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By: Justinas Liuima

    Over the last 10 years Asian countries have emerged as low-cost manufacturing hubs for products aimed for export. However, the situation is changing and Asian countries are developing higher value domestic industries. In addition, the growing number of affluent people in Asia is boosting demand for imported goods from Europe, in turn changing the trade structure. These changes are also having an impact on logistics.

    As trade structure is changing, new modes of transportation between Asia and Europe are being developed. The Trans-Asian Railway (TAR), supported by the UN, is the most representative initiative of boosting operational efficiency and the economic relevance of railways. The TAR aims to provide six efficient freight and passenger transport services between Asia and Europe via 114,000km of railway.

    Trans-Asian Railway

    In 2011, the first line connecting China and Germany was opened. The railway line, dubbed the new Silk Road, covers more than 10,000km through China, Kazakhstan, Russia, Belarus, Poland and Germany. The journey by train takes 15 days (compared to 30-40 days by sea) and is 80% cheaper than air transport. Computer giant Hewlett-Packard claims it shipped more than four million notebooks via this railway over 2011-2013, while German carmaker BMW uses it to transport automotive components from Leipzig to Shenyang. One of the operators of the line, DB Schenker Rail Automotive, has in turn launched a daily freight service to China.

    New routes from Singapore to Shanghai and Seoul to Samarkand, Uzbekistan, will also be possible in the near future. Improving rail connections will also increase the importance of dry ports, which will operate as hinterland distribution and consolidation centres in the logistics chain. Dry ports are also expected to become a viable alternative to sea transport and provide new opportunities for landlocked countries. Moreover, railway gauge differences create preferable conditions for dry port expansion in Eastern European countries.

    Russia

    Due to the development of new TAR lines, dry ports in Russia could become a viable alternative to sea transport. Seaports are the main logistics channels in Russia, with the ports of St Petersburg, Novorossiysk and Vladivostok handling 60% of the country’s container traffic. However, as the motor vehicle, heavy machinery and electronics industries in Russia develop, its seaports are unable to cope with increasing trade flows. China, Japan and South Korea are among major component suppliers to Russia’s machinery and electronics industries and growing railway links between Europe and Asia (including the Trans-Siberian Railway) are viewed as a positive development.

    The dry port at Vorsino (also referred to as Freight Village Kaluga) is the most promising development. At the end of 2013, the railway, temporary storage warehouses and container terminal were completed at the Kaluga Industrial Park, where car component, heavy machinery and electronics clusters are located. Investment stands at around €250 million, with the planned capacity of the terminal standing at 300,000 TEUs per year. Connection to Kaluga’s airport is planned by the end of 2014 and freight volumes are forecast to exceed one million TEUs per year.

    China

    With growing trade and investment between China and Germany, new railway links connecting Asia and Europe are being added. For instance, in 2013, Zhengzhou International Inland Port Development Co Ltd opened a train route from Zhengzhou Industrial Zone to the German port of Hamburg. By the end of 2013, new railway routes connecting China with Almaty and Moscow were also added. The Chinese city of Chongqing and Guangdong province in 2013 also announced plans to build dry ports and logistics centres. Dry ports are expected to simplify customs clearance procedures and save up to 30% on transportation costs. The potential for dry ports is huge as total freight volume at Chongqing stood at one billion tonnes in 2012.

    Poland and Lithuania

    Dry ports in Poland are also expected to benefit from railway links between Asia and Europe. The dry port at Poznan lies on the main trade route between Berlin and Moscow and is an important hub for handling cargo from Germany and other Western European markets. Poznan’s dry port handles around 150,000 TEUs annually, which are transported by rail. Given the growing exports of car components from Germany to China and Poland’s emergence as a car manufacturing hub in Eastern Europe, trade volumes are expected to grow. Railway gauge differences also provide opportunities for expansion for Poland’s dry ports located near the Russian and Belarusian borders.

    Lithuania is also expected to benefit from new routes connecting Europe and Asia. For instance, the Zhengzhou-Europe railway freight route passes through the port of Klaipeda and these developments will also benefit Lithuania’s dry port. MSC is now developing an intermodal transport terminal in Vilnius, at a cost of €32 million. The terminal is at the crossroads between Belarus, Poland and Russia and growing Asian-European trade by rail is viewed as a positive development.

    Uzbekistan

    Growing trade volumes by rail between Asia and Europe also provide new opportunities for landlocked countries such as Uzbekistan. Uzbekistan is also one of the nations which has acknowledged the importance of dry ports.

    In 2011, Uzbekistan opened a dry port in the city of Angren. The country is also developing a dry port in Navoi, in connection with the Navoi Free Trade Zone and Navoi Airport. The facilities are located along major sub-regional road, rail and aviation routes to capitalise on the country’s transit potential. In addition, the country’s authorities are planning to cut tariffs on cargo handled by dry ports.

    Uzbekistan is rich in mineral resources and lies on important trade routes. Its importance is expected to further increase once new railway links connecting Uzbekistan with Afghanistan, Volgograd, Seoul and Bukhara are finished.

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