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5. Joint venture sees opportunity to set up southern freight corridor
February 14th, 2007
A trans-continental rail freight company linking Europe with Asia is expected to be up and running by summer (2007). EuroAsia Rail Logistics (ERL) will be a joint venture between state-owned rail freight companies Deutsche Bahn (DB) in Germany, PKP in Poland, BC in Belarus and RZD in Russia.

"One of the obstacles decreasing the competitiveness of RZD in the trans-continental corridor is the absence of a powerful operator in charge of the entire process, " its senior VP, Boris Lapidus, told the Eurailfreight conference last week.
The partners already offer intermodal products between Berlin and Russia and from Russia to Rotterdam and Antwerp; in 2005 they piloted a train service between Berlin and Moscow, shortening transport time by 15 hours.

< ERL’s role will be to present the customer with a single face and establish a regular timetable, coming up with new products and monitoring them. It will subcontract transport from its shareholders. In November, DB and RZD signed a separate agreement with China Railways to increase freight transport along the east-west corridor. An Limin, senior advisor to the ministry of railways in China, told the conference: "With the complete opening of the European freight transport market, it would be a big opportunity and challenge for China Railways to develop and expand intercontinental freight transport." Trade between China and Europe exceeded US$300bn in 2006. Most of the products exported to the EU are containerised and transported by sea, with Sino-European maritime container volumes topping 10m teu in 2006.

"It will be neither economical nor wise to depend solely on maritime transport to meet the demand of such a huge market, " said Limin. "Maritime transport takes 35 days, which indicates the great potential of railway transport in intercontinental transport." China Railways was hoping to reduce the rail transit time between Beijing and Germany to 15 or 12 days, using a more southerly route than the Trans-Siberian Railway (TSR).
Highlighting the need for commercial co-ordination to draw up competitive products, Klaus Kremper, CEO of Railion Deutschland, said that time-wise, rail had an advantage over sea, but ships still had a clear cost advantage over rail.
"Transporting a 20ft container from Asia to Europe by rail costs €1,600 ($2,000) and by sea it costs €1,100 ($1,430)." Other challenges include installing an automatic gauge changing system and the interface between different rail laws.

CIT, the Swiss-based international rail transport committee pushing for a single Eurasian rail transport law, has already succeeded in producing a single consignment note combining CIM and SMGS requirements - the legal rail transport conventions covering Europe and Asia. It will become available this year in electronic form. The two legal systems mean that consignment notes have to be transcribed, often a source of error and resulting in lost time and added costs.

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