New rail hubs are emerging in Europe as Chinese influence and fraught geopolitics force a rethink of facilities and connections, the Silk Road Summit held in Vienna on November 28 heard.
This is especially true for the Middle Corridor, the multi-modal land and sea route emerging between China and Europe, especially the latter’s southeastern countries.
China’s focus in Europe, it was pointed out, is increasingly eastern both in political and investment terms.
While Austria and its capital Vienna each bring important things to the table, the increasing role of China as an investor, especially in Eastern European countries such as Hungary, which last year took 44% of Chinese investment in Europe, means new links are needed.
“It’s connected to the Chinese,” Martin Koubek, head of Silk Road for intermodal major METRANS told the summit.
Backing this up is Austria and Vienna’s geographical position as a gateway to the continent’s southeast. “Its location is just right,” said Dmitrij Hasenkampf, general manager, sales and business development, at RTSB, a leading rail operator along the Eurasian corridor. Germany and its industry lies to the northwest and around Austria are countries like Poland, Slovenia, Slovakia, Czechia and Hungary, where a lot of outsourcing is done.
Location was just one of a list of Austrian/Viennese advantages listed by Hasenkampf. As a country, Austria has one of the better rail infrastructures in the EU, a good business environment and abounds with human capital. Vienna, specifically, he pointed out, is at the crossroads of Eastern and Western Europe.
Vienna is not so much the destination, but its network and expertise will be, was the view of Igor Majorov, managing director at InterRail Europe, a Eurasian railway company.
Business this past year, he told the summit, has gone off “like a rocket.” (Meanwhile, Koubek of METRANS reported 50% more volume compared with last year.)
Another big change is also coming into play with Chinese companies developing what Hasenkampf termed “network thinking.”
Chinese customers, he went on to say, know and understand much more of the subtleties and the nuance of facilitating from the centre rather than going straight to Duisburg and Hamburg. “It’s logical and efficient. Chinese customers know where they want to go,” he said.
More volumes in Eastern Europe means new hubs are emerging, but many at the summit emphasized this was not at the expense of the traditional hubs both rail such as Duisburg and ports such as Rotterdam and Hamburg. “It’s not just one hub anymore; it’s many hubs,” said Majorov.
This, in turn, is helping to underpin the emergence of the Middle Corridor of the Silk Road with Vienna as its terminus. Already things are moving, but at the moment, there is some caution in large part because of the geopolitical context, even though some see it as part of the corridor’s opportunity.
One out-there view has Yemen’s Houthi rebels, who created and sustain the current logjam in and around the Suez Canal, as the only reason why the Middle Corridor is being considered. With it possible to go from Hong Kong/Shenzhen to Trieste Koper in 25 (or even just 22 days in some cases), traditional shipping routes remain as valid as the corridor.
Against this was a feeling different parts of the same geopolitical context, such as the risk of goods being sanctioned as well as Chinese interest, will drive the Middle Corridor.
Already some think it will be a niche especially when compared to the well-established, voluminous northern route. “The development will be reasonable, maybe in a couple of years,” said Majorov.
Things are starting to change and vexing issues like capacity and procedures are being tackled, meaning not so much that volumes are changing, although it helps, but that times are getting better.
The example given by Hasenkampf was countries like Azerbaijan, Armenia and especially Kazakhstan, which he said are “investing a lot in infrastructure.” This means transit times are down from 50 days to around 30 on the Xi’an and Chongqing to Budapest routes. “It’s improving in terms of cross-border operations, documentation and the people they understand this is their chance,” he said.
Substantial work still needs to be done elsewhere though, including development of the Black Sea to the middle of Europe network, said Alexander Mironov, managing director of DL Europe. “It’s going to be challenging,” he said, especially as there are still concerns about the rail network and highways or autobahns in the rest of Europe.
Another area of interest is Turkey, which is keen to be involved and would add extra weight to the political push the project needs although it has similar problems.
Already one Turkish company, Arkas Holdings, has trialled trains to Georgian ports and moving freight across the Black Sea to Romania and Bulgaria, according to Zeki Demirag, trade and customer relations director for Arkas’s Port and Terminal Services Group.
“I see Turkey as a great potential in this corridor, though we need to do something with the infrastructure,” said Hasenkampf.
By Michael Mackey
Correspondent | Vienna
