CAREC Railways Making Rail a Mode of Choice- 1st Meeting of the CAREC Railway Working Group November 2015 Tokyo, Japan

Transcription

1 CAREC Railways Making Rail a Mode of Choice- 1st Meeting of the CAREC Railway Working Group November 2015 Tokyo, Japan

2 Contents I. INTRODUCTION II. GLOBAL AND REGIONAL FACTORS AFFECTING CAREC RAILWAYS III. CAREC RAILWAYS: CURRENT SITUATION IV. SWOT ANALYSIS V. CAREC RAILWAY VISION VI. ACTIONS VII. IMPLEMENTATION ARRANGEMENTS AND RESOURCING 2

3 I. INTRODUCTION

4 Why a railway strategy for CAREC? Economic transformation from command structure to market oriented Railway operations/institutions have not kept pace with change CAREC railways experiencing decreases in market share CAREC railways in need of investments and institutional restructuring 4

5 What is the scope of the strategy? Is: Regionally focused Action oriented Specific to what CAREC can do Is not: Countryspecific Solution to all challenges facing railways 5

6 Who is the strategy by? Railway Working Group Set up by decision of 14 th Transport Sector Coordinating Committee (TSCC) in Ulaanbaatar Mongolia (April 2015) 6

7 Railway Working Group Representatives of railway sector from 10 CAREC Countries Supported by: Expert organizations (OSJD, UIC, etc.) CAREC Development Partners CAREC Secretariat 7

8 How was the strategy formulated? Identification of global and regional factors affecting CAREC railways Understanding current situation and challenges of CAREC Railway Country /Corridor/BCP/Operator Analysis of strengths, weaknesses, opportunities and threats (SWOT) Formulation of a CAREC Railway Vision Identifying actions for the short/medium term (2020) and long term (2030) Infrastructure/Soft components 8

9 II. GLOBAL AND REGIONAL FACTORS AFFECTING CAREC RAILWAYS

10 Demographic Outlook With a total of 337 million, CAREC region has a modest population increase of 1.7% p.a. Population is diverse from Mongolia with 3 million to Pakistan with 182 million +1.4% 9 AZE +1.3% +1.3% 5 TKM +1.6% 30 UZB KAZ +2.4% 6 KYR 8 TAJ +2.0% +2.5% 3 MON Xinjian Uyghur Autonomous Region +1.5% Inner Mongolia Autonomous Region Annual Population Growth Rate(2013) +1% 5 Population in Million (2013) AFG PAK % 10 Source: World Development Indicators

11 Economic Outlook Average growth rate is modest at 4.8%; ranging from 2% of Kyrgyz Republic to 9% of Turkmenistan Average GDP/Capita is $4,398; ranging from $665 of Afghanistan to $13,612 of Kazakhstan +9.2% +3.8% +5.0% +2.8% 7,812 AZE GDP Growth Forecast 2016 (%) 1,000 +5% 7,987 TKM 665 AFG +3.5% 1,878 UZB PAK 13,612 KAZ 1, % 1,037 TAJ 1,263 KGZ +4.5% +2.0% +4.8% Xinjian Uyghur Autonomous Region MON 4,056 6,047 10,979 Inner Mongolia Autonomous Region GDP/Capita 2013 ($) Source: ADB Outlook, World Development Indicators 11

12 Importance of Trade In 8 out of 10 CAREC countries, trade accounts for more than 50% of GDP CAREC countries rely heavily on trade 140% 120% 125% 118% 109% Trade as Percentage of GDP Year % 88% 80% 60% 50% 40% 70% 65% 59% 50% 42% 31% 20% 0% Source: World Development Indicators 12

13 303% 300% Export-Import Balance In energy-producing countries, more than 100%, i.e. excess of exports over imports Other 350% 5 countries are less than 100%, i.e. excess of imports over exports Export/Import Ratio Year % 200% 168% 150% 100% 100% 124% 106% 61% 57% 50% 0% 33% 20% 7% Source: International Trade Center 13

14 Trade flows PRC dominates trade with trading surpluses with EU, Russia and generally with CAREC countries Inter-CAREC trade relatively small ($9 billion) Large trade volumes between EU and PRC, which indicates the potential of CAREC as a land bridge Trade Flows among EU/Russia/PRC/CAREC 9 Exports from In USD Billion; Year 2014 EU Russia PRC CAREC To EU Russia PRC CAREC Source: IMF Direction of Trade Statistics 14

15 Trade with PRC Exports to and imports from PRC are increasing rapidly PRC is considered as a growing trading partner for 9 CAREC countries 30% Share of Trade of 9 CAREC with PRC Exports 30% 30% 30% 29% 27% 27% Imports 25% 24% 23% 24% 20% Source: Trade Map-International Trade Statistics 15

16 III. CAREC RAILWAYS: CURRENT SITUATION

17 Freight and Passenger Transport The CAREC railway community is diverse in terms of size of transport volume CAREC railways are more freight carriers than passenger except for Pakistan Freight (million tonne-km) 10,000,000 1,000,000 Freight and Passenger Transport Volume in CAREC Railways Freight Carriers KAZ PRC 100,000 MON UZB 10,000 AZE TKM 1, AFG TAJ KGZ PAK Passenger Carriers ,000 10, ,000 1,000,000 10,000,000 Passenger(million passenger-km) Source: CAREC RWG Secretariat 17

18 Market Share Average freight market share declined from 20% (2010) to 14% (2014) The reasons include competition with road transportation, infrastructure deficiencies, lack of interoperability, and lack of user orientation 60% 50% 57% Freight Market Share 40% 30% 36% 20% Avg in % Avg in % 10% 17% 9% 18% 15% 11% 9% 11% 8% 10% 5% % Source: RWG database 18

19 Change in Freight Traffic Volume Despite losing market share, many CAREC railway have increased freight traffic volumes This hints at a large potential for CAREC railways to carry more 40% Change in Freight Traffic Volume (2014/2013) 20% 0% 26% 24% 22% 20% 3% -20% -40% -35% -60% -80% -72% Source: RWG database 19

20 Distribution of Rail Freight Traffic Domestic market large in Pakistan, Uzbekistan and Kazakhstan Import market large in Kyrgyz Republic and Tajikistan, and transit is large in Tajikistan 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Distribution of Rail Freight Traffic in Selected CAREC Countries 14% 7% 99% 68% 11% 6% 10% 11% 34% 9% 26% 34% 29% 78% 6% 10% Transit 65% Import 54% 50% Export 47% 11% Domestic 11% 9% Source: CAREC RWG Secretariat 20

21 Recent Railway Projects-1 Construction projects with IFI and government funding Zhezkazgan- Saksaulskaya- Beyneu (KAZ) Angren-Pap (UZB) North-South Railway (TKM) Yavan-Vahdat (TAJ) Atamyrat-Aquina (TKM) Hairatan-Mazare-Sharif (AFG) ADB World Bank JICA IsDB Government funding 21

22 Recent Railway Projects-2 Electrification/Signalization projects supported by IFIs Angren- Pap (UZB) North-South Railway(TKM) Karshi- Termez (UZB) Marokand- Karshi (UZB) ADB World Bank JICA IsDB 22

23 Planned Railway Projects Construction projects are planned by each of the governments 23

24 Regional Corridors Regional corridor plans have been proposed through multilateral initiatives Overlapping corridors among the plans suggest high level of priority Parallel corridors should be studied for their alternative roles CAREC UN ESCAP TAR OSJD ECO Regional Corridors Proposed by Multilateral Initiatives Corridors 6 Multimodal Corridors proposed in CAREC region A wide-range of railway network plans in Eurasia continent International rail corridors connecting Asia and Europe proposed Five priority rail routes identified TRACECA Rail linking Europe through Black Sea/Caspian Sea to Central Asia and PRC Source: CAREC RWG Secretariat 24

25 CAREC Railway Corridors-1 6 multimodal corridors have been proposed by CAREC TTFS 2020 Among them, the following corridors are railway corridors Corridor Route Sub- Corridor From To VIA Referred Corridors 1 Europe - East Asia CAREC 1a PRC RUS Dostyk to Astana to Russia Korgos route PRC KAZ Khorgos to Almaty and Astana DRC 1 UNECE 2 - CAREC 2c GEO PRC Baku to Aktau to PRC DRC Mediterranean - East Asia Russian Federation - Middle East/South Asia CAREC 2b AZE PRC CAREC 2d AFG PRC Baku to Turkmenbashi to Osh to PRC (Kashi) Herat to Turkmenistan to Afghanistan to Tajikistan to Kyrgyz Republic and PRC (Kashi) CAREC 3a RUS IRN IRN,TKM, UZB,KAZ Part of TRACECA DRC 2 DRC 7 Including DRC 10 TRACECA ECO Part of UZB IRN UZB, AFG,IRN DRC3 CAREC 3b Source: CAREC RWG Secretariat 25

26 CAREC Railway Corridors-2 Corridor Route Russian Federation - East Asia East Asia - Middle East/South Asia Europe - Middle East/South Asia Sub- Corridor PRC CAREC 6a RUS PAK Port of Gwadar to Kandahar, Kabul, Dushanbe and PRC Russia - Atyrau to Beynau to Samarkand to Termez/Tashkent DRC 4 EATL 1 CAREC 5a PAK PRC Port of Gwadar to Quetta to Kashi DRC 12 CAREC 5c From To VIA CAREC 4b PRC RUS MON PAK Referred Corridors DRC 11 DRC8 Note: TTFS 2020 introduced the concept of designated rail corridors (DRCs), where priority services will be given to long-distance freight/specific passenger trains over a selected linear rail section or route. Above 6 railway corridors also overlap with DMCs as indicated in the column of referred corridors. Source: CAREC RWG Secretariat 26

27 CAREC Railway Corridors-3 6 corridors have been proposed by CAREC program Rail corridors in northern part of CAREC area are generally at a higher level of completion, compared to the southern part Corridor 1 Corridor 2 Corridor 3 Corridor 5 Corridor 6 Solid line - existing/under construction Dashed line - planned Border Crossing Points

28 CAREC Railway Corridors-4 Corridor No.4 transits Mongolia Corridor 4 (existing/under construction) Border Crossing Points

29 Progress in CAREC Railway Projects-1 Out of 37 projects, 15 are completed The length of completed projects is 1,869km for new construction and 2,710km for renovation (electrification/signalization, etc.) projects Progress in CAREC Railway Projects Planned Ongoing Completed Total New Number of projects Length (km) 1, ,869 3,478 Cost ($M) 3, ,926 9,425 Renovation Number of projects Length (km) 2,109 1,270 2,710 6,089 Cost ($M) 2,858 1,301 2,245 6,403 Other* Number of projects Cost ($M) Total Number of projects Length (km) 3,592 1,396 4,579 9,567 Cost ($M) 5,898 1,901 8,378 16,177 Note: * Locomotives, cargos and wagons. Source: CAREC RWG Secretariat 29

30 Progress in CAREC Railway Projects-2 Investments have focused especially on corridors 1 and 2, i.e. northern corridors Multimodal links are not fully considered so far in actual investments Completed Railway Projects by Corridor Corridor Number of Length (km) Cost ($M) projects 1 4 2,161 2, ,811 4,773 3 * * * ,282 Note: Some projects lie on more than one corridor. (*) includes projects for rolling stock. Source: CAREC RWG Secretariat 30

31 Traffic in CAREC Railway Corridors CAREC Corridor 1 has the highest density for current rail freight traffic Traffic Densities on CAREC Railway Corridors (2010) Corridor 1 Source: PADECO, Research Report on Transit Flows,

32 Border Crossing Points 19 pairs of railway BCPs are identified for further study No Country 1 BCP Country 2 BCP 1 PRC Alashankou KAZ Dostyk 2 PRC Khorgos KAZ Horgos (Altynkol) 3 AFG Hairatan UZB Termez (Galaba) 4 KAZ Saryagash UZB Keles 5 KAZ Beynew UZB Karakalpakstan 6 UZB Savay KGZ Karasuu 7 UZB Bekabad TAJ Nau 8 UZB Saryasia TAJ Pakhtaabad 9 UZB Kokand TAJ Kanibadam 10 AZE Beyuk Kesik GEO Gabdabani 11 KAZ Merke (Lugovoya) KGZ Chaldovar 12 UZB Alat TKM Farap 13 KAZ Kairak RUS Troitsk 14 KAZ Aul RUS Veseloyarsk (Lokot) 15 KAZ Ganyushkin RUS Aksarayskiy 16 PRC Erenhot MON Zamiin-Uud 17 MON Sukhbaatar RUS Naushki Ports 1 TKM Turkmenbashi AZE Baku 2 KAZ Aktau AZE Baku Source: CAREC RWG Secretariat 32

33 Bottlenecks at BCPs Problems at BCPs represent the main constraints to smooth movement of cargo in corridor Major Bottlenecks at Railway BCPs (i) Where gauge changing is necessary, delays are often incurred while transferring cargo (ii) There is a duplication of document checking and safety/security inspections of the train by staff members of both railways (iii) Customs clearance procedures are generally bottlenecks Source: CAREC RWG Secretariat 33

34 Railway Operators Generally in CAREC countries, railway management often is too close to the government; thereby restricting the ability to manage the railway on a commercial basis Status of Railway Operators in CAREC Status Status Country of Railway Operators Operator Afghanistan Afghan Railway Authority Government Turkmenistan Turkmenistanyn Demir Yolulaglary (Ministry of Transport) Pakistan Pakistan Railway Mongolia UBTZ JSC Azerbaijan Azerbican Demir Yollari Kazakhstan Kazakhstan Temir Zholy Uzbekistan O'zbekiston Temir Yo'llari State Corporation Kyrgyzstan Kyrgyz Temir Zholu Tajikistan Tajik Railway SUE JSC= Joint Stock Company (100% government owned), For UBTZ, Russia 50%, and Mongolia 50%. Source: CAREC RWG Secretariat 34

35 Tariff Railway tariffs may be uncompetitive for international cargo movements. Major Issues on International Tariff (i) Rail tariffs are generally tapered; meaning that the longer the haul, the lower the tariff per ton-km. However, for international cargo movements, the tariff applies only within the boundaries of each country; when an international border is crossed, the tariff of the neighboring country applies. (ii) There are only some cases where a bi-lateral or multilateral tariff agreements could resolve the situation. Source: CAREC RWG Secretariat 35

36 Profitability Most of operators are less profitable- average operating ratio is 1.11 Government financial support is still required by all operators for capital acquisitions as well as for funding the operating losses 1.00 Operating Ratio of CAREC Railways (2014) Less profitable Profitable Note: Operating ratio is operating costs divided by revenue. Afghanistan, Azerbaijan, Pakistan and Uzbekistan are year Source: RWG database 36

37 Financial Integrity Passenger services lose money and freight services are generally profitable (cross-subsidization) Cross subsidization of loss-making services operated in the public interest leads to higher tariffs for freight and reduces railway transport s competitiveness with road Profitability of CAREC Railways Country Profit/Loss Total Passenger Freight Afghanistan Loss* (no service) Loss* Azerbaijan Loss N.A N.A Kazakhstan Profit Loss* Profit* Kyrgyz Republic Profit N.A N.A Mongolia Loss Loss Loss Pakistan Loss Loss Loss Tajikistan Loss Loss Profit Turkmenistan Profit* Loss* Profit* Uzbekistan Profit N.A N.A (*) are based on the secretariat s observation from the interviews. Source: CAREC RWG Secretariat 37

38 Rolling Stock As railway traffic has declined significantly since the break-up of the Soviet Union which dramatically changed trade patterns, many CAREC railways have an excess of inoperable locomotives and wagons Number of Rolling Stock Owned 40, ,000 35, ,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Wagons Coaches Locos Source: RWG database 38

39 IV. SWOT ANALYSIS

40 SWOT Analysis Based on stocktaking in chapters II and III, SWOT analysis for CAREC railway is conducted Internal factors (under control of CAREC Railways) External factors (beyond control of CAREC Railways) Strengths Opportunities Weaknesses Threats 40

41 Strengths High level of rail infrastructure compared to other world regions CAREC countries and development partners continue to invest in rail Competitive costs versus other modes for long-distance freight Railways offer low-carbon, environmentally friendly mode of transport

42 Weaknesses-1 Low attention to intermodality Customs and other procedures at BCPs cause delays Gauge changes at BCPs cause delays Lack of single railway tariff from origin to destination on cross-border rail routes Technological innovations in train control, communications, signaling, locomotives and rolling stock remain untapped to full potential Cross subsidization between freight and passenger services cause distortions Railways remain responsible for extensive non-rail operations Less private sector participation

43 Weaknesses-2 CAREC railways generate insufficient revenue from operations and require government financial support for capital acquisitions as well as for funding operating losses Railways are operated as government departments or closely controlled by governments, which restricts managerial autonomy and the ability of management to react to market conditions Railways rely too much on their own internal freight forwarding companies (as semi-monopolies) and employ complicated procedures and processes that are not sensitive to customer needs Insufficient rail network might limit economic development of the region

44 Opportunities Expanding market for import and export traffic in PRC and connection between Asia-Europe Continued need for access to the ports of the Gulf and Arabian Sea Untapped demand for trans-caspian Sea links

45 Threats Demographic and economic growth remains modest Most CAREC countries have a negative trade balance, which affects the flow of railway traffic and affects wagon supply Increasingly strong road transport competition

46 V. CAREC RAILWAY VISION

47 Railways become a mode of choice for freight traffic in CAREC countries by 2030 through offering more efficient railway transportation, a focus on customers and enhanced interoperability.

48 VI. ACTIONS

49 Infrastructure Aspects 1. New Construction 2. Renovation, Electrification and Signalization 3. Intermodal Facilities 4. Other Investments (Rolling stock, etc.) 49

50 Infrastructure Needs-1 Infrastructure needs by 2020 (short term) and by 2030 (long term) will be formulated by corridor Infrastructure Needs by Corridor (for discussion in RWG meeting) Corridor New Construction Renovation, Electrification and Signalization 1 Europe East Asia No need for new 2 Mediterranean East Asia 3 Russian Federation Middle East and South Asia 4 Russian Federation East Asia construction. All lines from Herat to Tajikistan to Kyrgyz Republic and PRC are planned No need for new construction. No need for new construction. Intermodal Facilities Double tracking Beyneu to Jezkazgan Electrification Sarakhs Samarkand Line capacity expansion: double track, electrification, signaling. Additional ferries needed to offer reliable services BCP Sukhbaatar/ Naushki Other investments 50

51 Infrastructure Needs-2 Infrastructure Needs by Corridor- cont. (for discussion in RWG meeting) Corridor New Construction Renovation, Electrification and Signalization 5 East Asia Middle East and South Asia 6 Europe Middle East and South Asia Rail link between Gwadar port and Mastung is planned. Chaman to Kandahar rail link also planned. Rail lines between Kandahar and the Tajik border are also planned. Rail link between Gwadar port Afghanistan still planned; Afghanistan network also being planned. The link Atamarat Aqina in Turkmenistan under construction; Aqina to Sherkhan Bandar under planning. Intermodal Facilities Other investments 51

52 Soft Components-1 1. Streamlining activities at BCPs 2. Developing attractive operational and tariff structures 3. Enhancement of Institutional/Technical Knowledge Transfer 52

53 Soft Components-2 Item 1. Streamlining activities at BCPs 2. Developing attractive operational and tariff structures 3. Enhancement of Institutional/Tech nical Knowledge Transfer Actions Pre-clearing of goods and improvement of border management using information communication technology (ICT) Mutual access for locomotives and drivers Common standards and rules Joint inspections and document review Multilateral/bilateral tariff agreements Selling codes directly to forwarders ICT usage for tariff coordination Improving wagon tracking Pilot designated rail corridor (DRC) sharing of institutional/technical knowledge among the railway organizations Seek involvement of other organizations in the RWG meetings, such as OSJD, UIC 53

54 VII. IMPLEMENTATION ARRANGEMENTS AND RESOURCING

55 To Implement CAREC Railways Role of RWG 2. Listening to Users Views 3. Financing 4. Monitoring and Reporting 55