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2021 on the New Silk Road: integration of infrastructures, technologies and expertise

By the end of 2021 the volume of railway container transportation between Europe and China will make one million standard containers (TEU). Integration solutions on the Eurasian railway segment are becoming a benchmark for other transport corridors. Additional 20% growth is possible.

2021 on the New Silk Road: integration of infrastructures, technologies and expertise

In 2021 the increase in economic activity has led to a parallel increase in demand for logistic services. In particular, there is a trend of rapid growth in railway traffic between Europe and China. By the end of 2021, the volume of railway container transportation between the two largest world economies will approach one million standard containers (TEU).

According to Alexey Grom, CEO of the United Transport and Logistics Company - Eurasian Rail Alliance JSC (UTLC ERA), the largest carrier on the New Silk Road, the growth in the volume of transported goods was largely due to the stable position of railway transport during the crisis period: “One of the main competitive advantages of the railway in comparison with other modes of transport is the ability to remain stable even amid challenging times. During the pandemic, the best competitive qualities of railway transport were manifested especially clear: reliability, regularity, environmental friendliness, delivery speed, price stability”.

Benchmark for transport corridors
In 2021, UTLC ERA, a joint venture of the railways of Russia, Belarus and Kazakhstan, will perform more than 80% of all railway transportation on the broad gauge of the New Silk Road. By mid-November 2021 this figure was 573 thousand TEU transported from Europe to China and vice versa. At the year-end the plan is 675 thousand TEU. At the end of 2020 the result was 547 thousand TEU.

“We’ve been working on the development in this field for a long time and today we have become a benchmark for other corridors that use the technologies we’ve started to use in relation to the length and occupancy of trains, double cargo operations on border infrastructure, which can significantly reduce the time of transportation, or in relation to the development of additional directions for diversification of cargo flows and provision of a sufficient safety margin for the growth of traffic volumes ", stated Alexey Grom.

The total value of all goods transported by UTLC ERA in 2020 exceeded USD 31.5 billion. In 2021, according to preliminary estimates, it will amount to almost $ 45 billion worth of goods or 5 percent of the value of trade between Europe and China. The main goods transported from East to West are electronics, engineering products and spare car parts. Today more and more plastics, wood, textiles, optics, rubber goods, as well as luxury goods, complete this list.

Additional growth of 20% is possible
Although currently the growing rail traffic between Europe and China makes a bit more than 3 percent of total freight traffic on this route, it will increasingly supplement the sea delivery. In general, the turnover of containers between Europe and Asia is estimated at about 24 million TEU.

Today it has become obvious that it is necessary to focus efforts not only on the boost of the train speed but also on widening bottlenecks at border crossings, as well as diversifying freight flows. “I wouldn’t like to undermine the trust of cargo shippers, thus, I would like to emphasize the importance of coordinated work of all traffic participants both on the 1520 mm space and on the adjacent sections of the 1435 mm gauge against the background of a fairly high load of transport capacities today. We must constantly improve the transportation process and increase the competitiveness of the railway route. If today we had all the necessary capacities at the European and the China-Kazakhstan borders, the total volume of the transported containers could be 20% more,” noted Aleksey Grom during a press briefing with the European media.

More railing through Kaliningrad
UTLC ERA has been developing the Kaliningrad direction since 2018, starting with the departure of the first container train in this direction, and today it demonstrates a multiple growth. A significant flow of goods came to the region, which has provoked infrastructural development.

On 1st October, the new transport and logistics centre “East-West” in the town of Chernyakhovsk in the Kaliningrad region was officially opened. The new rail terminal will increase the estimated capacity of Chernyakhovsk station to 450 thousand TEU a year.

Kaliningrad region is located in the center of Europe and has convenient transport connection with a high-level railway, auto-road and sea craft. All the transport services in the region have a great potential for growth due to the possibility of using both the infrastructure of land border points and multimodal communication through ports. The transit corridor through Kaliningrad provides access to many European countries: Northern Europe, Scandinavia, Great Britain, the countries of South-Eastern Europe - Hungary, Czech Republic, Slovakia etc. UTLC ERA has already sent containers to USA via the Kaliningrad corridor using multimodal traffic.

“Kaliningrad region has become competitive for European, South Asian and Chinese clients in terms of prices, technologies and transit time. This year, according to our forecasts, the volume of transportation by UTLC ERA in this direction may exceed 120 thousand TEU,” Alexey Grom explained.

On the 8th of December a Memorandum of Cooperation on the organization of container transportation on the China-Europe-China route was signed between UTLC ERA, Kaliningrad Railway and the seaports of Kaliningrad Region. The agreement provides for the guaranteed acceptance of the declared container trains and timely execution of all cargo operations, on the premise of an additional flow through the region in the amount of at least 190 thousand TEU during 2022.

Infrastructure improvements also affected the terminal capacity at the Chinese-Kazakh border: in early June, a new transshipment cargo terminal, Dostyk TransTerminal (DTT), with a target capacity of 700 thousand TEU, was opened here.

Integration on the Eurasian track
The need to apply new technological solutions in the field of railway transport was consolidated during the meeting of the Eurasian Intergovernmental Council. On 20th of August a declaration of intent concerning support for sustainable Eurasian transit routes and rail transport between the member states of the Eurasian Economic Union (EAEU) was signed. Within the framework of the agreement, UTLC ERA acts as a pilot company for the formation of an ecosystem of digital transport corridors of the EAEU and practical implementation of a unified EAEU procedure for goods transit. Pilot projects with the participation of UTLC ERA are planned in the field of introduction of digital solutions, as well as testing effective IT innovations and technologies.

In particular, this year in November UTLC ERA has implemented a test dispatch of empty fitting platforms using only digital unified waybill. The train passed the route Brest - Dostyk / Altynkol. This pilot project was the first step towards the transition to the end-to-end electronic format of the transit consignment note for the movement of goods both through the territories of the EAEU member countries and, in the long term, along the entire China - Europe - China route.

Speaking about the possible growth points of transportation services on Eurasian direction, UTLC ERA team noted the possibility to use railway for the prompt return of empty containers. The company offers special rates for the return of empty containers, which may be regarded as a kind of investment in the future growth of volumes from East to West. Also, the transportation of food products from European countries can be another growth point. The project for the transportation of sanctioned goods through the territory of the Russian Federation using electronic navigation seals was launched in March 2020.

According to Alexey Grom, the trend towards constant development and creation of new crossing capacities, implementation of digital solutions is observed simultaneously in the European railway space and in the 1520 wide gauge area. “If you get high speed in one section, but at the same time there are difficulties in the section of connected infrastructure, all efforts are wasted. Integration of key players in the rail container market is required more than ever. Integration of infrastructures, technologies, expertise. This is becoming a key success factor for the Eurasian transport system. The good results achieved in recent years and the steady demand for services from cargo owners are a reliable basis for further growth and development of partnerships. A partnership based on mutually beneficial cooperation, professionalism and a common desire to make our industry even more competitive, and our Eurasian continent even more successful. "

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