Amid two serious crises, the international railway community met for a rendezvous in Brussels - corona-conform in a hybrid mix of live and virtual panels. During several sessions, experts and spectators discussed the present and future of the Middle Corridor, which runs south past Russia.
The first part of the meeting was dedicated to the current state of transportation between China and Western Europe. In addition to the Covid-19 issue, permanently present for more than two
years, and its impact on trade, logistics, and transportation, the Russian war of aggression in Ukraine is now emphatically affecting international trade. Until February 2022, about 80-90% of
shipments from China went through the Northern Corridor; the route from China, via Kazakhstan or Mongolia, through Russia. Since Russia has largely been decoupled from international trade (and
many customers explicitly want to bypass Russia), the Middle Corridor has become increasingly attractive. Unfortunately, there is not enough capacity here.
The Middle Corridor runs from China via Kazakhstan, through the Caucasus, Azerbaijan, Georgia, and Turkey. In the process, the Caspian Sea must be crossed, and either the Black Sea or the land mass of Turkey. In addition to several necessary reloading operations, it should be noted that the Black Sea is almost entirely a war zone, and strewn with sea mines in large parts.
Expand the infrastructure
Jacky Yan, Managing Director of New Silk Road, predicted that it would take two to three years for volumes on the Northern Corridor to return to pre-war levels once the war ends (not yet foreseeable), and Western sanctions cease. Diyor Mirkhoyayev, Commercial Director of Neptune Logistics Group, stressed that traffic through Belarus would increase significantly again in the future. He clarified that the transition from Covid measures to post-Covid will be quick and smooth, provided all players are willing to share their information with the market. He urged further infrastructure development on the Middle Corridor.
The Western sanctions were the subject of another panel, in which two lawyers, Sarah Reilly and Shanne Verkerk, explained the issue and practical consequences of the Western sanctions, in detail. Transit through Russia is currently not subject to sanctions, the speakers clarified. However, sanctions many also not be circumvented, and sufficient steps to clarify the ownership structure and the final use of the transported goods are expected.
Long runtime at a higher price
The main problem of the Middle Corridor is the long transit time of at least 40 days – making it hardly shorter than the sea route, but significantly more expensive. The biggest bottlenecks here are the capacity of sea transport across the Caspian Sea, and the infrastructure in Turkey, both inland and at the borders. Cankat Yildiz, Business Development Director, Middle Corridor Logistics, was certain: "Despite a steady increase since 2017, the Middle Corridor will not be able to replace the Northern Corridor!"
In his presentation, Martin Koubek, Director Silk Road, METRANS, explored the question of what inconveniences customers would be willing to bear for a desired bypass of Russia. It is not only in the Asian region that infrastructure problems stand in the way of smooth progress; extensive construction work in Serbia, and the bottleneck of the Bosporus crossing through the Marmara Tunnel, or the alternative route across the Black Sea and through Romania, also pose considerable obstacles.
Problems and benefits
The problem with the Middle Corridor: customers are reluctant to buy a product that - compared to the Northern Corridor - takes significantly longer and demands much more investment. Alexander Hau, Product Manager Intercontinental Rail at Maersk Line, spoke of the Middle Corridor being the alternative to the alternative, already considering the Northern Corridor as an alternative to sea freight.
Uwe Leuschner, CEO of FELB Group, commented on the current situation: "Multimodal services and creativity are in demand. But the decision-makers for this are sitting in the customer-oriented companies! Rail transport can still be attributed a high level of importance, because the arguments of rail are still valid: ‘Faster than sea freight, cheaper than air freight, and a far sight more sustainable than other transport modalities!’”
The future is digital
A final panel dealt with the future of rail freight. Marianna Levtov, Head of Regulatory Affairs, Digital Silk Road Specialist at Nexxiot, emphasized the importance of digitalization for the future. The longer the transport route, the greater the complexity due to greater dependence on third-party services. On longer routes, one also has to deal with various controls as well as country-specific regulations and certifications. Therefore, long-distance transportation also requires automated and transparent processes. Andre Wheeler, Director, Wheeler Management Consulting Pty Ltd, examined the impact of the Sino-Russian agreement on China's Belt and Road Initiative (BRI). China relies on Russia for the BRI, as most of its trade with Europe passes through Russia and Belarus. The Russian attack will thus also further strengthen China's tendency to rely more heavily on the Middle Corridor, Wheeler said.
"The corridor is not dead; the corridor is an opportunity!" This assessment by Onno de Jong, Senior Consultant Transport, Infrastructure & Mobility, Ecorys, was shared by the majority of the participants in the end.
Thomas Felber, CFG / MAR
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