1. Building the Wider Black Sea Area Railway land bridge Providing frameworks for a seamless transport from Far East to Central and Eastern Europe Railway Days; 8 October Bucharest, Romania Ivan Petrov, Chairman, CLECAT Rail Institute

2. CLECAT – Who do we represent? 2 Brussels based organisation representing the interest of logistics service providers and freight forwarders National federations and confederations Associate and Related interest representatives 19000 companies: Global players, SMEs and regional operators Business coverage: ≈ 90% of Customs, 70% maritime, 90% air, 50% road and rail operations in Europe – but in general LSP do not own the truck, ship, railwagon, etc… 08/10/2013

3. Policy Considerations EU White Paper 2011 ambition: Revitalisation of Rail Freight Railway’s liberalization realized slower than in other sectors Target: more goods to rail is not reached 2013: rail freight transportation still faces serious problems EU members show stagnation, the level of market share is still below target figures with a 10-year delay. Different degree of development in East-West comparison 3 08/10/2013

4. Modal split EU Freight Transport, % of tkm 08/10/2013 4 Air and sea: only domestic and intra-EU 27 Source: EU transport in Figures, 2012, p. 36

5. Policy Considerations (2) A single European rail market is conditional to increase competition, reduce costs and improve transparency with regards to rail shipments. Full unbundling and interoperability are required to create the necessary level- playing field. Policymakers have to further develop the railway policy in Europe and offer support for the 4 th Package, without delay. 5 08/10/2013

6. Market Considerations International trade flows have surpassed global GDP growth for decades. Increasing trade across borders is supported by transportation improvements and increasing ICT, lowering costs and providing transparency. For Europe, growing markets are moving East and/or South, potentially increasing distances and number of countries to cross. The share of rail freight transports in the EU has been decreasing in recent years, but opportunities, in particular on the East-West corridors, are big. 6 08/10/2013

7. Market considerations: Evolution of the market in the East intense industrial activity in Russia and in Central/Western China rising domestic consumption/new consumer markets in Russia, in China and in Central Asia increasing direct foreign investments, especially in the eastern side of the WBSA Delocalization still in-progress (Russia) and in China (from the coast to Central and West China) - logistics service providers need to follow Exploitation of natural resources (Russia: wood, oil, gas/ Kazakhstan: oil, gas/ Uzbekistan: gas, uranium/ China: ore)  boost in trade volumes on the East-West axis, these are the main factors that trigger railway development opportunities 7 08/10/2013

8. Market for multimodal business between Asia and Europe Huge volume between Asia and Europe 15 million TEU by sea A big potential for multimodal business  A lot of existing and developing flows: between Europe and the region of Moscow  on corridors from Russia to Central Asia: China, Kazakhstan The competitiveness of the rail in terms of prices and transit time  Big interest in rail in the Eurasian market  need for multimodal products and partners in this area 8 08/10/2013

9. Comparing the options (1) 9 Railway Solution  Transit time: 3 weeks  High frequency of shipments  Fewer containers per shipment  High level of flexibility  Terminals at the border stations Air Freight  Transit time: 5-10 days  Limited frequency/Flexibility  Low weight capacity  Very high costs in general Deep Sea Vessel  Transit time: 4-6 weeks  Slow/super slow steaming  Unstable rates 08/10/2013

10. Comparing the options (2) 10 Price: rail costs 20-30% more than sea Transit time: rail is about 30 days faster than sea transport Trends in prices: In short-term: increasing prices for sea transport, closing the gap between sea and rail prices Additional huge capacity in sea container vessels will force down freight rates in maritime transport - rail will face new challenges in direct competition In the long-term: sea and rail transport prices will be closer again partly due to higher energy prices and additional costs Trends in transit times: In shortening transit times for rail due to infrastructure, technological developments and further enhanced cooperation Result: relative competitiveness of rail will improve 08/10/2013

11. Basic rules for the Competitive Rail Option Price: Competitive pricing, based on market prices Time: Time as key differentiation of rail to sea Reliability Flexibility and frequency Quality: SLA’s A total integration in the supply chain Identify return flows: to reduce empty loads 11 08/10/2013

12. Interoperability is key! Further development of ports and hinterland connections for railway transport will allow for increase in cargo volumes in the WBSA region. All intra-European corridors, those linking Europe to Asia and Middle East, need improvement, because they boost interoperability. But also need for real interoperability between continents and modes:  need for provision of information several times for different purposes  lack of information on multimodal availabilities  lack of integration of information from tracking and tracing technologies and intelligent cargo applications harmonisation of technical and administrative rules both in Europe and Asia which will facilitate and ease cross-border operations 12 08/10/2013

13. Challenges along the Rail Corridors Customs Identification of return flows  Imbalance in trade flow: 55% westbound, 45% eastbound – economic interests in strengthening exports CIM/SMGS single consignment note Lack of e-Documents Lack of real Single Windows in support of:  faster release of goods  predictable and efficient description and implementation of rules  more transparency 13 08/10/2013

14. Multimodal Challenges 14 Complexity of freight transport information exchange in an multimodal transport context: lack of interoperability along the supply chain inefficiencies, costs, reduced visibility of freight, perceived complexity for multimodal transport, sub-exploitation of multimodal transport, non-optimized use of existing transport infrastructure, etc. 08/10/2013

15. Thank you for your attention!