EURACTIV: Kazakhstan the new EU Green Gateway to East Asia

As the European Union is revising the TEN-T rail freight corridors under the new Sustainable and Smart Mobility Strategy, the effective connection of the Eurasian rail routes with the EU Core Backbone Network is a key priority, writes Pierre Borgoltz.

Pierre Borgoltz is a member of the advisory council at FERRMED Study, a former coordinator for cooperation with Central Asia countries, EEAS.

A new geography of transcontinental transport and trade is in the making across Eurasia as the “EU-China Express” freight trains have reached in 2020 a landmark transit of half million TEU containers equivalent, an increase of 65% over 2019.

The Trans-Eurasian Rail Corridor has established itself as a new important channel for EU trade with Eurasia and East Asia The EU stands much to gain in adapting its transport network to this new reality.

The establishment of rapid trans-Eurasian rail routes has brought closer together the two edges of the Eurasian continent while giving a chance to Central Asia partners to become land-linked and have access to global markets.

Competitiveness of transcontinental freight routes has markedly improved over the past few years and is attracting increasing volume of high-value-added goods and material, the flagship of EU exports to East Asia.

With continued improvements of operations and logistics services on the rail freight routes new synergies have emerged between major economic actors across the Eurasian space, notably for industrial production and value chains in sector such as motor vehicles, electronics, chemical or pharmaceutical sectors.

To recall that the first “Express block trains” from China to the EU were arranged for large European companies.

Trade in goods carried on the trans-Eurasian routes has developed steadily in both Eastern and Western directions. In year 2017, the estimated share of trans-Eurasian freight routes in total EU and China containerised trade was 2.5 % for EU imports and 3.2 % for EU exports, but 80% higher in Germany trade and 2,5 times higher for imports by Poland.

The value of goods per rail container from EU to China could be estimated five times those of maritime transport. By end 2020, the volume of containers flows transiting on the “EU-China Express” rail routes has tripled.

Kazakh rail system accommodated most of the 2020 surge, handling 90% transit flows, while major congestion unfolded at the EU eastern borders. Kazakhstan, becoming the main transport hub in the middle of the Eurasian continent, has also turned into the new EU Green Gateway to East Asia.

Continuous improvements along the Eurasian rail freight routes have made it possible to absorb safely and efficiently such considerable transit.

EU bottlenecks

The rapid expansion of train frequency and container volumes from the Trans-Eurasian freight routes has been causing difficulties at the EU borders. In particular in Poland, through which transit 95% of total “ EU-China Express “container freight, both the main cross border station Malacewiecze/Brest and the country’s rail freight network appear to have been caught off-guard and reached their management and capacity limits.

Already end 2018, some difficulties were expected in coping with growth of transit between Europe and Asia – estimated then at up to 650,000 TEU by 2028, in case the operational and technical bottlenecks on the Polish rail freight system and Terespol-Małaszewicze/ Brest border crossing were not removed.

During 2020, recurrent delays have been observed at the main EU entry station, thereby cancelling all the progress and competitiveness edges achieved by Eurasian operators up that point on the trans-Eurasian routes.

However another important factor appears to be the limited management and absorption capacity of the country’s rail freight system itself to organize expeditions of block trains continuing from the border to their final destination in further EU hinterland.

The poor and inefficient links with the EU Rail Freight Corridors Network translate in a rapidly growing proportion of “EU-China Express” block trains that no longer can reach earlier destination in the main EU Economic Locomotive regions, but shortly end up their course in Poland, reaching 56% of all “China-EU Express” trains in first half 2020, with 44% stopping right at the border station Malacewiecze.

In contrast, the later was the point of departure for only 9,3% containers rail transit back to China, clearly unable to organize “return” block trains eastward and achieve balanced east-west container flows. This phenomenon generated a costly shift in east-west EU-China Express container cargo, from 47% -53% in 2018 to only approx 30% – 69% for 2020.

Actually, establishing a balance between east- and westbound rail traffic has been one of the main aims of the operators active on the New Silk Road.

The increase in eastbound traffic supports the return of locomotives, rolling stock as well as container equipment and thus, as noted by observers, the cost of rail freight is decreasing by each percentage when eastbound traffic increases, feeding itself the sustainability of the transcontinental rail routes.

The outcome would equally enhance the EU potential for high end exports to China and East Asia. China is itself actually promoting this virtuous process, for instance promoting directly return EU export flows or by the construction of type-B bonded logistics center at key Europe-China hubs that much improve performance of Eurasian routes, relieving congestion at Border Crossing Points and boosting their handling capacity while activating further hinterland links for the expansion of supply and value chains.

During the last couple of years, in succeeding to maintain the direct connections between the major multi-modal counterpart hubs in economic locomotive centres on each side, “China-Germany Express” block trains were able to ensure a quasi-balanced east and west containers transit flows, including for year 2020.

The key importance to establish a smooth path along the freight routes directly between major multi-modal hubs, end destinations in respective economic locomotive regions that can feed cargo delivery hinterland with an efficient capillarity up to final clients has been highlighted for strengthening TEN T Rail Freight Corridors Network. The same principles take even more significance regarding the long distance transcontinental rail routes.

At the recent COP Summit on 12 December 2020, the European Union, Kazakhstan, China, Japan, South Korea and other partners have just set new ambitious targets to meet their commitments under the Paris Agreement and to become carbon neutral by 2050-2060.

And on 10 December 2020, the Commission released its new ‘Sustainable and Smart Mobility Strategy’ to guide the mobility sector to achieve a 90% cut in carbon emissions by 2050, including inter alia, the doubling rail freight traffic by 2050.

The rail freight corridors will be integrated in the TEN-T core network, filling in the most important missing links with improved connections, adapting the core rail network so that it is fully suitable for absorbing much higher freight traffic.

To achieve the EC targets, it appears necessary to concentrate efforts in the priority sections of the 9 Main Transport Corridors where the most significant freight transport volumes (all land transport modes included) are moved.

Another key point is to identify a limited number of strategic socio-economic hubs of this EU Core Backbone Network with the corresponding clusters of main intermodal terminals (strategic terminals) duly linked to intermediate and local terminals.

“Quick wins” highlighted for enhancing performance and efficiency are train length, loading gauge, digitalisation and improved operational rules. For achieving an upgraded efficient freight scheme for EU economy in years to come, an additional Trans-Eurasian perspective is also required.

While the extension of the TEN-T was “one key deliverable “ to Eastern Partnership in 2020, the Indicative Action Plan for investments to 2030, drawn before the new “European Green Deal” didn’t incorporate fully its objectives, nor address the rail connectivity issues between trans-Eurasian routes and the Backbone Rail Freight Network.

As the EU embarks on unprecedented overhauling of the “TEN- T Backbone Rail Freight Corridors, it provides also an excellent opportunity to integrate the optimum connections between the Core Backbone Freight Corridor Network and the key “Trans-Eurasian “Express” rail routes in the new “sustainable and smart” scheme .

Engagement and enhanced cooperation by the EU with the Eurasian/East Asian counterparts would be most timely to ensure effectively the building of strong competitive rail connectivity of the EU with China and East Asia across Eurasian space for the coming years.

In line with the EU’s Strategy on Connecting Europe and Asia, a structured form of cooperation among all the actors of the transport and logistics chains would promote a sustainable, comprehensive and rules-based connectivity, addressing pending issues to ensure a lasting high-performance of the transcontinental rail freight transport to the mutual benefits of all the stakeholders.

At the Eurasian Economic Union Summit (EAEU) on 15 December 2020, as Kazakhstan is about to take up the organisation chairmanship in 2021, President Kassym-Jomart Tokyaev emphasized the need to create an integrated Eurasian transport system by optimising and lowering the costs for cargo transit.

In the present context, the high relevance for the EU to take up such proposal for enhanced cooperation on the trans-Eurasian corridor remains entirely valid and would indeed substantially contribute to upgrading effective and operational connections between the EU Backbone Rail Freight Corridors and the trans-Eurasian Rail routes that are urgently needed for the coming years.

Time is ripe for the EU to effectively engage and connect with the Trans-Eurasian Corridor and. all its counterparts.

Pierre Borgoltz