New Silk Road Keeps Rising (China-Europe Rail Freight)

[Soontir C'boath]

Good to see freight by rail across the continents is continuing to grow and with shorter transit times than by sea. It is unfortunate that a simple difference in track gauge presents a huge problem time wise though.

China - Europe rail freight: in it for the long-haul

ONE of the defining rail freight trends of recent years has been the spectacular rise in the volume of intermodal traffic between China and Europe. In November, China Railway Corporation (CRC) reported that more than 3000 container trains had run between the two continents since the start of 2017, exceeding the total for the previous six years combined, with services connecting 35 cities in China with 34 destinations in Europe. In Russia, TransContainer reported a 19% increase in the number of containers crossing the country by rail in the first 11 months of the year.
For Far East Land Bridge (Felb), the growth of the market last year exceeded all expectations. “2017 has been a crazy year,” CEO Mr Wilhelm Patzner told IRJ at the company’s offices in Vienna in November. “We doubled our volume compared with 2016, and we’re up to about 70,000 TEU, which was incredible. We certainly didn’t expect to see that dynamic.”

Felb aims to compete directly with both sea and air freight, offering door-to-door rail-based services, including the provision of containers, in both directions between South Korea, China and Europe. The company operated its first pilot service in 2007 and has since acquired more than 7000 containers while increasing the frequency of its services from one to six trains per week. Two Block Train Centres (BTCs) have been established in Asia and Europe to consolidate consignments from multiple points of origin into long trains for the journey across Russia.

Transit times fell from 25-28 days in 2009, when Felb launched its first regular services, to less than 17 days in 2016. The continuous reduction in transit times was broken last year when engineering works on the Polish side of the Malaszewicze (Poland) - Brest (Belarus) border crossing generated operational challenges for Asia - Europe rail freight operators at a time when they were grappling with a sharp upturn in traffic.

“For us transit time is the key selling point,” Patzner says. “We promise our clients door-to-door transit times of 14-17 days, and the average in 2017 was 21 days. These problems arose from three major issues - the construction works in Poland, the enormous growth in the market for all participants, and also because of our operational concept. Our strength is that we have a big network in Europe and a big network in China, consolidate our volumes on the borders, and run long, heavy trains across Russia for a good transit time. It was always our advantage to be able to cover the whole of China and Europe with our solutions.”

Felb adapted its operating concept with only one consignee per train to reduce shunting and minimise the disruption to its customers while the works were being carried out. “Fortunately we are back to normal transit times now, but a lot of customers are very dissatisfied with the performance - and I understand why,” Patzner says.

Around 90% of the containers handled by Felb travel via the Trans-Siberian Railway, with the remainder transiting through Kazakhstan, but last year the company ran its first train via Mongolia, and Patzner can see the potential for development on this route. “By going this way you can reach new regions of China and it takes the pressure off the Manzhouli [China] - Zabaykalsk [Russia] border crossing, where there are issues with congestion,” he says.

Patzner is extremely satisfied with the reduction in transit times that have been achieved in recent years, particularly in Russia. Of the 11,000km haul, 9000km is in Russian territory and trains often cover more than 1000km a day on this section of the route. In Europe however the situation is more challenging, particularly around infrastructure performance. “The Russians are very efficient and they are working on being more efficient,” he says. “I believe they could reduce transit time even more - perhaps by a day or so - but Europe is the biggest challenge. Despite the recent upgrade there won’t be any more big capacity jumps at Malaszewicze - Brest, so the challenge is to find new border crossings. I would be happy if we get back to the transit time we had in 2016, so we can offer reliable door-to-door solutions between 14 and 17 days. If we get back to that standard we don’t need a further reduction in transit time - we need solid performance, quality, predictability. That’s more important than whether it takes 14 days or 13 days.”

With the break-of-gauge at both the European and Asian ends of the Russian leg of the journey, efficient transhipment of containers between 1435mm-gauge and 1520mm-gauge wagons is crucial to maintain fluid operations. However, with traffic growing rapidly, these terminals are becoming bottlenecks. “If there’s an obstacle to further growth it’s transloading and the congestion it creates at borders,” Patzner explains. “If we want to see growth in the future we need either new border crossings or more capacity the existing crossing points. But investing in capacity isn’t something you can achieve in a matter of weeks. The Russians and the Chinese have recognised that this is a problem, the Europeans less so. The good thing in Europe is that you have more options for border crossings.”

Imbalance

Another issue for all actors in the Asia - Europe rail freight market is the huge disparity between eastbound and westbound volumes. This has resulted in an equipment imbalance which is growing more acute as the volume of westbound traffic continues to rise steadily. “The challenge for the whole market is that we have two-thirds westbound, one-third eastbound,” Patzner says. “The key for further growth is finding European goods that you can put on the train to help equalise westbound and eastbound traffic. Empty containers have also become scarce in Asia - two years ago we paid around $US 300-400 for a container one-way to Europe. Now the market rate is $US 1200.”

The price for an eastbound container is currently only around half the westbound rate. “It’s a pricing issue on one hand, but it’s also a question of new technology,” Patzner explains. “We’re working on refrigerated solutions, and there are some products from Europe which are in demand in China, but you need reefer supply. There is potential in markets such as foodstuffs, but there is the question of who will invest in the containers.”

Patzner also sees air freight as a potential target for growing rail’s business between Europe and Asia. “If our transit time comes down to 12 days we start to be attractive to air freight customers because with customs, loading and unloading, we are not so far from air freight transit times,” he says. “Our price is 25% of air freight so if the transit time disadvantage decreases, there’s potential for rail to break into the air freight segment for eastbound traffic.”

The rapid growth in the market during 2017 was driven to a certain extent by Chinese provincial governments offering subsidies for the movement of containers by rail to Europe. The price of these incentives ranges from $US 1000 to $US 5000 per 40 foot container. Patzner believes that significant reductions in these subsidies will come in 2018, or at the latest in 2019. “Chinese subsidies have pushed the market, but it’s only a temporary push,” he says. “We don’t believe that this policy of subsidising containers to Europe will go on for more than 3-5 years. We think subsidy policy will be centralised and prices will be reduced. At the end of the day that’s good for us because most of our products are not based on subsidies, while many of our competitors’ products are.”

Looking beyond China, Patzner sees opportunities for growth through the expansion of the Felb network to other countries. “We see a lot of demand from Vietnam to Europe, where transit time could matter,” he says. “South Korea is already a big market for us because of the electronics industry, and India is also a potential new market for us. We see potential for importing goods from these countries to the Moscow region. Sooner or later, I see potential for Chinese investments in Africa, perhaps via Italian ports to northern Africa.”

After the surge in volumes in 2017, Patzner predicts a less frantic year ahead, although the story remains one of growth and Felb is still aiming to move 100,000 TEU in 2020. Rumours in the Russian press at the end of 2017 indicate that the government may be about to sanction the sale of part or all of RZD’s controlling stake in TransContainer, with Mediterranean Shipping Company (MSC) and UCL Holding, Russia, reportedly expressing an interest. TransContainer accounts for around half of container movements in Russia, and any change in ownership in such a dominant player is likely to have repercussions for the Asia - Europe rail freight market.

“I don’t expect growth to continue like it has,” Patzner concludes. “As a company ruled by economy, if we can keep profitability and price at the current level, I’m more than happy because competition is increasing and that’s putting pressure on prices. But a lot depends on Chinese policy - if they want to push Asia - Europe freight, the prospects are going to be good.”

[K. A. Pital]

No worries!

There are solutions for quick gauge adjustment for passenger rail (already implemented on the Moscow-Berlin fast train route)
https://en.wikipedia.org/wiki/Strizh_(train)

Similar solutions are being worked on by a joint team of Chinese and Russian trainbuilders
http://www.gudok.ru/news/mechengineering/?ID=1365471

We and our Chinese colleagues have started creating a freight train. A new technology, new possibilities. Speed up to 300 kilometers per hour. It should absolutely be a train with variable track gauge, so that we could disregard the gauge transition without overhauling cargo. Technically it is possible.

How do I know it's an ongoing effort with actual innovation and not just PR? Well, there were some patent studies on variable train gauge for freight trains in Russia, back in 2008, but also in 2014, 2015. On these though I can't provide links or info, however, you'll have to trust me or not.

[Soontir C'boath]

Interesting, variable gauge trucks can reduce or increase in width by going through tracks that can unlock the wheels from their original position.

Americans will certainly feel left behind with freight trains running at 300km/hour. Freight railroads here for the most part run at 80km/hour or slower with a few areas at 96km/hour, but that's what happens when they build tracks that meander with curves all over the place to extract as much money as they could from the government.

[Sea Skimmer]

Yeah Variable gauge trains have been built for realz for a long time, experiments are probably as old as locomotive using railroads are. Problem is it always weighs more while being less durable, and durability of the undercarriage of a train is kind of a big deal if your making a 10,000km trip one way!
https://en.wikipedia.org/wiki/Variable_gauge

Tracks are much more likely to meander to keep grades low without building huge embankments then any other reason. Steep grades are the utter doom of freight traffic and a railroad is far better off being slow then steep in that situation. Certainly the US did have a lot of super corrupt railroad building, but the US freight system is the most efficient in the world right now now that it's been allowed to shed all it's useless routes.

As for 300km/hr freight, the only way that is going to happen to with lightweight cargoes and track that costs what 300km/hr track costs ( a frigging lot). Certainly not impossible, in fact I see no reason why it would require new technology. I have a 1980s study based around use of the French TGV adapted to transport six M1 tanks apiece in fact, but I highly doubt the economics will work out for any form of cargo over Asian span of distance, and it would certainly be no competition with conventional freight traffic. It's competition with air traffic and maybe some road routes.

You can't make rails and wheels that don't grind each other off, because you can't make steel hard enough not to deflect under the loads involved. That means if you want really high speed you have to keep the axle load down because the impact forces rise so quickly with speed. Oh and don't forget braking issues. The French TGV for example is limited to 17 tonne axle loads, while the typical European freight standard is 25 tonnes, with a few routes at 30 tonnes. The US standard is about 32.5 tonnes, though some slightly heavier routes exist. You can make trains longer.... but that does not change the reduction in payload vs gross weight ratio. It also doesn't help if the trains are already as long as the sidings and train yards can fit.

So you might be able to find cargoes where this isn't a problem I'm sure, but for day to day traffic a high speed freight line would be vastly less efficient then a slow one. In fact many freight lines in the world are intentionally run below speed to reduce maintenance costs. Iron ore hauling railroads for example do this all the time.

Remember 1kg at 100kph has 386 joules of KE. At 300kph that's 3473 joules. The rails and wheels are dealing with nearly ten times the force! This is a super non trivial problem for a real railroad that has things like bridges and mudholes to deal with long term that make it so the rails are not entirely rigidly supported.

Do remember back in 2007 all the rage was about how we needed to make container ships faster...

[K. A. Pital]

Sea Skimmer, it is meant to compete with air traffic and deliver time-sensitive goods, of course. I don’t think it is meant to be for hauling regular goods.

[JI_Joe84]

Good luck with this Europe, in checked economic relations with China is a disasterous thing for your economies.
They will rip off your ideas and slap some thing together as quick and cheap as possible and then flood every market they can with out batting an eye.
They did it to us and they will do it to you in a heart beat.

[Soontir C'boath]

Ok... Blatant patent infringement is a separate issue to putting together land based trade routes that participating countries can charge fees and benefit greatly especially if they are landlocked. Just from reading the few articles I've come across has various countries along the way from Turkey, Iran, Azerbaijan, Kazakhstan, Russia, etc investing large sums of money into building their railroad infrastructure to accommodate easier trade and passenger service through their country and within their own cities and towns.

[K. A. Pital]

Patent infringement and theft is the only way for nations to rise up.

Japan stole US semiconductor technology on a grand scale.

China should do the same if they wish to become developed and not just a gigantic factory for rich assholes to use as they please.

[Simon_Jester]

Sea Skimmer, it is meant to compete with air traffic and deliver time-sensitive goods, of course. I don’t think it is meant to be for hauling regular goods.

That's going to be a hard competition to win... Rail and air do very different things in the modern world, and it's hard for high-speed rail to outcompete aviation in the "get stuff there fast" role on just about everything except ferrying passengers from one fixed location to another, city-to-city.

[mr friendly guy]

Good luck with this Europe, in checked economic relations with China is a disasterous thing for your economies.
They will rip off your ideas and slap some thing together as quick and cheap as possible and then flood every market they can with out batting an eye.
They did it to us and they will do it to you in a heart beat.

Got news for you buddy. The EU as a whole replaced the US as China's largest trading partner a while ago. This is irregardless of the Chinese plan to use rail for more trade. Economic relations with China is occurring even without these souped up rail connections, and last time I checked the disastrous thing for the EU economies was due to the Euro crisis, not trade with China.

Frankly this Chinese just flood the market with cheap goods is just an outdated racial stereotype.

That's going to be a hard competition to win... Rail and air do very different things in the modern world, and it's hard for high-speed rail to outcompete aviation in the "get stuff there fast" role on just about everything except ferrying passengers from one fixed location to another, city-to-city.

Arguably its supposed to be for those who want it faster than sea, but don't want to pay the cost of air (and they don't need it as fast as air). The question is, will there be high enough demand for this form of transport that it doesn't just remain a niche thing.

Patent infringement and theft is the only way for nations to rise up.

Japan stole US semiconductor technology on a grand scale.

China should do the same if they wish to become developed and not just a gigantic factory for rich assholes to use as they please.

You'll love these articles.

https://www.pri.org/stories/2014-02-18/ ... as-history

"The US complains that others steal its technology, but America was once a tech pirate itself."

http://foreignpolicy.com/2012/12/06/we- ... rates-too/

"We were pirates, too."

Basically the history of getting ahead or in the same position when you start off late in the tech criteria is to copy from those who are ahead. In the case of the US, it was from the British empire. Although these days its easier just to buy it via deals. Its not stealing if you purchased it.

What's real funny. The much hyped American Lily drone which got coverage from Forbes, well it turns out its videos (which allegedly was filmed by the drone) was filmed using/ a DJI drone. While not quite patent violation, it does reek of the same copying claims China gets labelled with.

[Zaune]

That's going to be a hard competition to win... Rail and air do very different things in the modern world, and it's hard for high-speed rail to outcompete aviation in the "get stuff there fast" role on just about everything except ferrying passengers from one fixed location to another, city-to-city.

Not as much as you'd think. The other major commodity that travels from one fixed location to another, city-to-city is mail, which tends to be bulky but not particularly heavy; a lot of parcels traffic in this country is moved by a modified commuter train design. There's no particular reason one couldn't modify a TGV or similar high-speed train the same way. And even if the Chinese don't stump up the money for the necessary infrastructure for that kind of line speed, a shipping option that's a few days slower than airfreight but significantly cheaper and still much faster than sending it by sea would be very attractive to a lot of importers and exporters even if it was subject to a quite restrictive weight and size limit.

EDIT: In fact, I just found out that not only can you modify a TGV to carry mail traffic, the SNCF actually did. They were retired after the French postal service switched to "swap body" containers.

[Simon_Jester]

Okay, to be fair, mail is the other thing that traditionally gets carried around via fast trains, and has been since the early 1800s.

That said, I think Skimmer has a point, there may very well not be enough demand to support freight trains running at, say, 120 km/h over continental distances, insofar as it has to compete either with much cheaper trainsets running the same distance at 60 km/h or airplanes flying the distance at 800 km/h

[Elheru Aran]

Okay, to be fair, mail is the other thing that traditionally gets carried around via fast trains, and has been since the early 1800s.

That said, I think Skimmer has a point, there may very well not be enough demand to support freight trains running at, say, 120 km/h over continental distances, insofar as it has to compete either with much cheaper trainsets running the same distance at 60 km/h or airplanes flying the distance at 800 km/h

Aren't heavy cargos like minerals, chemicals, etc. well suited to train transport as well? Granted you could move them by truck as well, but given the massive distances involved between Asia and Europe and the geographical barriers, perhaps bulk freight like this would also benefit from a rail connection between the two?

(bearing in mind that my knowledge of trains is fairly limited)

[Simon_Jester]

Well yes, but the point is that this mostly is stuff that runs on slow freight trains, far more efficiently than by truck. Or it runs by ship, which is slowest of all (longer routes AND ships are slower than locomotives as a rule)... but by far the most efficient per ton-mile.

Moving cargo from A to B faster usually only matters very much if there are special incentives to get it there in a hurry. And compromises on the continuum of "get there as fast as reasonably possible, but it'll cost you" and "get there eventually, cheaply" tend to have trouble competing with either extreme of the scale, depending on the nature of the thing being moved around.

[Elheru Aran]

Well yes, but the point is that this mostly is stuff that runs on slow freight trains, far more efficiently than by truck. Or it runs by ship, which is slowest of all (longer routes AND ships are slower than locomotives as a rule)... but by far the most efficient per ton-mile.

Moving cargo from A to B faster usually only matters very much if there are special incentives to get it there in a hurry. And compromises on the continuum of "get there as fast as reasonably possible, but it'll cost you" and "get there eventually, cheaply" tend to have trouble competing with either extreme of the scale, depending on the nature of the thing being moved around.

Yeah, that's fair enough. I think I missed the distinction that the article is about establishing fast train routes between Europe and Asia, not just train routes in general, which I should have figured existed anyway.

[JI_Joe84]

Good luck with this Europe, in checked economic relations with China is a disasterous thing for your economies.
They will rip off your ideas and slap some thing together as quick and cheap as possible and then flood every market they can with out batting an eye.
They did it to us and they will do it to you in a heart beat.

Got news for you buddy. The EU as a whole replaced the US as China's largest trading partner a while ago. This is irregardless of the Chinese plan to use rail for more trade. Economic relations with China is occurring even without these souped up rail connections, and last time I checked the disastrous thing for the EU economies was due to the Euro crisis, not trade with China.

Frankly this Chinese just flood the market with cheap goods is just an outdated racial stereotype.

And yet they still do it. Just because I'm complaining about this does not mean that I'm some kind of Trumper that just likes to gripe about the minorities.
If you go to wish or geek com you can buy several as cards of any capacity you want for just a dollar or two and then a dollar for shipping. You can do it with other stuff to and it all comes from "China CO."
If some body is taking advantage of you then you have to stick up for your self or you're going to get raped.
China can grow with out ripping off every ones intellectual property and then flood the market with their ideas for practically no $$.
Why do they do this? If the goal was to simply aquire tech to get on par with the world then why do the second part?

[JI_Joe84]

God phones suck at quotations.......

[Simon_Jester]

Well yes, but the point is that this mostly is stuff that runs on slow freight trains, far more efficiently than by truck. Or it runs by ship, which is slowest of all (longer routes AND ships are slower than locomotives as a rule)... but by far the most efficient per ton-mile.

Moving cargo from A to B faster usually only matters very much if there are special incentives to get it there in a hurry. And compromises on the continuum of "get there as fast as reasonably possible, but it'll cost you" and "get there eventually, cheaply" tend to have trouble competing with either extreme of the scale, depending on the nature of the thing being moved around.

Yeah, that's fair enough. I think I missed the distinction that the article is about establishing fast train routes between Europe and Asia, not just train routes in general, which I should have figured existed anyway.

Surprisingly few of them until the last few decades. For a long time the Trans-Siberian Railway was the only one, and that's way the hell up north. China didn't have enough industry to be worth building rail connections into until the last thirty or forty years, and it wasn't until the fall of the Soviet Union that there was a point in opening up direct land transportation corridors across Central Asia to tie European markets to Chinese manufacturers.

[mr friendly guy]

And yet they still do it. Just because I'm complaining about this does not mean that I'm some kind of Trumper that just likes to gripe about the minorities.
If you go to wish or geek com you can buy several as cards of any capacity you want for just a dollar or two and then a dollar for shipping. You can do it with other stuff to and it all comes from "China CO."
If some body is taking advantage of you then you have to stick up for your self or you're going to get raped.
China can grow with out ripping off every ones intellectual property and then flood the market with their ideas for practically no $$.
Why do they do this? If the goal was to simply aquire tech to get on par with the world then why do the second part?

1. Irregardless of whether China is flooding the market with cheap products, (they actually sell both high end, and low end products), the fact is their trade with Europe is already big. You seem to think that its currently not and will only happen when they ramp up their rail project. You remember the part where you warned Europe about trade with China right? Your "warning" is at least 12 years too late since 2005 was the year the EU became China's largest trading partner.
http://www.china-embassy.org/eng/xw/t272113.htm

2. Given that China also is competitive on expensive goods, this they only flood the market with cheap goods is a stereotype, like I said. Would you like me to list Chinese companies which deal with expensive goods? You know, like Lenovo, Huawei, DJI, BYD etc.

3. You grossly exaggerate what China does. Do you expect anyone but a Trumpeter to take you seriously when you say they sell their items for practically nothing. How the hell do their continue to grow their economy at decent rates when they sell things for practically nothing?

4. You know who else said China was raping them. Donald Trump. I find it hilarious you say you're not a Trumper and use the same rhetoric to discuss a questionable claim. You mean the US doesn't also benefit from trade with China? How about low inflation for one. How about China buys more General motor cars than the US does for the past 6 years. You know, how US car companies are struggling and would be in a tougher spot if China wasn't a market.

Its almost like you selectively point out the costs of trade, ignore the benefits, and then use the former to accuse people of trying to take advantage of you.

[Soontir C'boath]

Well yes, but the point is that this mostly is stuff that runs on slow freight trains, far more efficiently than by truck. Or it runs by ship, which is slowest of all (longer routes AND ships are slower than locomotives as a rule)... but by far the most efficient per ton-mile.

Moving cargo from A to B faster usually only matters very much if there are special incentives to get it there in a hurry. And compromises on the continuum of "get there as fast as reasonably possible, but it'll cost you" and "get there eventually, cheaply" tend to have trouble competing with either extreme of the scale, depending on the nature of the thing being moved around.

Yeah, that's fair enough. I think I missed the distinction that the article is about establishing fast train routes between Europe and Asia, not just train routes in general, which I should have figured existed anyway.

Surprisingly few of them until the last few decades. For a long time the Trans-Siberian Railway was the only one, and that's way the hell up north. China didn't have enough industry to be worth building rail connections into until the last thirty or forty years, and it wasn't until the fall of the Soviet Union that there was a point in opening up direct land transportation corridors across Central Asia to tie European markets to Chinese manufacturers.

One of China's main interest is to build further away from sea ports and invigorating their more western and inland provinces by having factories built there instead that rail can be used to access markets. Whatever can be said of China, re: JI_Joe84, they do seem to trend in a direction to uplift their entire country and not just the major cities in the east.