Back on track – reviving rail in Central Asia

Published on Tuesday, 19 April 2016

Published by Sharad Saxena on Tuesday, 19 April 2016

The Zhezkazgan-Saksaulskaya railway connects the Caspian Sea with the PRC via Kazakhstan.
The Zhezkazgan-Saksaulskaya railway connects the Caspian Sea with the PRC via Kazakhstan.

Railways are generally considered an efficient way to transport bulk cargo or goods over long distances. But all over the world, they have been losing market share to road transport. This is especially the case in Central and East Asia, where governments have generally tended to give priority to road network investments.

In Central Asia, this downward trend for rail market share is exacerbated by political and economic circumstances. Over the past 20 years, economies in most Central Asian countries have changed dramatically, moving away from the command structure of the past to being more responsive to market demands. However, railway operations and institutions have failed to keep pace with these changes.

During the Soviet period, there was only one railway organization for the whole region. The institutional setups of many railways in Central Asia have not changed dramatically from this monolithic approach. Most railway organizations are still closely controlled by governments, leaving railway management with little autonomy.

There were also fewer international borders during the Soviet era. Now, borders are not just a fact of life for the former Soviet republics, but also a source of friction that inhibits the smooth flow of traffic between neighboring countries.

Given these trends, we could be forgiven for being pessimistic about the state of railways – both in general and especially in Central Asia. However, one recent development provides hope for the future of railways. This comes in the shape of container “block trains” that have started operating along the route between the People’s Republic of China (PRC) and Europe. These trains are called “block trains” because all the freight cars are shipped from the same origin to the same destination, without being split up or stored enroute – a practice that saves time and money.

After much hand wringing over the years about the competitiveness of moving goods by rail, we are at last seeing railways capture a significant segment of the market. Block freight offers an integrated service from railway service providers from origin to destination, ensuring close coordination among the various railway operators en route, and streamlined border crossing procedures.

The first PRC–Europe block container train began test operations between Beijing and Hamburg in 2008. Since then, the number of routes and frequency of service has grown dramatically.

One example is the Chongqing–Duisburg rail route—the Yu-Xin-Ou line—which now has three container trains per week. Departing from the industrial hub of Chongqing, where companies such as Hewlett-Packard Co., Acer Inc. and Apple Inc. supplier Foxconn Technology Co. have production sites, the train takes 16 days to travel more than 11,000 km from the PRC via Kazakhstan, Russia, Belarus and Poland – an impressive feat by any standard.

Such east-west overland rail services are competing successfully with ocean transport and other transport modes for freight transit in high value, time-sensitive commodities. In this case, door-to-door time of transporting personal computer notebooks is a little more than a third of the sea route and costs about a sixth of transporting them by air. Thus rail is becoming the perfect alternative when companies are looking for a faster alternative to sea transport and are unwilling to pay the high costs of air freight.

This year, a weekly container service is planned moving loads eastward from Hamburg to Zhengzhou. It is a service—taking about 15 days—that will provide the all-important eastbound service, carrying auto spare parts, electronic components and other parts for industrial robots for manufacturers in the PRC.

These developments on rail freight are heartening for a number of reasons. First, they show railways do offer a mode of transport that is accessible, affordable, environment-friendly, and safe.

They also show railways as a vehicle for promoting regional cooperation and integration. A recent notable example is a pioneering 75-km line, funded with a $165 million ADB grant. Linking the Afghan city of Mazar-e-Sharif to Hairatan on the northern border with Uzbekistan, this award-winning project is the first commercial rail network in Afghanistan’s history, connecting to Uzbekistan’s extensive rail network and giving landlocked Afghanistan faster and cheaper access to regional markets in Europe and Asia. This, along with other planned rail lines in Afghanistan, will allow it to take better advantage of its vast mineral resources.

Before the line was built, cargo moving across the border had to be offloaded from Uzbek trains and reloaded onto Afghan trucks. The line is helping to slash travel time, lower freight costs, and expand cross-border freight consignments allowing for some 4 million tons of goods to be transported in the first year of operation.

Hopefully with investments like this, and the cooperation of countries across Asia and the Pacific, railways can increasingly serve as the backbone to an increasingly prosperous region.