About the increase in the volume of cargo within China-EU railway track in the services of UTLC ERA
546,9 THOUSAND TEU LANDMARK ON THE CHINA-EU TRACK HAS BEEN ACHIEVED
The volume of container traffic along the China-Europe-China route at the transit services of Joint Stock Company "United Transport and Logistics Company - Eurasian Railway Alliance" (UTLC ERA, a joint venture of the railways of Belarus, Kazakhstan and Russia) amounted to 546.9 thousand TEU, which is 64% higher than in 2019, when 333 thousand TEU were transported.
The company confidently maintains its leading position in the Eurasian rail transit market and continues to set new records both in terms of volume and quality indicators.
In particular, 198.8 thousand TEU were transported in the direction of China, an increase of 45%. 348.1 thousand TEU were transported towards Europe, an increase of 77%.
A total of 5,649 container trains passed through UTLC ERA services in 2020.
About the increase in the volume of cargo within China-EU railway track in the services of UTLC ERA
An extraordinary year was how Alexey Grom, CEO of Moscow-based United Transport and Logistics Company – Eurasian Rail Alliance Joint-Stock Company (UTLC ERA) described 2020.
There is no doubt that the coronavirus pandemic has had a strong impact on transportation in general, and on rail transportation in particular. There is a significant redistribution of freight flows between modes of transport. This process can be defined as "modal shift", which is characterized by the increase in a workload of a turnover capacity to maximum values.
“Of course, when you have such a significant increase in orders, it takes more time to develop and integrate new technologies. Thanks to our partners, we managed to achieve this in the shortest possible time. We are also focusing on European shippers to encourage them to use our corridor to transport goods from Europe to China. By developing a flexible tariff policy, we motivate our clients to increase orders. Balancing cargo by destination is an important factor that allows us to maintain cost competitiveness when transporting from China to Europe. The new possibilities of the 1520 gauge allowed to convince many Eurasian suppliers to switch to the railway,”- said Alexey Grom.
About the measures to optimize and increase traffic volumes
“It is necessary to maintain a high speed of transportation and reduce transit time in order to ensure high quality services. The train is able to travel 1200 km per day and it only loses speed at border crossings. Our main technological efforts are focused on reducing this time. Fortunately, we have established a good understanding with partners, for example, with colleagues from Poland. An excellent job has been done over the 5 joint years: new technologies have been integrated, which have made it possible to transport over 50,000 containers per month,” - highlighted Alexey Grom. In 2020, UTLC ERA agreed on the double freight operations technology at border terminals, which significantly contributed to increase in the traffic capacity at the border by 30% without investments in infrastructure. We are also currently negotiating with the Chinese Railway and the Kazakhstan Railway to integrate similar technologies on the eastern border of the EAEU”.
The tariff policy
UTLC ERA is also focused on keeping costs under control and has no plans to raise rates in the short term (Q1 2021). Commenting on the tariff policy, Alexey Grom emphasized: “We do not plan to increase the cost of our tariffs, at least for the next quarter. The current stable level of tariffs is a competitive advantage of the railway for our customers. Our rail services are highly competitive and in some cases our prices are even cheaper than those by sea. And we deliver cargo three times quicker.”
About the main challenges to the development of railway networks in the Eurasian space
“It is impossible to achieve large volumes of supplies without infrastructure development. The process should be implemented throughout the Eurasian space. For example, let's take the length of the train. When we carry out the transit of cars from the Chinese gauge to the 1520 gauge, there will be formed one unified train instead of two. Later this train will be once again split into at the border with Poland. If we do not separate these trains, we can achieve a 50% increase in productivity. I understand that the length of the train in Poland cannot be the same as in Russia or Kazakhstan, but some changes here will improve the results, as well as reduce the cost of transportation. "
About the most popular nomenclatures
“Anyone who wants to quickly transport goods along the China-EU-China track can use the services of UTLC ERA. In the beginning, a large share of our transportation was made up of electronic equipment and computers. Now we transport completely distinct goods, including ones that are different in the price category: for example very cheap ones such as pulp, textiles or food products. We do not focus on specific items."
The largest growth was noted for the following items in the China-Europe direction: plastics and plastic goods amount to 13 649 TEU (+ 145.66%), finished textiles - to 5 728 TEU (+ 186.11%), optics, devices, medical equipment - to 5 650 TEU (+ 65.06%), rubber and industrial rubber goods - to 955 TEU (+ 146.77%), perfumery, cosmetic and toilet products - to 502 TEU (+ 90.15%).
In turn, shipments of wood and woodworking products to China increased and amount to 3,734 TEU (+ 142.15%), as well as shipments of fruits and vegetables - to 138 TEU (+ 176.00%).
About the benefits of a joint business
According to Alexey Grom, the development of a joint business is important especially “when there is a multinational project that covers, for example, 9 countries. If one of the chains falls out or works poorly, it will damage all participants. That is why it is important to combine efforts and create a competitive product. UTLC ERA is a good example of combining goals, objectives and marketing programs to achieve good results. It is important to formulate a rule for such interaction. Sometimes it carries its own limitations, but the benefits give more prospect for development".
About the environmental aspect of railway transportation and activities of UTLC ERA
The railway industry makes a significant contribution in this direction, because it is one of the most environmentally friendly transportation modes. UTLC ERA is also focused on achieving climate targets. “In accordance with our index ERAI, most of our clients rate our service and its cost positively. The next important advantages of our services are safety and, of course, environmental friendliness,” - said Alexey Grom.
Moreover, UTLC ERA actively supports WWF projects: within the framework of “KEEN ON GREEN” ecological initiative, UTLC ERA helps in restoration of the tugai deer population in
Kazakhstan. It is planned to relocate 20 animals to the new area to create a broodstock. UTLC ERA became the first company to support WWF projects in Kazakhstan.
About ERAI Index
“We have been using this index since 2018. We aimed to create a competitive business model for our clients, similar to the one that sea carriers have,” added Alexey Grom. The ERAI index allows customers to familiarize themselves with UTLC ERA tariffs and understand how they are formed. “If you are a computer equipment manufacturer from China, now you have an alternative - either export technology through the port of Shanghai, or use our terminal on the border with Kazakhstan. Shanghai manufacturers are very familiar with the WCI and now, if they decide to use rail, they can compare this index with our ERAI, which reflects the cost of rail transport from China to the EU. "
About 2021 becoming the year of railways in the EU
“It seems to me that a year is not enough. I would suggest 5 years. For such an industry, it takes a longer period to implement development programs. We support this initiative of our European colleagues. Next year will be the year of climate for Russian Railways. All this topics are connected: the railroad, the climate, the increase in capacity, partnership and cooperation. Railway infrastructure is a treasure for Eurasia. In Russia, they say that the standard of living rises when the railway develops. I think this also is applicable to Europe and China, ”commented Alexey Grom on the initiative.
About new corridors development plans
“We are working on several new corridors, passing through new EU border crossings. The first one throughGoryn’ border has been tested at the end of 2020 year. The second one will pass along the Kaliningrad direction and is scheduled for testing for the first quarter of 2021. We do not have specific requests for these corridors, but we want to have additional capacity reserves in case of an increase in supply volumes. Soon these projects will be announced,” - said Alexey Grom during a press conference.
About forecasts for 2021
“We are optimistic for upcoming 2021 year. In 2020, we transported 60% more than previously predicted. We are focusing on developing new capabilities in our infrastructure to meet the growing customer demand for transport from China to Europe,” - said Grom. UTLC ERA estimates that next year the supply volumes will increase by 10-15%. “Now the issue of subsidizing the development of new transit corridors for shippers from Southeast Asia and Europe is being considered at the state level in Russia. In this case, we are talking not so much about the UTLC ERA corridors, but about the direction as a whole. Over the past years, we have significantly expanded the capabilities of our service: we have added extended XL-trains, started digitalizing our services, integrated a system for reloading cars from track to track - all this activities are in demand, and we will continue to implement this and introduce technologies that are attractive to our customers.