_ EDB Centre for Integration Studies. St. Petersburg, 10 May 2018.
In the long term, the growth of container traffic along the China – EAEU – EU axis will be constrained by a range of non-tariff barriers, as well as the risk that Chinese provinces will discontinue export container traffic subsidies. One of the most critical infrastructure restrictions is the insufficient transport capacity of Polish railways, including crossing points at Belarus-Poland border. The most intense container train traffic runs through the Brest (Belarus) – Małaszewicze (Poland) border crossing point. Almost all routes connecting China and the EU pass this crossing point. With the current state of Poland’s railway infrastructure, locomotive fleet and rolling stock, boosting container traffic through the Brest-Małaszewicze crossing point would be a challenge. Even now, the Polish side processes only nine to ten container trains per day instead of the agreed fourteen.
Investments and substantial efforts are needed to upgrade the capacity of border crossings in Poland and develop the country’s railway infrastructure in the East-West direction. However, Poland does not invest in China-EU routes yet but channels all its resources into railway routes linking the Baltic ports with the south of Europe (North-South). This contradicts the interests of the trans-Eurasian transit.
Differences in the length of container trains are another constraint for the development of transcontinental transit along the China – EAEU – EU axis. While in Russia an average train has 71 conventional railway cars (a length of 994 m) and in Belarus between 57 and 65 cars (up to 910 m), Polish regulations require that the train length should not exceed 600 m. Therefore, the trains that depart from Małaszewicze contain no more than 43 cars that carry 86 TEU. Accordingly, if a 65-car container train moves towards Poland, it will be shortened to 43 cars in Brest, and the remaining 22 cars will need to wait for another train to be despatched. This results in the loss of time, the accumulation of containers at border crossings, and higher costs.
The low speed of freight trains in the EU degrades the main competitive advantage of land container shipments – delivery times. Container trains moving with high speed in the EAEU countries slow down dramatically as they enter the EU. Poland posts the lowest cargo train speeds in Europe. At the same time the EU countries charge much higher freight rates than, for example, Russia. In recent years, many EU countries did not pay due attention to railway freight traffic and this led to the noticeable gaps in the development of railway infrastructure caused by the lack of investment and the need for modernisation, among other things.
The annual doubling of the number of container trains and volume of container cargoes along China – EAEU – EU routes in 2013-2016 was due primarily to China’s export railway container traffic subsidies. Yet, there is a risk that China will abolish or cut these subsidies after 2020. This may happen due to the growing demand for China – EU container traffic, as Chinese consignors enjoy additional advantages offered by railway routes (in comparison with sea routes): convenience (speed, frequency and regularity, door-to-door delivery, etc.) is expected to compensate for the freight rate disparity. Whether Chinese provinces will preserve and enhance their railway subsidies is the key issue as regards the prospective increase in container traffic.
According to the Centre for Integration Studies, the main administrative and legal barrier to the increase of freight traffic among the EAEU, China and the EU is the lack of unified shipping documents and technical regulations. Efforts are needed at the level of Greater Eurasia to implement a coordinated freight rate policy and standardise normative documents and technical regulations (rules for shipping various types of cargoes, rolling stock parameters, environmental standards, etc.).
To remove barriers to international freight traffic, it is important to ensure that the countries hosting the main container transport routes share their long-term, five- to ten-year, mutual railway traffic growth forecasts, such as promising routes and freight traffic volumes and the expected average daily numbers of railway cars processed at break-of-gauge points, among other data. Exchange of information will help to identify necessary administrative and technical measures, as well as those to develop railway and related infrastructure so as to assure problem-free delivery of cargoes within approved timeframes.
There is a range of promising areas for investment in the EAEU countries:
- investment in alternative East-West container train routes (the expanded use of the St. Petersburg transport hub and of Kaliningrad Region’s transport and logistics infrastructure);
- the establishment of nodal transport and logistics centres in Russia, Kazakhstan and Belarus; and
- the enhancement of international freight traffic with the use of special containers/cars (for chemical and mineral cargoes) and refrigerated containers (for food products).
“To increase the transport capacity of land corridors along the China – EAEU – EU axis and improve their competitiveness compared to sea routes, no mega projects are needed,” Evgeny Vinokurov, Director of the EDB Centre for Integration Studies, believes. “The EAEU does not need another Trans-Siberian Railway. Instead, selective elimination of transport infrastructure bottlenecks is needed, and these efforts require limited investment in the construction of additional railways, the electrification of some railway sections, the upgrade and modernisation of locomotive fleets, the acquisition of special rolling stock the improvement of infrastructure at border crossings.”
A survey of European consignors has shown that efforts are needed to popularise trans-Eurasian freight traffic routes along the China – EAEU – EU axis. This will help to attract additional shipments from the EU to China and reduce the share of empty containers. For the time being, European companies lack information about the advantages and terms of using trans-Eurasian land transport corridors (delivery times, transport modalities, door-to-door delivery, delivery costs), the level of their development, and existing routes (primarily, railway ones).
These and other applied findings are presented in the report titled “Belt and Road Transport Corridors: Barriers and Investments”.