Railway Days; 8 October Bucharest, Romania Ivan Petrov, Chairman, CLECAT Rail Institute

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. 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… CLECAT – Who do we represent?

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

4. Modal split EU Freight Transport, % of tkm

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 4thPackage, without delay.

6. Market Considerations • International trade flows have surpassed global GDP growth for decades. Increasing trade across borders is supported by transportation improvementsand 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.

7. Market considerations: Evolution of the market in the East • intense industrial activityin Russia and in Central/Western China • risingdomestic consumption/new consumer markets in Russia, in China and in Central Asia • increasing direct foreign investments, especially in the eastern side of the WBSA • Delocalizationstill 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

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

9. Comparing the options (1) • 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

10. Comparing the options (2) 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

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

12. Interoperability is key! • Further development of ports and hinterland connections for railway transportwill 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 • harmonisationof technical and administrative rules both in Europe and Asia which will facilitate and ease cross-border operations

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

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. Multimodal Challenges

15. Thank you for your attention!