Erich Staake is wearing two hats: on the one hand he is CEO of Duisport AG, Europe’s largest inland port lying at the center of Germany’s busy Rhine-Ruhr economic area. Secondly, he is Chairman of the Supervisory Board of MFAG, the holding company of Leipzig/Halle and Dresden Airports. Therefore, water and air are two very familiar business sectors to the logistics expert. Now he has added rail freight to his scope of functions, benefitting both Leipzig and Duisport.
The manager’s newly awakened interest in rail freight was recently illustrated in Minsk, Belarus. There, Mr Staake and other managers inked a contract aimed at building a large distribution
center for processing exports arriving from China by cargo train and unloaded at the Belarus capital. Once construction works are completed, Chinese e-commerce shipments bound to central or
western Europe could be flown from Minsk Airport to Leipzig and from there onto their final destination within the EU. By doing so, it would shortcut the supply chain by three to four days
compared to freight that continues its journey on board the cargo train taking from Belarus to Western Europe.
Train-plane combined transports
An operator for this sort of blended transport solutions is already in the starting blocks: CargoLogicGermany. However, since the newcomer is still waiting to be admitted an Air Operator’s Certificate by the German aviation authority LBA, their B737 freighters are forced to remain grounded.
But experts assume that sooner or later the deadlock will be overcome with Leipzig-based CLG starting flights to Minsk and other European cities transporting e-commerce goods, as previously announced by their management.
SF Express is next LEJ candidate
Another good news for Leipzig, the airport’s chief controller Herr Staake, and CargoLogicGermany is a recent announcement made by SF Express to commence freighter flights between Shenzhen and the Saxon city as of next year. This will massively up the throughput of express cargo handled there with most of the shipments transited to their final EU destinations by air following customs clearance at LEJ.
Strengthening Leipzig-Halle as a cargo hub is fully in line with Germany’s official aviation policy. In their coalition agreement, Conservatives and Social Democrats have consented to extend landing rights at LEJ and to foster the airport’s role in international traffic right negotiations.
On the other hand, this political prioritization of Leipzig/Halle is seen as an affront by the Berlin airports. The fact that Hainan Airlines is persistently denied additional frequencies requested since long on the existing Berlin-Beijing route evidences this one-sided slot policy, claim their managers.
And there is a second issue bothering Berliners: After stopping over at Minsk the cargo trains continue their journey nonstop to Hamburg or Duisburg, ending there.
This is stipulated in the contracting parties' bilateral transport agreements signed for instance by Zhengzhou and Hamburg or Shenzhen and the city of Duisburg, 33% co-owner of Duisport AG.
Intermediate stop wanted
This cemented track policy project manager Sybille Rehse of the Investor Center Ostbrandenburg GmbH in East Germany is eager to break up. Her and her agency’s task is attracting entrepreneurs and fresh capital for creating new jobs. Chinese cargo trains making an intermediate stop at Brandenburg or in Berlin for uploading shipments bound to consignees living in the German capital, the western parts of Poland or northeast Germany – totalling more than 8 million - would be a blessing, provided “we can add value to the goods,” states Mrs Rehse.
This would also benefit Berlin Airports because a great part of the goods that need to be transited to their buyers spread across Europe could be flown off right there.
Highly subsidized cargo trains
Fact is that the number of cargo trains crossing the huge land bridge between China and Europe is growing steadily. So is the quality of goods transported by cargo trains across the new Silk Road. According to Jonathan Hillman of the Center for Strategic and International Studies (CSIS) in Washington, in the first half of 2018 the value of shipments railed between China and Europe rose by more than 140 percent. This upswing is triggered by a combination of steadily increasing market demand and financial support granted by Chinese municipalities. It’s both, confirms expert Ellen Liang of Euroway International Logistics, a Hamburg-based provider of integrated logistics services. Asked about the level of subsidies she speaks of a little transparent situation since each Chinese city interested in becoming part of the transcontinental rail network has its own guidelines.
Beijing nods in agreement
Their doing, however, is fully in line with Beijing’s One Belt, One Road policy aimed at establishing close links between China and countries located along the vast Eurasian rail track.
Recent surveys prove that the financial support often exceeds US$ 3,000 per TEU granted from day one. In his survey, Hillmann speaks of even up to US$7,000 per steel box railed from China to the West. But no matter how high the subsidies amount to, the payments are reduced by 20 percent each consecutive year, thus ending after five years, says Mrs Liang.
And she adds another interesting aspect to this: While in the past goods transported from China to Europe exceeded loads traveling in the opposite direction at a ratio of 60 to 40 or even 65 to 35 at times, this has changed drastically. “Now the volumes are balanced with even a slightly higher number of TEUs railing eastwards.”