INTERNATIONAL: Transit traffic to and from China and Europe by rail is growing faster than predicted, with Alexey Grom, CEO of the largest operator UTLC ERA, reporting that the company is ‘two years ahead of our forecasts’ and expecting to see a further 20% growth in the rest of this year alone.
Grom said the reasons for the growth were complex: sea transport suffered various setbacks in the first half of this year, including the blockage of the Suez Canal, and a fourfold increase in costs while rail prices remained stable. Rail operators are also developing new services, digitalising their operations and adapting infrastructure to handle anticipated growth.
‘The last year and a half has not only led to an unforeseeable boom in Eurasian rail shipments’, said Grom. ‘This mode of transport has become a real alternative to ship and road for many companies trading between Europe and China. This is certainly due in part to its improved speed and reliability, but also to the stable tariffs, which we are not planning to increase at present.’
Growing business
The UTLC ERA joint venture of the national railways of Belarus, Kazakhstan and Russia is responsible for 90% of all transit freight on the 1 520 mm gauge ‘new silk road’ routes between China and Europe.
In 2016 UTLC ERA moved 100 983 TEU of transit traffic, but in 2020 it carried 547 000 TEU, up 64% year-on-year. The goods transported last year had a total value of US$31·5bn, or 5·5% of trade between Europe and China by value.
China has traditionally been the driving force of transit freight and in the first six months of 2021 a total of 200 200 TEU was sent to Europe, up 42% on the previous year. At the same time, eastbound transport of loaded containers to China grew by 80% to 116 500 TEU.
UTLC ERA added 64 new routes in 2020, 40 westbound and 24 eastbound, and 23 freight yards joined its network, including 18 in Europe. The most important Chinese locations are Xi’an (36%), Chengdu (22%) and Chongqing (20%), while the provinces of Changzhou, Hefei, Yiwu and Wuhan are showing ‘positive momentum’.
Westbound traffic includes electrical goods (85 135 TEU in 2020), engineering products (80 556) and car parts (57 796) which together accounted for 40% of traffic last year. This is down from 80% three years ago as a result of the growth in the transport of lower value products including plastic parts (28 838 TEU), wood (14 859), textiles (12 825), optical goods (10 704) and rubber and rubber products (7 509).
Increasing throughput
It now takes UTLC ERA around 5½ days to transport goods 5 430 km from the Chinese border to the EU border, and Grom said the company is constantly looking to increase throughput and capacity and to work with partners to implement new technologies.
Recent developments include the opening in early June of a transhipment terminal at the break of gauge at Dostyk on the Kazakhstan-China border. This was developed by Dostyk TransTerminal and is managed by PTC Cargo, with phased expansion planned to a target capacity of 700 000 TEU.
‘It’s fantastic that the terminals at the borders are being expanded’, said Grom, adding that it is ‘not just the terminals along the Chinese border. We are also seeing rapid development in Belarus and Kaliningrad.’
Technology is being used to increase throughput at the busy Brest – Małaszewicze crossing between Belarus and Poland, while routes using rail to Kaliningrad oblast and rail or Baltic Sea shipping connections to the EU and UK are providing additional cross-border capacity. Traffic through the Russian exclave was up by 320% in 2020, and UTLC ETA believes it could handle four times the current volume.
