken strengthen competitive position of railway sector by using new commercial solutions, but they also contribute to providing equal opportunities between the various modes of transport. Currently road transport has the most favorable operating conditions. Freedom of movement when crossing a borders, uniform technical and legal regulations, or as it was until recently in Poland, no fees for access to infrastructure are just some of the examples showing the differences. To achieve the goal of transferring 50% of road freight transport to rail and reduction of carbon dioxide emissions in the transport sector by 60 per cent until 2050, we should primarily eliminate these differences to create the same competitive conditions for all.

Railway Pro: DB Schenker’s expansion to new European as well as non-European countries makes you, on the one hand an incumbent operator and on the other hand a new entrant. How do you see the relationship between the two categories of players on the German as well as on the other transport markets?

Hans-Georg Werner: Currently, this dual perception is our challenge. In past time the rail was a national domain, now rail begins to extend beyond the borders. This is caused by the necessity to follow the customers who run their businesses in more than one country. We are interested in finding the best solutions for our customers, not in market share. Now as DB Schenker Rail we are a European company with the footprint on the German market – we think globally and act locally. Of course, the rail market is still seen through the national prism, but the inevitability of changes which were initiated by the EU in the previous decade changes this perspective. This is a long term process and it can’t be done within two or three years.

Railway Pro: In the past years, Poland has built itself a good image with respect to ensuring the railway routes between the Extreme Orient/Central Asia and Central and Western Europe. To what extent can such a position be consolidated/attacked by building projects such as Rail Baltica, the railway connection of Constanta Seaport, development of rail and port capacities in the north of the Adriatic Sea?

Hans-Georg Werner: Poland as the largest rail market in this part of Europe is an important part of a pan- European network of DB Schenker Rail. As a “gateway to the East” makes it possible to implement cross-border connections in the west-east corridor. All European infrastructure projects linking Poland with the East or ports in the Adriatic Sea are welcome, but insufficient. Currently, Poland has one of the highest access rates to infrastructure in Europe, the average commercial speed of freight trains is about 20 km/h. In addition, as I mentioned in the beginning, every day we are facing discrimination on the tracks. Małaszewicze terminal is a very good example, where the key tracks belong to the carrier and not to a legal entity established for this purpose. Such a situation is incompatible with Polish and European law where rail network has to be managed by the infrastructure manager, not by a carrier.
So in the future to consolidate its image as “the gateway to the East,” firstly Poland should improve its railway infrastructure, not only on major routes, and remove existing access barriers.

Railway Pro: Building rail commercial offers between Europe and Asia has to face a series of challenges (different gauges, difficult climate, countries with different customs procedures, completely different requirements regarding the length and tonnage of trains etc.) What are the solutions identified by the authorities and by rail infrastructure managers to increase the attractiveness of these routes?

Hans-Georg Werner: Yes it is true; rail link between Europe and Asia is a big challenge. To be successful, you have to focus on different areas like fees, customs clearance, legal regulations or quality.
Fees must be competitive with other modes of transport as well as predictable and stable in the long-term. All customs clearance procedures should be simplified and harmonized with the timetable. Transport regulations must be harmonized and simplified, however, this can only be achieved with political support. The improvement of quality is also an important aspect. Therefore the development of modern terminals which will allow offering a wider range of services is very important. The implementation of these elements will create a favourable transport offer, which meets customers’ requirements.

Railway Pro: A constant challenge that rail freight transport has to face is the discriminatory treatment compared to rail passenger transport. What do you think would be the solution for increasing the speed and punctuality of freight transport?

Hans-Georg Werner: In the near future all infrastructure investments which are planned by EU and Member States should improve the situation. New lines, I mean high-speed railways, will take over more and more passenger traffic and previously used tracks will be more accessible for freight traffic, which should improve punctuality. When it comes to speed, this is a problem mainly concerning CIS countries, where the condition of infrastructure prevents from developing optimal speed.

Railway Pro: DB Schenker Rail Polska, in cooperation with the authorities, will invest more than EUR 20 Million in the terminals of the Baltic Sea ports. What is the role of Baltic States in building transport routes between Europe and Asia?

Hans-Georg Werner: DB Schenker Rail Polska, in cooperation with the authorities, will invest more than EUR 20 Million in the terminals of Szczecin and Świnoujście Ports. The investment in DB PS is mainly in the construction of the new container terminal in Szczecin. It is a joint project of DB PS and the Port of Szczecin and Świnoujście Authority, for which we are trying to get financial support from the European Union.
There is a growing number of vessels with capacity of 10,000 TEU and higher coming from Asia into the Baltic Sea. Such vessels can be handled by larger ports in the Baltic Sea area. This will stimulate competition between various transport modes and trigger a discussion on developing connections with hinterland and ways of distributing cargo, especially containers. A decision to choose rail cargo transportation between Europe and Asia will be followed by tough negotiations on prices and quality of service. There are some opportunities in promoting this kind of transport, especially considering transport time, the type of cargo and environmental issues. We have to realize that the Baltic States will grow with their GPD in the future and for sure the trade with China will have an important role.

[ by Pamela Luică ]

Comments are closed.