Does ground-breaking China-Czech Republic train signal new era in railway transport?

Illustrative photo: Robert Linder, stock.XCHNG

A pilot cargo train recently set a new record for covering the vast distance between China and the Czech Republic. The train, carrying 50 containers with computer parts arrived in the Czech city of Pardubice just 16 days after it set out from central China. Will more such trains follow in the near future? And does it mean that trans-Asian railway transport is now competitive with deep see routes?

Illustrative photo: Robert Linder, stock.XCHNG
The train covered the distance of 11,000 kilometres between the Chinese city of Wuhan and Pardubice in the Czech Republic in 16 days, travelling nearly 700 kilometres each day of the journey. Crossing Kazakhstan, Russia, Belarus and Poland on its way, the train carried fifty containers of computer parts to the Czech factory of the multinational electronics maker Foxconn. From the Chinese border onwards, the cargo train was operated by the Swiss company Interrail. Pavel Lagov is the director of strategy and business development for the firm’s Russian branch.

“I wouldn’t say it was the very first experience for our company because some months ago, we moved some containers between Shanghai and Switzerland just to prove to our customers that technologically, the route is operational and we can do the job. But when it comes to block trains, it was a first for us. In fact, we were the first as far as I know to reach the Czech Republic within 16 calendar days.”

The ground-breaking cargo train set off from the capital of the central Chinese province of Hubei on October 24. Six days later it reached the Chinese-Kazakh border where the cargo had to be reloaded onto a train of a different gauge. The journey across Kazakhstan took four days, and it took the train another five to cover the territories of Russia and Belarus. On day 15, the train reached the Polish border where it was reloaded again. It reached its final destination a day later, in the record time of 16 days. Pavel Lagov from Interrail says the pilot project provided the firm with an opportunity to test the feasibility of the route, and test a new system of clearing the customs.

“We have offices at the borders which are responsible for the processing of the documents. As soon as the train was dispatched from Wuhan, we knew we would have approximately five days to get the paperwork done. We sent all the railway bills, invoices and packing lists for the entire train to the border.

Photo: European Commission
“Our people went through them with the customs officials, corrected the few discrepancies and when the train arrived, all the documents were almost ready, they were stamped, and the train did not wait for a single minute longer.”

Although shorter travelling time is the railway’s biggest advantage compared to sea routes, the method of transport is still too expensive for most companies.

“If cargos are transported by ship from China to Europe, the transit time would be approximately 42 or 45 days and the price per one 40-ft container would be over between 5,000 and 5,500 US dollars. Moving cargo by train, the transit time significantly decreases. Depending on the destination in Europe, it might be between 16 and 25 days. But the speed comes with a price unfortunately. The approximate price would be between 8,600 and 8,900 US dollars per container.”

That’s a price the customer – in this case, Foxconn – was willing to pay. But regular railway transport of cargos from China to Europe would not be feasible without subsidies from the Chinese government, says Lagov.

“Railway routes are still non-competitive in comparison with deep sea shipments. Therefore, the Chinese government, knowing that very well, subsidizes these railways deliveries because it understands very well that without subsidies, the prices would be much higher.”

The Swiss-based InterRail is optimistic about the future of trans-continental railway transport. But what do other European train operators think of it? I asked Petr Lochman, who is executive director of the Community of European Railway and Infrastructure Companies, a lobby group.

Photo: Hafiz343, CC 3.0 license
“The price is one factor, the other is technical compatibility along the journey. There are different gauges along the line; it of course depends on whether you go through the Russian territory or through Turkey, Azerbaijan. Bu that decision also affects the travelling time. And there are also the parameters of the line which is something you have to take into account as well.

“We have dispatched some pilot trains, this is all possible. But you have to set up special conditions for the train journey which is something that’s not available under normal circumstances. So there is still a lot of improvement that needs to be achieved before we come to more regular services between China and Europe.”

The company AWT is Europe’s largest private provider of rail freight services. The firm’s external affairs director, Petr Jonák, says railway transport needs a push to become competitive in the long run.

“It’s a proof of outside-the-box thinking. I’m a bit sceptical about regular rail freight transport across Asia to Europe in the short term. But over the mid- and long term, this is the way companies, countries, the EU, and all the stakeholders should think and develop the whole segment.”

For the time being, however, European train providers are faced with more immediate problems. Railway’s share in freight transportation in Europe has been declining over the last few years. In many countries, including the Czech Republic, private rail transport providers have to follow lengthy bureaucratic procedures to have their trains approved for operation. Lobbyist Petr Lochman again.

Photo: European Commission
“We have a company, NTV, that operates trains in Italy. It took them more than three years to authorize one high-speed train. So it’s an expensive exercise, and it’s an obstacle for any competition. The whole business is relatively capital intensive, and if you have to add the costs for authorization, it makes it almost impossible. Instead of doing that, you will switch your business to another transportation mode, possibly road, because it’s much cheaper.”

The European Commission is preparing new legislation, referred to as the fourth railway package, which should facilitate these procedures. It should also allow for more competition in railway transport which is for historical reasons dominated by state-owned firms. Keir Fitsch is from the cabinet of the European Commissioner for Transport.

“Firstly, we will hopefully have a much larger research programme in the new financial period. We work with manufactures to actually develop railway products which will make railway attractive.

“But the most important thing is addressed in the fourth railway package which we are adopting towards the end of the year. It will actually ensure that railways have competition internally which will allow people who want develop new services, who want to innovate, to do so.”

Private rail transporters also complain of high fees that the state-owned railway companies collect for letting them use their tracks. In the Czech Republic, this had led to a situation when most private freight trains bypass the country, according to Petr Jonák of AWT.

“The rail fees in the Czech Republic are now the highest in central and Eastern Europe. They are higher than in the neighbouring countries, in Germany, Poland, Austria and Slovakia, and this is a real problem. For operators of transit transport across more countries, it’s quite easy to avoid the Czech Republic and take their trains through those countries.”

Photo: Jiří Němec
However, the Czech railway market has seen some interesting developments, mainly in the passenger segment. Two private operators – RegioJet and Leo Express – have launched regular services. The authorities have also announced that railway fees would decrease next year to make railway transport more competitive. Petr Jonák hopes railway will see a boom similar to that which air travel registered more than a decade ago.

“We expect that the railway market will in the coming years go through something similar to what air transportation experienced in the 1990. That would mean huge development, liberalization and the unbundling of private companies like AWT in freight transport in Central Europe, or Leo Express and other Czech private companies in passenger transport. They will enter the state-owned domain and will bring a new level of efficiency.”