Potential versus real railway freight traffic in main Trans- European corridors
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1 Potential versus real railway freight traffic in main Trans- European corridors George Raymond FERRMED Multisectoral Working Group (FMWG) on Operations Barcelona, 7 June
2 Intermodal: more Europe <-> Far East than within (geographic) Europe 25 Intermodal flows (millions of TEUs) Source: MDS Transmodal Intra Europe Europe <-> Far East Barcelona, 7 June 2018 Potential versus real railway freight traffic 2
3 Intermodal: between Far East and Europe stable at 68% westbound Percent westbound intermodal between Far East and Europe Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 3
4 Mediteranean ports and markets gaining market shares Trade flows: +3% Port flows: +18% Mediterranean markets now responsible for 30% of market share and 33% of container port activity Trade flows: +6% Port flows: +28% Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 4
5 Drivers for EU rail freight traffic growth: policy and trade Public policy: Actions by the EU to increase rail market share in Europe. Actions by third countries, particularly China, to increase rail market share on Eurasian freight Trade: growth of high-value Eurasian freight (in both directions) whose owners find air too expensive and ships too slow. Lesson: Future traffic on backbone EU rail freight corridors will partly depend on our own efforts. Barcelona, 7 June 2018 Potential versus real railway freight traffic 5
6 Potential and real bottlenecks Worldwide, container port throughput is growing and becoming more concentrated as ships grow. This is a challenge for ports and hinterland transport capacity, especially when handling larger peaks. Congestion occurs near ports and the main production and consumption centres, where cargo has to be handled and distributed. Projected trade and freight flows to 2050 highlight the need to assess the capacity of existing infrastructure such as port terminals and rail infrastructure to deal with the bottlenecks that may emerge. Source: ITF Transport Outlook 2017, OECD International Transport Forum Barcelona, 7 June 2018 Potential versus real railway freight traffic 6
7 EU target for modal share The EU modal share of freight transported over land remains largely constant. It is still dominated by road transport (75 %), followed by rail (18 %) a slight increase over 2000 and inland waterways (6 %). A [oft-cited] 2011 EU whitepaper stipulated total of 30 % of road freight over 300 km should shift to other modes such as rail or waterborne transport by 2030, and more than 50 % should shift by Source: Freight transport demand, European Environment Agency, Oct Given expected market growth, this means rail will have to handle three to four times the cargo volume it does today. Source: How to make modal shift from road to rail possible in the European transport market, as aspired to in the EU Transport White Paper 2011, European Transport Research Review, June Barcelona, 7 June 2018 Potential versus real railway freight traffic 7
8 The iron silk road Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 8
9 Eurasian rail services: advantages over maritime Rail s transit time advantage over maritime now double pre-2006 level: Now 16 days (40 days by maritime, inland to inland terminal); could have been 30 days by maritime in 2006 (before slow steaming) Market has grown by a further 27%, making trains easier to fill While mega-ships are now twice as hard to fill to maintain frequencies UTLC s speeds between the Chinese and EU borders: 2014: 550 km/day in : 990 km/day : 1500 km/day by 2019, implying 10-day China-Europe transit time. Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 9
10 Eurasian services: Advantages for shippers For high-value or perishable cargo, saving of 20 days of transit time and that much inventory cost. Gives range of land-locked smaller economies (such as Kazakhstan and Uzbekistan) direct access to European markets Greater access for Far East producers to urgent market (such as custom-built cars, fashion goods and e-commerce) Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 10
11 Eurasian rail services: advantages for operator Expanded proportion and scale of market able to pay a higher rate Opportunity to win cargo from air freight services Most cargo shippers prefer cheaper to quicker, but overland rail now much quicker for the minority (estimated at 10%) ready to pay Direct volumes reached about 150,000 TEU in 2016 Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 11
12 Involvement of major air and sea players Regulatory concerns have discouraged door-door control of rail services by deep-sea lines But Eurasian services have re-cast rail services as competing and not just complimentary CMA/CGM and Maersk (DAMCO) now entering overland rail market from China as well as air-based integrators (UPS) Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 12
13 Eurasian services: Summary Combination of Slow steaming, and very large vessels Ambition to better serve European consumer markets Investment in rail networks in Russia and Kazakhstan Is potentially leading to Development of a new much faster surface transport direct rail offer The wider potential to disturb the intermodal market between all the competing European maritime gateways. Possibly: a more cost-effective intermodal railway culture with much wider benefits? Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 13
14 The new intermodal opportunity: the Asian rail network Source: MDS Transmodal Barcelona, 7 June 2018 Potential versus real railway freight traffic 14
15 FERRMED s response Both Eurasian rail freight and European maritime traffic with the Far East are growing. Corridors linking Europe s mega-regions are where both rail traffic growth and rail capacity bottlenecks are likely to occur. Ferrmed s reponse: A business-oriented approach to prioritise and achieve improvements to infrastructure, rolling stock and operations. Initial concentratation on the 6,000 km of the FERRMED EU Trans- Eurasian Rail Freight Backbone Network Adequate implementation of the FERRMED standards of reference. Barcelona, 7 June 2018 Potential versus real railway freight traffic 15
16 Questions or comments? George Raymond FERRMED Multisectoral Working Group (FMWG) on Operations home office phone mobile/cell Barcelona, 7 June 2018 Potential versus real railway freight traffic 16
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