Presentation on theme: "Prof. Stane Božičnik, PhD University of Maribor, Slovenia"— Presentation transcript:
1Prof. Stane Božičnik, PhD University of Maribor, Slovenia Is Rail a Realistic Option for Transport of Goods between China and EuropeProf. Stane Božičnik, PhDUniversity of Maribor, Slovenia2014 Forum on Euro-Asia Transport Internet of Smart Cities (EATISC),Hong Kong, March 17th 20140
2ContentsDriving forces for EU-China transport (rail freight) needs growth:globalisationmarket potential growthautomotive industryModal split /development trends of EU China freight transportCharacteristics of the two prevailing transport modes (sea, air)Rail freight – advantages, disadvantagesThree basic Asia – Europe land bridgesHow to evaluate quality of a corridors on land bridges ?Competition to rail freight Euro-Asia – climate changeConclusions?
3Driving force for EU-China transport needs growth - globalisation Forum 2013Driving force for EU-China transport needs growth - globalisation
4Globalisation – reason for EU- China transport growth Strategically important factors for China - Europe foreign trade relationships growth (since the 1980s) are:the evolution and growth of international supply chains .Supporting concepts in management:keep to core business,out sourcing, (3 PL, 4PL…)from push to pull strategy, lean manufacturing…shift from company logistics to supply chain management“tube” logistics economics….Supply chain informatics and data exchange ..EDI…ESAP ..etc.
5Globalisation – reason for EU- China transport growth Constant fall of transportation costs (economies of scale) – will be explained laterNew international competition model: international competition amongst national manufacturers at the sectorial level (Phase I)i.e., Swedish cars (Volvo) versus Japanese cars (Honda).
6Globalisation – reason for EU- China transport growth Fast technological developments enabled competition of production processes within supply chains, where:different stages of production of a single good take place across multiple (international)locations (Phase II)i.e. Swedish cars contain Chinese components and vice-versarapid technological change (development), particularlyin the field of ICT technologieshave marked the second wave of globalization !
7Globalisation – reason for EU- China transport growth Result of this processes is: global production and global consumption of (global) products (interdependence)multi-national companies spread out different stages of production to different countries in order to become more efficient. Taking advantage of:low-cost labour on the global level andlow-cost (maritime) transport – economies of scale !Result : countries compete to attract different stages of production within the supply chain (e.g. automobile industry)
8Globalisation – reason for EU- China transport growth China and Asia in general (consequently), became the global production centre !This led to China’s remarkable economic boom and huge transport growth between EU – ChinaAnnual average transport growth rate is 25 percent (last decade), which is:double world trade growth rate!
9Globalisation – reason for EU- China transport growth Consequences: congestion in the ports !World Bank study, China’s demand for container port services is almost twice as high as the available supplyResult: significant delays in shipments.Over-congestion in Chinese ports and other advantages make rail freight as an important alternative for transport of goods between Europe and China.
10EU – Asia trade volume today ~51% of world sea container flows are Asia-relatedAsia - Europe Trade Volume about 553 Billion EUR /yearThe volume is growingAbout 20% of total trade value - automotive industry
11Market potential of China Forum 2013Market potential of China
12China – Economy - today The second largest economy of the world The biggest exporter in the worldExperts estimates predict China may be on track to become the world’s biggest economy within the next 10 years,internal market of 1.35 bn consumersChina and the EU are trading more than €1 billion every day
13China market potential - tomorrow In the long term, China’s importance as a strategic market of the EU can only increaseEvery year, 20 million Chinese households pass the threshold of household income of USD13,500At this level families are able to afford key consumer goods and services, like cars.even if China’s GDP growth rate is gradually slowing down, its nominal GDP is continuing to grow rapidly!90 % of global economic growth in the next years is expected to be generated outside Europe,a third of it in China alone!
14Potential for future co-operation between EU – China EU-Switzerland economic co-operation – as basis for comparison of EU-China trade/transport potentialEU still exports more goods and services to:Switzerland, 8 million inhabitants,€216.3 billion, than toChina, 1,35 billion inhabitants,€173.7 billionThere is a great potential for co-operation in FUTURE !
15China – EU trade volume – a potential for rail freight Forum 2013China – EU trade volume – a potential for rail freight
16China – EU Trade Dynamics Forum 2013China – EU Trade DynamicsJust three decades ago, China - EU trade was more or less of symbolic value !2000 – 101 Bill. EUR2009 – 297 Bill. EUR2012 – 434 Bill. EURSustainable growth, expected also in future!In terms of volume of transported goods 2012:90,6 million ton of goods
17Forum 2013EU – China trade volume 2012EU imports from China in 2012: 299,9 Billion EURMachinery and transport equipment:145,5 Bill. EUR (50,2%)Miscellaneous manufactured goods:86,7 Bill. EUR (29,9 %)Manufactured goods/classified by materials35,9 Bill. EUR (12,4%)Chemicals 12,9 Bill (4,5%)Food 4,1 Bill. EUR (1,4%)Source: Eurostat
18China – EU trade volume 2012 China imports from EU 143,8 Billion EUR Forum 2013China – EU trade volume 2012China imports from EU 143,8 Billion EURMachinery and transport equipment84,1 Bill. EUR (58,5%)Chemicals and related goods16,8 Bill. EUR (11,7%)Manufactured goods/classified by materials13,7 Bill. EUR (9,6%)Misc. Manufactured articles 11 Bill. EUR (7,7%)Crude materials 9,8 Bill. EUR ( 6,8%)Food 2,8 Bill. EUR (2%)
20EU trade deficit with China Record of €169.3 billion in 2012!Europe´s trade deficit with China is mainly caused by sectors like:office and telecommunication equipment,shoes and textiles,iron and steel.Evaluation of Trade deficit is of crucial importance for transportation industry!Empty run of transport vehicles in one direction !
21China – EU automotive industry trade volume trade perspectives Forum 2013China – EU automotive industry trade volume trade perspectives
22Automotive industry trade growth Automotive industry – accounts for 20% of total EU – China trade volume todayIs expected to grow by 2018Automotive industry is one of the main potential transport demand generators for rail freight transport between EU-China.
23Global market development trends in car production Forum 2013Global market development trends in car productionTODAY: 82 million cars/year103 million cars/year - is expected global production in 201850% of global production outside EUComponent suppliers – have to master requirements of global market and production/logistics complexity
24China‘s vehicle import and export – (in 2010 about 110 Billion) Forum 2013China‘s vehicle import and export – (in 2010 about 110 Billion)
25Transport modal split of China – EU trade (2012) Euro-Asi Economic Forum 2013Transport modal split of China – EU trade (2012)
26Forum 2013Distribution of EU-China Trade by Mode of Transport in 2012 (in € and %)TOTAL EU-27 - China value of trade billion € , (China-EU 300 Billion, China-EU 143,8 Bill.)Total trade volume by mode:Sea € 268 billion 62%Air € 99.8 billion 23%Rail €1,7 billion 0.4%Road € 31 billion 7%Other*€ 34 billion7,6% (post, self-propelled..)Rail freight of minor importance so far !Source: Based on Eurostat data Available from:(Accessed on 10/07/2013).
27Euro-Asi Economic Forum 2013 Market characteristics and trends of the two prevailing transport modes (sea, air)
28Two prevailing transport modes Forum 2013Two prevailing transport modesSea transportbasic transport mode for transport of goods between China and Europe62% of transported value between China and EULow cost (maritime) transport also contributed to globalisation processes of the last two decadesDevelopment trends in terms of costs/unit ?
29BIGGER VESSELS SIZE TO REDUCE SLOT COST – ECONOMIES OF SCALE
30VESSEL SIZE - Grow consistently in the last 15 years Forum 2013VESSEL SIZE - Grow consistently in the last 15 years
31Economies of scale - ships and ports-transport cost/unit decrease Forum 2013Economies of scale - ships and ports-transport cost/unit decrease
32Maritime transport vs Rail Low cost (Maritime) transport significantly contributed to globalisation processes !Economies of scale caused by constant growth of vessels and transport demand growth enables decrease of maritime transport costs / pricesBecause of crisis – “low steaming”, longer transport timeSo far there was no serious competition except air transportRail could be real challenger in a certain market segments
34Two prevailing transport modes 2013Two prevailing transport modesSecond: air transport 201223% of total transported value between China and EUAbout 2,1 million tons out of total 90 million tons of transported volume, represents in terms of physical transportAbout 2,2 % transport of the total transport volume between EU and China.What are expected development trends in future?
35Europe-to-Asia air transport volume and structure of transported goods Forum 2013Europe-to-Asia air transport volume and structure of transported goods
36Europe–Asia- Europe air cargo market Forum 2013Europe–Asia- Europe air cargo markettraffic has grown10.4% per year
37Europe-to-Asia air trade (forecast) Forum 2013Europe-to-Asia air trade (forecast)with average 5.6% growth per year through 2031
38Asia-to-Europe air trade (forecast) Forum 2013Asia-to-Europe air trade (forecast)with average 5.8% growth per year through 2031
39Euro-Asi Economic Forum 2013 Railways – as a new (third) freight transport option between EU and China
40Basic rail freight advantages Price (air) and time (maritime)!Suitable for bigger quantities, longer distances (two drivers)One container shipping costs/time from Chongqing to Western Europe:The carbon footprint of rail, is about one-thirtieth that of air freight.PriceTransport timeSea$ – 3.00038 – 45 daysTrain$ – 5.50016 – 20 daysAir$ –1 – 2 days
41Reasons for rail freight option Forum 2013Reasons for rail freight optionIncreasing volume of goods,Congestion in the EU and China portsIncreasing value of traded goods per unitTwo basic transport options prevailingLow cost and long lasting sea (40days)Expensive and fast – airFaster than sea and cheaper than air option is looked after – solution rail transportFirst transport -several good practices VW, HP..Optimal link central Europe – central China
42Comparative Advantage of Rail Corridors Forum 2013Comparative Advantage of Rail CorridorsConnection of Mainland Industrial Regions
43First transport of container trains Forum 2013First transport of container trains
44Rail freight disadvantages NaslovRail freight disadvantagesDifferent gauges /transhipment/wagon changeDifferent rail systemsCustoms procedures on bordersAdministrative /legal proceduresTime consuming procedures on bordersSecurity issues etc.
45In spite difficulties - good results! Forum 2013In spite difficulties - good results!VW, HP-TransEurAsia Railways,…HP - Pilot – March 2011 (Chongqing, Kazakhstan, Russia, Belarus, EU)40% shorter than sea transportRunning now 9 months (Winter solution is looked after), plan to run 12 monthsAll pilots: time advantages confirmed, in about 60% also cost advantage.
49The first Euro-Asian land bridge -Trans Siberian railway built between 1890 and 1905 connect Moscow with Vladivostok kmNowadays, the Trans-Siberian railway has connections to Berlin, Kiev, Budapest, Helsinki and Beijing.less known is the role of the Trans-Siberian Euro-Asian freight option
50Technological level of Trans-Siberian railways Information technology enables:full monitoring of trains and the status of cars and containers;following of consignments in real time along the whole route electronic goods declaration, thus reducing freight inspection times from 3 days to 1.5 hours;monitoring the security of goods in transport and transit etc.Modernisation plans : Fast train – co-operation China Russia.
52The Second Eurasian Land Bridge 2011 China completed a “Second Eurasian Land Bridge” running from:port of Lianyungang on the East China Seato Kazakhstan’s Druzhba and further to Central Asia, West Asia and Europe.Km long, running about 4100 Km in China.
53The Second Eurasian Land Bridge is linking also:Tashkent in Uzbekistan, andAshgabat -Turkmenistan’s capital and further to the border of IranWith some additional investment, these links, could open new economic possibilities in much-neglected regions of Central Asia.
57The Third Eurasian Land Bridge? In 2009 announced accelerated construction of the third Eurasian continental land bridge that will link:south China and Europe via Turkey. Starts with the Port Shenzhen and will connect Bangladesh, India, Pakistan, Iran, Turkey and Europewill cross 20 countries in Asia and Europe, total length of about 15,000 kilometres.Total annual trade volume of the regions the route passes through was nearly US$300 billion in 2009.Ultimately the plan is for a branch line start in Turkey, cross Syria and Palestine, and end in Egypt
58Economic potential of the new “iron” silky road Euro-Asian space 40% of total land in the world, (prime uncontaminated agriculture land!);¾ of the entire world population,¾ of known world energy resourcesall minerals needed for industrialization are available in the region.
61“The Railways of the Middle East, Visions 2025,” UIC strategy, February 2008,
62The third land bridge tomorrow China-Turkey agreement ( 2010) for high-speed railway link across Turkey (about 35 BN EUR), will be the largest railway project ever.Decreasing travel time through Turkey from 36 to 12h.Will run from:Kars on the border with Armenia through to Istanbulconnect Marmaray - recently finished rail tunnel under the Bosporus and linkEdirne near the border to Greece and Bulgaria in the European Union.
63The third land bridge tomorrow Baku-Tbilisi-Kars (BTK) railway connecting Baku to Kars is under construction, which greatly increases the strategic importance of the Edirne-Kars linehigh speed train connection Astana-Almaty line in Kazakhstan, 1050 kilometres, employing China’s advanced rail-building technology, is to be finished in 2015 , speed of 350 kilometre is to be finished in 2015!Signed contract China-Egypt for high speed railway linking Alexandria-Cairo-Luxor-Hurgada (Strategic concept for connecting Africa with Middle East via Egypt !)
64The third land bridge tomorrow 2010, China signed agreements with Iran to connect railways through Central Asia, as well as onto Turkey and Europe. recently inked deal to build Israel’s high-speed railway linking the ports of Ashdod and Eilat, with eventual connectionsrecent deal to build a high-speed railway linking Cairo, Alexandria, Luxor, and Hurghada,with a longer-term view to eventually connect Africa with the Middle East via Egypt.
66Evaluation of transport corridors Forum 2013Evaluation of transport corridors
67How to evaluate performance of a transport corridor ? The following KPIs:Out-of-pocket costs (excluding VAT), measured in €/tonne-km;Transport time, measured in hours (or average speed, measured in km/h, depending on the application);Reliability of service (in terms of timely deliveries), measured in percentage of consignments delivered within a pre-defined acceptable time window;Frequency of service, measured in number of services per year;SecurityavailabilityCO2 (SOx) emissions, measured in g/tonne-km; andOthers suggest different indicators.KPIs should be selected by the corridor management on the basis of the objectives being pursuedBESTFACT workshop on Co-modality & Green Logistics, Vienna, 20 September 2013
68Corridor - crucial decision making elements Forum 2013Corridor - crucial decision making elements
69Corridor performance - time distance? Time components of a transport chainBESTFACT workshop on Co-modality & Green Logistics, Vienna, 20 September 2013
70Corridor performance - cost distance? Cost components of a transport chainBESTFACT workshop on Co-modality & Green Logistics, Vienna, 20 September 2013
71A lot of problems on EU - China Intermodal Rail Corridors Forum 2013A lot of problems on EU - China Intermodal Rail CorridorsProblems:regulations,procedures,national rail priorities,InteroperabilityDocumentsInformation systemsGauges: China = EU; Russia, Mongolia, Belarus, Kazakhstan 1 520mm
72Competitor to rail freight between Europe and Asia – climate change !
73Forum 2013Climate changeFirst Ship ( ) arrived to Rotterdam from China over North Pole,12-15 days shorter transport.Climate change could allow ships to cross the north pole by 2040.
74ConclusionsLand route between Europe and Asia (One of the oldest trade links in the world), is today not (yet) used to its potential to serve a large-scale inter-continental trade.Maritime transport dominates in inter-continental trade. It is improving its transport prices by means of economies of scale.international maritime companies have significantly expanded their capacities in order to meet the increasing demand on intercontinental level.
75Forum 2013ConclusionsBased on the several positive experiences rail transport could be considered as viable alternative for transport between China and EU.Taking into consideration the price of transport and shorter transport times, rail can fill the missing gap between expensive air transport and low cost but slow sea transport. (Modal split analysis proves the idea)Existing and expected growth volumes of transported goods give economic reasons further development of rail corridor connections.
76Forum 2013ConclusionsQuality of rail freight transport service is still hindered by:current limits of rail infrastructure,administrative procedures,border crossing procedures,different railway legal systems,different track gauges,non-physical obstacles, etc.Systematic and organised approach of all relevant stakeholders along the land bridges for problem solving is advisable.
77Conclusionsincrease of value added of Chinese products is expected to increase demand for rail transport.Container port capacities in China and Europe are reaching a saturation point, rail freight is a competitive alternativevolumes of container traffic grow at double-digit rates
78ConclusionsEfficient rail transport is an important factor for further and faster development of Euro-Asian “Iron"silky road region.China which is today one of the world’s most efficient railroad constructors and one of the best train producers can play in this development process a role of crucial importance.
79ConclusionsFollowing the examples of 19 century Europe, rail transport enabled “industrial revolution” of Europe.100 years later the "Iron” silky road (in particular the second and the third mentioned corridors) open a new economic perspective for all today relatively isolated countries and to Euro Asian macro region as whole.Rail is a realistic and promissing option for transport of goods between Europe and China!
80Thank you for your kind attention! University of Maribor, Slovenia 2013Thank you for your kind attention!Stane BozicnikUniversity of Maribor, Slovenia
81Forum 2013ReferencesBloomberg Businessweek, The New Silk Road, december 20, 2012,Clime change could allow ships to cross the north pole by 2040,Melting arctic sea ice will allow ice-strengthened vessels to sail directly over the pole by 2050,Shippers can take the fast boat to China,Save a hundred thousand dollars: Take the northern sea route,Cargo ship embarks on historic Arctic Northern Passage non-stop,Ships may sail over North Pole by 2050,This is the IRU 2013 – driving progress since 1948,Financing Transport Infrastructure, Transport links between Europa and Asia, new challenges, Economic Commission for EuropeChina gibt Gas, Entwicklung der automotive Handelsbeziehungen mit China, mag. Michael Druml, Executice Director Global Supply Chain Management, MAGNA STEYR Fahrzeugtechnik AG & CoKGWorld Air Cargo Forecast,Priorities of the JSC „Lithuanian Railways“ Activities“, Virgilijus Jastremskas, Development Department Director of JSC Lithuanian RailwaysExchange of the Best Practices in Developing the Trade Corridors Between Europa and Asia, EWTCA China Forum, Shanghai, , Vytenis Alisauskas, Customs AdvisorAsia Europe logistics Developments, East West Transport Corridor association, Mark MillerSino-Europe rail link to boost trade,Goods of the Silk Road,The Role of Belarusian Railway in the development of East-West transport corridor, Belintertrans transport and logistics centre, Igor Butko, Marketing managerDie Baltisch-Adriatische Verkehrsachse und ihre Bedeutung für die wirtschaftliche Entwicklung unserer Region, Logistikkongress, , VillachAdratic why not? An overview on shipping scenario, Alps-Adriatic Logistics Congress 2012, Michela Fonda