The enablers and inhibitors of intermodal rail freight between Asia and Europe

Journal of Rail Transport Planning & Management xxx (2014) xxx–xxx

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The enablers and inhibitors of intermodal rail freight between Asia and Europe Hendrik Rodemann a,⇑, Simon Templar b,1 a b

Schnellecke Logistics AG & Co. KG., Stellfelder Straße 39, 38442 Wolfsburg, Germany Cranfield University, MK43 0AL Central Ave, Cranfield, Bedford, United Kingdom

a r t i c l e

i n f o

Article history: Received 5 August 2014 Revised 9 October 2014 Accepted 9 October 2014 Available online xxxx Keywords: Intermodal transport Eurasian landbridge Intercontinental rail freight Modal shift Supply chain alternative Trans-Siberian railways

a b s t r a c t Contemporary modes in intercontinental transportation are sea and air freight. The geographical connection of Eurasia additionally enables rail freight via the Eurasian landbridge. This transport concept reduces lead time compared to sea freight at lower cost than air or sea-air freight and hence fits into a strategic niche between established modes. These characteristics facilitate developments in supply chain management like increasing transport distances and continuous cost reduction together with relatively new trends (smaller, but more frequent shipments, flexibility and sustainability) that are only partly satisfied by contemporary modes. At this moment, the Eurasian landbridge is at an immature state, used by few shippers. This paper intends to identify factors that enable, respectively, inhibit Eurasian rail freight and understand how inhibitors can be overcome. The research based on case studies reviewing literature and conducting interviews to investigate individual landbridge routes. Besides providing secondary data, literature identified stakeholders and thus served as input for 24 semi-structured interviews to gather primary data. Both data streams were then combined to reveal the current attractiveness of Eurasian rail freight. A future outlook in the closing section aims at stimulating further research and thinking in order to create a viable alternative for global supply chain management. Ó 2014 Elsevier Ltd. All rights reserved.

1. Introduction Today’s markets more than ever present a merciless challenge to almost any corporation in terms of consumer satisfaction, costs and competition. Developments like the enhanced customisation, servitisation and variety of products as well as the continuous urge for technical innovations have replaced former order winners such as costs and quality and downgraded them to order qualifiers. To cope with such developments, supply chain management has become key to a company’s success (Christopher, 2011). Trends as introduced above have considerably changed various prevailing characteristics of supply chain management in relatively short time. The satisfaction of consumer demand has become extremely volatile and hard to please. This has put immense pressure on lead times and caused orders to become smaller, but more frequent. In addition, the constant pursuit for innovation has drastically shortened product life cycles and immensely reduced the time-to-market available to manufacturers in industries such as ⇑ Corresponding author. Tel.: +49 1794118666. E-mail addresses: [email protected] (H. Rodemann), Simon.templar@ cranfield.ac.uk (S. Templar). 1 Tel.: +44 1234 751122.

fashion, consumer electronics and automotive. Such changes present an enormous need for enhanced flexibility in these industries that is generally related to increased costs. However, these developments have come along with the ongoing endeavour to take costs out of supply chains (Christopher, 2011). A reason for this dilemma is the increasing pressure from global competition that forces companies to simultaneously improve service and lower prices. Price reductions are principally pursued by the supply chain function procurement that continuously searches for a lower combination of cost for raw materials, production (including labour) and transport (Rushton et al., 2010). As this is often achieved through global sourcing, the distance goods travel through supply chains from source to consumption has been lengthened enormously in recent decades. Garments for example are not produced and sold close to the cotton growing area anymore. Instead, cotton is grown in Central America, shipped to Asia to produce garments that are later dyed in Northern Africa to be sold in Europe. At the same time however, the peak oil scenario as well as the issue of sustainability gain more and more attention by consumers, economists and politicians. The scarcity of (cheap) oil immensely increases transport cost which in the outer case might trigger the reorganisation of entire supply networks, especially those including very long transport distances. Possible network reorganisations

http://dx.doi.org/10.1016/j.jrtpm.2014.10.001 2210-9706/Ó 2014 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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include the shift of production sites closer to the place of consumption and the introduction of (super) slow steaming of shipping lines in order to reduce cost of emission and fuel. Sustainability has become an increasingly important indicator against which the performance of any supply chain is measured. It also imposes new legal requirements to be obeyed by corporations in order to conduct business (refer to Section 6.6). To ensure customer satisfaction through the provision of sophisticated service at minimal costs and environmental impact under such turbulent macroeconomic conditions requires supply chains to adapt. Intercontinental transport which is a central component of contemporary supply chain management plays a crucial role in this (Rushton et al., 2010). Currently, 99% of intercontinental transport volume is carried by sea freight and the remainder by air, respectively, sea-air freight. Intercontinental rail and road freight take in a negligible share (Davydenko et al., 2012). The characteristics of the available transport modes force shippers to choose between the two extremes of long lead time and low transport cost (sea freight) and short lead time and high transport cost (air freight) as shown in Fig. 1. While these extreme characteristics turn out to be ideal for certain product groups, other cargo types are rather suitable for intermediate solutions. The geographical preconditions of most intercontinental routes however require the unique ability of sea and air freight in bridging oceans and thus do not facilitate the deployment of alternative modes. Such lack of alternatives forces shipments into either of the extremes and consequently requires other adaptation strategies for supply chains (e.g. form-postponement, demand sensing). Considering the geographical connection between Asia and Europe allows the investigation of alternatives to contemporary intercontinental transportation in terms of rail (and road) freight. The concept of running trains between Asia and Europe via the Eurasian landbridge is not new as the first connection, the Trans-Siberian route, was built in 1916 (Shirres, 2011) and used by international freight trains since 1936. During the world wars, the Trans-Siberian route was predominantly used to supply troops of the Allies and under the rule of the Soviet Union the connection initially served domestic, agricultural transportation and shipments to neighbouring communist countries. The emergence of containerised cargo in the late 1960s triggered the Russian government to again offer international transportation (in the form of block train services) via the Eurasian landbridge which attracted volumes of up to 100,000 TEU per year. After the collapse of the Soviet Union, the

High

Reduced Transport Time Transport Cost Reduced Cost

Low Short

Transport Time

Fig. 1. Competitive position of rail freight, Source: Author.

Long

future of the Eurasian landbridge was uncertain (Liliopoulou et al., 2005). Considering contemporary macroeconomic developments and related trends in global supply chain management (outlined in Section 6), Eurasian rail freight (together with road freight) possesses characteristics that present a promising alternative to fill a strategic niche between the extremes of sea and air freight in terms of transport cost and lead time. Based on a research study at Cranfield University, England, this article intends to provide an overview of factors that enable and inhibit Eurasian rail freight with special attention on intermodal transport. After outlining the followed methodology, the article introduces the different routes and their characteristics, compares the available transport modes and presents stakeholders of intercontinental rail freight. Furthermore, it elaborates on enablers and inhibitors of Eurasian rail freight, provides a critical assessment of the current landbridge state and suggests strategies to turn Eurasian rail freight into a valid alternative for global supply chain management. 2. Materials and methodology The research aim was defined as determining the enablers and inhibitors of (intermodal) rail freight landbridges between Asia and Europe that facilitate a transport alternative for global supply chain management. This aim was broken down into three main objectives:  The identification of landbridge stakeholders.  The identification of enablers and inhibitors of Eurasian landbridges.  The identification of strategies to mitigate inhibiting factors. To accomplish aim and objectives, an exploratory study was set up. Key to this approach was the triangulation of data from different sources that was achieved through a mix of literature and survey research. Literature research provided secondary data and was primarily based on the study of academic articles and research publications. However, to consider contemporary trends and market developments, further sources such as magazine articles, promotional material, press releases and websites were used to access a wide range of information and to bypass the time gap related to the publishing process of academic papers. The study of literature provided a technical overview of the different landbridge routes across Eurasia (Section 3) as well as a comparison of available modes (Section 4) and gave insight into the enabling (Section 6) and inhibiting (Section 7) factors of Eurasian rail freight as well as options to mitigate inhibitors (Section 8). Furthermore, literature contributed to the identification of stakeholder groups (Section 5) and hence served as input for survey research in the pursuit of generating primary data. Surveys were conducted using 24 semi-structured interviews supported by a questionnaire. Interviewees were chosen with the aim of generating a balanced mix of interview partners with at least one representative of each stakeholder group as identified in literature research. Potential partners were approached at practitioner events or via the authors’ (indirect) contact network and contacted by email that contained a draft outline of the research and expressed the intention of arranging interviews. The idea of using semi-structured interviews aimed at providing a basis for comparing answers of different interviewees on the one hand while leaving space to discover aspects not considered previously on the other hand. Interviewees were asked to name enabling and inhibiting factors of Eurasian rail freight and subsequently rank them according to perceived importance respectively rate

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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the perceived landbridge performance using a ten-point Likert scale. Besides landbridge enablers and inhibitors, the questions asked further covered the thematic areas options to mitigate inhibitors as well as future landbridge scenarios and were thus consistent with the structure of the previous literature research. For an overview of the 24 interviewees refer to Appendix A. The consistency of both, literature and survey research eventually enabled the triangulation of primary and secondary data which reduced the risk of biased information and contributed to a broader overview of the current landbridge state and developments as well as a more in-depth insight into the interrelations between different stakeholders. A combined analysis of the two data streams was executed with the help of the PESTLE framework which is a suitable tool to assess external factors (political, economic, social, technological, legal and environmental) of a business or market. The results are presented in Sections 6 and 7. 3. Route characteristics The Eurasian landbridge does not represent a single railway line between Asia and Europe, but comprises different routes across various countries. These routes partly share certain track sections, are occasionally linked with each and have further individual side tracks (refer to Fig. 6). The research considered two routes between the Asian East coast and Western Europe and a third route connectTable 1 Technical characteristics of northern east–west connection, adapted from Liliopoulou et al. (2005), Büker (2010) and Shirres (2011). Characteristics

Trans-Siberian route

International route

Connection Distance (km) Gauge (mm)

Moscow–Vladivostok 9290 1520

Electrification

Completely electrified, 3 voltage changes Double track

Hamburg–Beijing 10,000 1520 (Russia, Mongolia, Eastern Europe)/1435 (China, Western Europe) Partly electrified

Track

Moscow

Partly single track

Yekaterinburg

Novosibirsk

Table 2 Technical characteristics of central east–west connection, adapted from: Büker (2010), Engdahl (2012) and Weitz (2013). Characteristics

Central European route

Trans-Kazakhstan route

Connection Distance (km) Gauge (mm)

Antwerp–Chongqing 10,900 1520 (Kazakhstan, Russia, Ukraine, Belarus)/1435 (China, Belgium, Germany, Poland) Partly electrified Partly single track

Rotterdam–Lianyungang 11,870 1520 (Kazakhstan, Russia, Belarus)/1435 (China, Netherlands, Germany, Poland) Partly electrified Partly single track

Electrification Track

ing Northern Europe with the Persian Gulf. The reason for this geographical scope is the reflection of the available landbridge routes at the start of the research. The two east–west connections include a northern and a central connection. The northern east–west connection to a large extent uses the tracks of the Trans-Siberian railway that links the Russian cities Moscow and Vladivostok. Built in 1916 (Shirres, 2011), the Trans-Siberian railway is the oldest rail link between Asia and Europe and, due to being exclusively located on Russian territory, the only domestic Eurasian landbridge. Based on its immense importance as the backbone of Russia’s economy, the Trans-Siberian railway attracts considerable traffic volumes that make the northern east–west connection the most frequented of the current landbridges. At international level, the Trans-Siberian railway is linked to tracks in Belarus, Poland and further in Western Europe as well as the Chinese and Mongolian (Büker, 2010) networks which consequently allows railway transportation across the whole of Eurasia (refer to Fig. 6). Table 1 presents technical characteristics of the northern east–west connection. Figs. 2 and 3 schematically indicate important nodes and border crossings of both, the domestic and international northern east–west connection. The central east–west connection to a large extent bypasses Russia in the south by using the Kazakh railway network to enter Western China. Western Europe is either reached via Moscow, Belarus and Poland (this part is shared with the northern east–

Irkutsk

Ulan-Ude

Vladivostok

Fig. 2. Schematic northern east–west connection, Russian domestic transport, Source: Author.

Malaszewicze

Berlin

Hamburg

Brest

Moscow

Yekaterinburg

Ulan-Ude

Vladivostok

Nauski

Sukbaatar

Zamyd-Uud

Erenhot

Beijing

Fig. 3. Schematic northern east–west connection, international transport, Source: Author.

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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H. Rodemann, S. Templar / Journal of Rail Transport Planning & Management xxx (2014) xxx–xxx

Berlin

Malaszewicze

Brest

Moscow

Petropavlovsk

Dostyk

Alashankou

Duisburg

Prague

Krasnaya Mogila

Gukovo

Verhniy Baskunchak

Ganuskhino

Urumqi

Antwerp

Chongqing

Lianyungang

Fig. 4. Schematic central east–west connection, Source: Author.

Table 3 Technical characteristics of north–south connection, adapted from: Büker (2010) and Davydenko et al. (2012). Characteristics

North South connection

Connection Distance (km)

Helsinki–Banda Abbas 6000 via Caspian Sea 6500 via Azerbaijan 7600 via Kazakhstan, Uzbekistan, Turkmenistan 1520 (Russia, Uzbekistan, Turkmenistan, Kazakhstan, Georgia, Armenia)/1435 (Iran)/1524 (Finland) Partly electrified Partly single track

Gauge (mm) Electrification Track

Helsinki

west connection) or via Ukraine and the Czech Republic with a relatively short crossing of Russian territory (Büker, 2010) (refer to Fig. 6). Table 2 shows technical characteristics of the central east–west connection. Fig. 4 schematically presents important nodes and border crossings of the central east–west connection. Next to existing east–west connections, a southern east–west connection via Turkey, Iran and Kazakhstan is partly under

Bataysk

Moscow

Atyrau

Tiblisi

Astrakhan

Xankendi

Teheran

Nukus

Mary

Banda Abbas

Fig. 5. Schematic north–south connection, Source: Author.

Helsinki Yekaterinburg Moscow Hamburg

Novosibirsk

Berlin

Sovetskaya Gavan

Roerdam

Ulan-Ude 1

Atyrau 4

Antwerp

Kiev

Duisburg

Irkutsk

5

Ulan-Bator

6 Prague

2

Bataysk Vladivostok

Astrakhan

3

Tbilisi

Nukus

Xankendi

Urumqi

Beijing

Mary

Qingdao

Teheran

Tokyo Chongqing

Lianyungang

Banda Abbas

Shanghai

Mumbai Hong Kong Key Northern east-west connecon Central east-west connecon North-south connecon Further connecons (partly under construcon) Berlin Important city on route

Important border crossings/ gauge changes Malaszewicze (PL) / Brest (BY) Nauski (RU) / Sukbaatar (MN) Zamyd-Uud (MN) / Erenhot (CN) Krasnaya Moglia (UA) / Gukovo (RU) Verhniv Baskunchak (RU) / Ganushkino (KZ) Dostyk (KZ) / Alashankou (CN)

1 2 3 4 5 6

Shenzhen Bangkok

Fig. 6. Eurasian railway network, Source: Author.

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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construction at the moment (refer to Fig. 6). An important milestone in this is the construction of the Marmaray tunnel under the Bosporus (Rousseau, 2012). Further plans exist to build tunnels that link the Eurasian landbridge to railway networks in Japan and North America (Shirres, 2011). The north–south connection links the city of Helsinki, Finland with Tehran and the Port of Banda Abbas in Iran (refer to Fig. 6). Unlike the two east–west connections, the north–south connection does not exclusively use rail freight, but crosses the Caspian Sea by vessel. However, two routes that bypass the Caspian Sea at both, the east and west coast are currently under construction (Tennenbaum, 2001; Brice, 2013). Table 3 introduces technical characteristics of the north–south connection. Fig. 5 schematically indicates important nodes and border crossings of the north–south connection. Fig. 6 visualises the individual routes in a geographical perspective. 4. Mode comparison The Eurasian landbridge competes with contemporary intercontinental transport modes, sea and air freight, their combination sea-air freight as well as road freight for transportation between Europe and Asia. The current modal split indicates that sea and air freight dominate the Eurasian transport market in terms of cargo value with a combined market share of more than 80%

Fig. 7. Distribution of EU27-China trade by transport mode in 2012 in billion €, adapted from: Eurostat (2013a).

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(Fig. 7) whereas sea freight has by far the largest share (96%) with regard to transport volume (Fig. 8). The individual modes available to shippers come with different benefits and drawbacks. In the following, the consequences of choosing one of the contemporary transport modes are outlined and compared to the use of the landbridge. The mode comparison is divided into a general part that focusses on the transport modes as such and a route specific that considers the characteristics of individual landbridge routes. Intermodal trains that are run via the Eurasian landbridge typically exist in the form of block trains. Depending on the service they either collect cargo from inland and port terminals (public services) respectively production plants and distribution centres (point-to-point services dedicated to individual shippers). Choosing a train instead of a vessel, airplane or truck has a direct impact on the capacity available to the shipper. Trains facilitate the transport of about 90 TEU (Bauer, 2008), which outnumbers the capacity of airplanes and trucks, however at much lower scale than vessels that easily transport way more than 10,000 TEU (World Shipping Council, 2013). The available capacity of a shipment via the Eurasian landbridge capacity hence lies in between sea and air/road freight. Compared to contemporary transport modes, the image of Eurasian rail freight is primarily positive in terms of environmentally friendliness (Luica, 2012b), but rather negative regarding security (Rodrigue et al., 2013a) as the transportation through Central Asia is prone to theft, bribes, sabotage and corruption (Heiskanen, 2007). In terms of climate conditions, goods transported via the Eurasian landbridge (by rail and road) must withstand temperatures of minus 40 °C in winter (Jack, 2002; Ceva Logistics, 2013). As opposed to this, maritime transport exposes cargo to temperature fluctuation (Emerson and Vinokurov, 2009), sea air and severe weather conditions including frozen sea (Tennenbaum, 2001). The possibility to trace shipments through the transport chain is comparable for all intercontinental transport modes (Shin-Kyuo, 2004). Of special importance in today’s supply chain management are the factors costs, flexibility and transit time reliability (Cullinane and Toy, 2000; Vannieuwenhuyse et al., 2003). The latter is considered high for sea and air freight, but poor for rail (Otsuka, 2001) and road freight (IRU, 2013). Rail freight instead offers a combination of scheduled services and flexible transportation dedicated to a specific shipper which compares to practices in the aviation industry, but is not common in deep sea shipping. Transport cost using the Eurasian landbridge are considered higher than sea freight rates, but lower than transportation by air, sea-air (Davydenko et al., 2012; Engdahl, 2012) or road (IRU, 2013). Table 4 presents the costs of shipping a 40ft

Fig. 8. Distribution of EU27-China trade by transport mode in 2012 in million tons, adapted from: Eurostat (2013a). Other⁄ (Unknown, Post, Fixed Mechanism, Inland Waterway, and Self Propulsion) (Eurostat (2013a)).

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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Table 4 Cost comparison rail vs. sea freight, adapted from: Nothias (2011) and IRU (2013). Transport costs

Rail freight

Road freight

Sea freight

Northern east–west connection Central east–west connection North–south connection

5000€ 6500€ 4600€

10,000€ 10,000€ 6000€

4700€ 4600€ 2400€

Table 5 Transport time comparison rail vs. sea freight, adapted from: Nothias (2011) and IRU (2013). Transport time (in days)

Rail freight

Road freight

Sea freight

Northern east–west connection Central east–west connection North–south connection

14 14 11

13 13 8

25 24 16

container via the three rail freight connections considered in this article and compares them to sea and road freight. Certain sources (both, literature (Liliopoulou et al., 2005; Engdahl, 2012) and interviewees) used in this research however claimed rail freight charges to be even lower than sea freight rates, especially for shipments between hinterland origins and destinations far away from sea ports (Tsuji, 2010). Next to the general differences between available intercontinental transport modes, the characteristics of individual routes play an important role in shipper’s modal choice decisions. Trains and trucks that cross Eurasia pass various countries and related differences in political regimes, cultures, legislation and regulation. In the extreme scenario (central east–west connection), the Eurasian landbridge involves eight different countries versus two countries using sea or air freight (refer to Fig. 1). Next to the number of countries passed, the transport distance varies with different modes. While aircrafts almost take linear distance (intercontinental rail and road freight comes close to this, the distances of the individual landbridge routes are presented in Section 3), sea freight takes a detour around the Indian subcontinent and the Malaysian peninsula. Correspondingly, door-to-door transport time using air freight is much shorter (about 3 days (Trans Eurasia Express, 2012)) compared to road (15 days from Western China to Europe (IRU, 2013)), rail (15–25 days) and sea freight (about 35 days), depending on the route (Engdahl, 2012; Binyon, 2013a). Table 5 presents the duration in days of shipping a 40ft container (terminal-to-terminal) via the three rail freight connections considered in this article and compares them to sea and road freight. For differentiated information on the performance of individual route sections (including the most relevant border crossings), please refer to the time-to-road diagrams (Figs. 11–13) in Appendix B .

Further, the availability and state of infrastructure are essential success criteria for an intercontinental transport mode. Both, air and sea freight have a dense network of air- and seaports at their disposal. However, many air- and seaports are hampered through congestion (Engdahl, 2012; Oliphant, 2012) and weather conditions (Tennenbaum, 2001). Sea freight moreover suffers from congestions in hinterland transportation (Adamantiadis, 2009). The railway infrastructure across Eurasia is characterised by differences in railway systems (explicitly the northern and central east–west connections), especially in terms of gauges, voltages, loading heights, coupling and safety systems (Shirres, 2011; Binyon, 2013a). The Trans-Siberian railway (northern east–west connection) is equipped with double tracks, electrification, computer support and various terminals along the route (O’Reilly, 2011; Luica, 2012b). Other landbridge routes however (central east–west and north–south connection) lack such sophisticated equipment and have a less dense terminal network (Chang, 2012; Briginshaw, 2007). Depending on terminal availability and customer demand, trains using the east–west connections depart with a frequency of one up to five trains a week (Chang, 2011). Daily departures only exist for domestic rail freight in Russia (RusTroyka, 2012) using the northern east–west connection. The north–south connection is currently very lowly frequented considering political instability in the Caspian Sea region and trade embargos with Iran (Binyon, 2013a; Rai, 2013). Sea and air freight by contrast offer several scheduled services a day between the major air and seaports in Europe and Asia (China Shipping, 2013; FESCO, 2013). The same counts for road freight as it can be used flexibly according to customer demand. 5. Stakeholder analysis Having introduced the individual landbridge routes across Eurasia and the major characteristics of the available intercontinental transport modes, the focus is now on landbridge stakeholders, before outlining factors that enable (Section 6) respectively, inhibit (Section 7) intercontinental rail freight and strategies to mitigate inhibitors (Section 8). According to Yang (2014, p.838), stakeholders are ‘‘organisations or individuals who have a stake in, or can influence’’ organisational objectives. While most publications predominantly relate stakeholders to individual companies or organisations, it is possible to apply stakeholder theory in a broader context (as in studies by Dooms et al. (2013) and Zhang et al. (2013)) and hence also the Eurasian landbridge. Obviously, considering the geographical extend, the different political regimes and various companies involved, Eurasian landbridge stakeholders reveal a much more complex picture compared to a single

Fig. 9. Stakeholders of Eurasian rail freight, Source: Author.

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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organisation. The research resulted in a collection of various 22stakeholder groups taking in different roles that are presented in ‘swimlane’ form in Fig. 9. The diagram columns (headed by black letters on white background) indicate the identified stakeholder role(s) that are outlined in more detail in the following:  Landbridge development/regulation: Conceptual development of intercontinental landbridges as a logistics product.  Infrastructure development: Planning, construction and maintenance of infrastructure.  Infrastructure ownership: Ownership of ports, terminals and railway networks.  Infrastructure use: Use of ports, terminals and the railway network itself.  Logistics operations: Management of process from shipper to consignee.  Shippers: The customers of intercontinental rail freight across Eurasia. The stakeholder groups are displayed in the diagram body in horizontal rows (black letters on grey shaded background) reflecting their respective role(s) played in Eurasian rail freight. 6. Enablers of Eurasian rail freight For enablers (and later inhibitors), the combined analysis of literature and survey research was structured using the PESTLE framework in order to assess the Eurasian landbridge market in relation to external influences as listed in Table 6. This approach has been used in further researches such as Business Case Studies (2014). The introduction to this article has briefly introduced the strategic niche between contemporary long distance transport modes air and sea freight that can be filled by intercontinental rail freight between Asia and Europe. In the following, factors that enhance the attractiveness of this supply chain alternative and increase its potential customer base are elaborated on in detail. 6.1. Political enablers The research identified three major political enablers of Eurasian rail freight. First, the governmental investment in infrastructure such as ports, terminals and the construction of new respectively modernisation of existing lines (O’Reilly, 2011) increases landbridge capacity, allows higher speed (thus reduced lead time) and enhances reliability. Several initiatives to develop infrastructure exist, e.g., by the EU government (European corridor development), Russia (modernisation of the Trans-Siberian route (northern east–west connection)), Kazakhstan (central east–west connection), Turkey (Marmaray tunnel) and especially China (Davydenko et al., 2012; Weitz, 2013). Not only does China heavily invest in its domestic railway network (high speed lines and dedicated cargo routes to the hinterland), it is also able to support foreign initiatives for railway and further transport infrastructure development, predominantly in Central Asia (Lin, 2011). Examples are the construction of the southern east–west railway connection

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via Turkey, Iran and Kazakhstan as well as the intention to build a deep water port in Crimea with connections to Southern Europe via ports in Greece (Gulati, 2014). Second, the creation of customs unions such as the EU or the customs union of Belarus, Kazakhstan and Russia stimulates trade across Eurasia and eases border crossings in intercontinental transportation (Petrov, 2012), primarily the northern and central east–west connection. From a supply chain perspective, this reduces cost and lead time through shorter border procedures and improves reliability as the standardisation or omission of border crossings provides less space for delays caused by procedure ambiguity (Davydenko et al., 2012). Third, improved political stability especially in Eastern Europe and Russia reduces negative social influencers such as theft or vandalism and consequently improves reliability of trains in terms of time and product integrity. Additionally, stable social circumstances are linked to improved education (Tennenbaum, 2001) that in turn enhances the economic (and logistics or transport) position of a country on the long run. The main stakeholders involved in political enablers are governments. 6.2. Economic enablers The strong economic relation between Asia and Europe results in the world’s largest intercontinental cargo flow and consequently presents a favourable precondition for rail freight across Eurasia (Rodrigue et al., 2013b). This is amplified by contemporary developments in global and Eurasian economy such as rising global trade as such and growing economies in several Central Asian states, especially in Russia (Kallas, 2012; Luica, 2012b). Moreover, the East Asian and especially Chinese economy is changing from pure low cost manufacturing to the production of high value goods and the development of own brands. Although the immense growth of European imports from Asia has levelled off since the start of the economic crisis in 2008 (refer to Fig. 10), such developments favour transport characteristics offered by the Eurasian landbridge (northern and central east–west connection). At the same time, East Asian consumption of cars, luxury items and textile has increased considerably (European Commission, 2014), especially in the middle class (Christopher, 2011). This caused exports to Asian countries like China to triple between 2003 and 2014 (refer to Fig. 10) and consequently lowered the trade and hence transport disequilibrium between the two economic regions. Both continents currently experience a shift of economic activity from coastal areas towards Central Eurasia. In Asia (especially China) the economic upswing of the recent decades came along with enhanced prosperity and rising wages at the East coast. To maintain low labour cost, production (e.g. Intel’s semiconductor assembly from Shanghai to Chengdu (Ramstad, 2006)) is to a large extent moved towards the hinterland (e.g. Central or Western China) (O’Reilly, 2011). While the western European economy

Table 6 Factors of the PESTLE framework, Source: Author. Factor

Generic example

Political Economic Social Technical Legal Environmental

Strategies pursued by governments Trends in transport market and global economy Education of employees Characteristics of railway systems Regulations to be obeyed Climate conditions

Fig. 10. EU28 international trade in goods with China, adapted from: Eurostat (2013b).

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remains strong, the economies of many Eastern European countries have been catching up after the end of the Cold War and through EU membership (Luica, 2012b) and thus increased transport demand in Eastern Europe. The impact of these shifts on supply chain management is that they considerably lengthen the already costly pre- respectively post-haulage to and from ports which increases lead time and cost of sea freight (Dieter, 2010). Contrarily, such developments shorten the distance and thus lead time and cost of rail freight (northern and especially central east–west connection) which in turn improves the landbridge’s competitive position. Fig. 1 presents the strategic gap of cost and lead time when choosing contemporary intercontinental transport modes (sea and air freight) as well as road freight. This gap is increased by above outlined shifts of economic activity in Europe and Asia as well as through slow steaming applied by shipping lines (Shirres, 2011). As a consequence, shippers seek options such as rail and road freight that present an intermediate alternative to the two extremes. Next to filling the strategic niche between sea and air freight, certain characteristics allow rail (and road) transport to also compete with contemporary intercontinental transport modes. Shorter lead times in comparison to sea freight reduce cost for container leasing (Gennady, 2004) and inventory holding and thus make rail and road freight especially attractive for high value goods (Chang, 2011; Weitz, 2013). Furthermore, the avoidance of exposure to sea air through cargo transport via the landbridge reduces costly packaging (Helle, 1977). The peak oil scenario and the related rise of the oil price (Christopher, 2011) increase freight rates of ocean and especially air transportation. The option of propelling locomotives with electricity generated from alternative energies (further outlined under environmental enablers) can lead to rail freight being independent of oil supply and offers potential for relative cost reduction compared to sea and air freight. Economic stakeholders are primarily governments and shippers as well as the transport and logistics sector in terms of shipping lines, railway companies, logistics service providers, intermodal operators and forwarders. 6.3. Social enablers Social enablers are mainly influenced by governments and universities. The research did not reveal any specific social enablers of intercontinental rail freight across Eurasia. 6.4. Technical enablers Transporting cargo between Asia and Europe via land considerably shortens the distance to be covered in comparison to the seaway. As a consequence, a shift from sea to intercontinental rail and road freight drastically shortens lead time which makes the Eurasian landbridge especially suitable for urgent and high value cargo (Weitz, 2013). As outlined previously, this lead time advantage of rail and road freight is enforced by slow steaming of vessels. The size of vessels can turn out to be another disadvantage for sea freight as increasing vessel size limits the number of accessible ports (Kallas, 2012), especially those that are accessed via a river. The creation of such structural bottlenecks makes sea freight prone to congestion in ports and hinterland access and hence negatively impacts the reliability of supply chains (Engdahl, 2012). Supply chain reliability is further affected by practices like overbooking applied by the sea, but also air freight industry. As opposed to the potential risk of unreliability in sea freight, intercontinental rail freight currently offers sufficient capacity as well as modern rolling stock and technology (Trans-Siberian route (Heiskanen, 2007)) which results in high reliability, especially of trains dedicated to a single shipper. Trains dedicated to specific customers further

allow a high degree of flexibility in terms of departure times and train composition (comparable to road freight). The high number of container terminals along the Trans-Siberian route moreover guarantees easy accessibility across Russia. With regard to security of equipment and goods, rail freight is generally perceived by shippers as a safe transport mode. This especially counts for dangerous cargo that is rather difficult to handle in ocean transport. The landbridge itself is equipped to provide tracking and tracing as well as guard protection. A further advantage of the landbridge is the easiness of rail freight planning and the reduction of costly handling and as previously outlined pre- respectively post-haulage in comparison to certain sea freight chains (Luica, 2012a). Intercontinental rail freight can minimise pre- and post-haulage distance through a dense terminal network and reduce the required handling to two transshipments points (loading containers on and off trains). Sea freight however is only able to provide short pre- and post-haulage in coastal areas. In many cases, hinterland transport to and from ports is executed by different modes (e.g. first rail, then truck) and consequently requires additional transhipment steps that increase the total transport cost (Luica, 2012a). Technical enablers of Eurasian rail freight are primarily impacted by stakeholders such as governments, infrastructure owners (port authorities, rail network owners) and transport and logistics companies (shipping lines, railway companies, logistics service providers, intermodal operators, forwarders). 6.5. Legal enablers Related to political enablers as outlined above, the countries involved in rail freight via the Eurasian landbridge (northern and central east–west connection) have developed a waybill that incorporates the requirements of different states and is hence valid along the entire route from Europe to Asia (Tskitishvili, 2013). This has immensely reduced lead time and improved reliability through consistent procedures in terms of freight documentation. Moreover, the administrational effort related to border crossings and dispatch of shipments was eased and reduced considerably (Otsuka, 2001) which consequently lowered cost of Eurasian rail freight. Governments are the main stakeholders related to legal enablers. 6.6. Environmental enablers Environmental enablers of Eurasian rail freight focus on geographical (relief, slope) and climatic (temperature, weather conditions) circumstances on the one hand and on demand for sustainable transport on the other hand. Transporting cargo by train or truck across the Eurasian continent makes shipments independent of weather conditions at sea (Tennenbaum, 2001). This is of special importance and hence presents a niche for cargo that is prone to damage by sea air such as electronics that require special packaging before being loaded on a vessel (Helle, 1977). Furthermore, extreme weather conditions at sea are avoided that can cause time consuming detours or lead to damaged or lost cargo. Although landbridge routes too, pass different climate zones with extreme temperatures especially in Siberia and Central Asia (Jack, 2002), rail freight is less susceptible to weather if governments invest in infrastructure and their maintenance (tracks, drainage systems, trimming of green areas) as well as equipment (snowploughs, track clearance vehicles). In this case, rail freight can hence be considered as more reliable than sea and road freight with regard to weather conditions (Heiskanen, 2007). Furthermore, the geography of Central Asia (central east–west and north–south connection) offers ideal preconditions for low cost rail freight as plains and few inclinations allow long trains and high travel speed. The increased importance of sustainable supply chain management makes shippers report on using rail freight in relation to their

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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green policies and thus enhances the demand for transport modes with minimal impact on the environment. Intercontinental rail freight facilitates this demand by consuming considerably less energy and thus emitting less CO2 compared to the long distance transport modes air (Luica, 2013) and sea freight. Moreover, from a technical perspective it is already possible to run trains without any emissions considering locomotives propelled by green electricity. This ability is currently unique to rail freight and contributes to its recognition as a green transport mode. Next to CO2, the emission of sulphur dioxide (SO2) has a big environmental impact. The United States Environmental Protection Agency considers the introduction of rules concerning sulphur dioxide emissions (EPA, 2014) which could raise the cost of sea freight and hence present a further advantage for intercontinental rail freight in terms of cost and sustainability. Stakeholders of environmental enablers include governments and shippers, port authorities and rail network owners as well as transport and logistics organisations (shipping lines, railway companies, logistics service providers, intermodal operators, forwarders). 7. Inhibitors The previous section has presented factors that position intercontinental rail freight as a promising alternative for Eurasian supply chain management. However, there are various circumstances that impair the attractiveness of the landbridge and decrease the potential customer base. In the following these factors are presented using the PESTLE framework as applied above. The stakeholders of the individual inhibitor factors equal those of the respective enablers introduced previously. 7.1. Political inhibitors Due to its geographical extension, the Eurasian landbridge crosses various countries and is consequently influenced by several different political systems and intentions (Rodrigue et al., 2013a). In Western Europe the EU pursues trade and market liberalisation and has initiated the EU wide development of railway networks and systems (corridor development and Transport Corridor Europe Caucasus Asia (TRACECA) programme). This however is still an ongoing process, as certain Western European countries like Belgium and France have not yet opened their rail freight markets for foreign traction. Eastern Europe and Central Asia are still influenced by the socialist sovereignty of Russia and only slowly opening their economy and railway market to international initiatives. Instead, Russian Railways pursues own initiatives such as ‘‘TransSiberian railway transit in 7 days’’ or the modernisation of the Trans-Siberian route and side sections such as the Baikal–Amur mainline. In Eastern Asia, especially China has experienced an immense economic growth in recent decades. To maintain this, the Chinese government heavily invests in the development of railway infrastructure (high speed passenger and dedicated cargo lines) in Central and Western China as well as countries that are (potential) trade partners, e.g., in the form of the Central Asia Regional Economic Cooperation (CAREC) programme (this especially counts for the central east–west connection). As outlined above, China has initiated the construction of a southern east–west connection via Turkey. The consequence of different initiatives is the lack of a common approach respectively poor cooperation in landbridge development (Briginshaw, 2007), financing (Brice, 2013) and execution. In Russia for example, passenger and domestic freight trains are given priority over international cargo trains (Davydenko et al., 2012) that are assigned to the remaining capacity at high charges (Tsuji, 2010) which in particular counts for the

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northern east–west connection. Not only does this deteriorate the competitiveness of the Eurasian landbridge through forcing up prices, it also inhibits smooth scheduling and can cause extensive delays if intercontinental trains are disadvantaged when waiting for new slots. Different governmental intentions further cause political tensions (Briginshaw, 2007) and even war (Binyon, 2013a) that not only present a disadvantage concerning customer attractiveness, but also hamper trade and network development in general (e.g. trade embargos with Iran that limit transport via the north–south connection). The contemporary crisis in the Ukraine inhibits shipments through the Ukraine and hence disables the Central European Route, one of the two central east–west connections. While it is relatively easy to bypass the Ukraine by rail, probable sanctions against Russia such as trade embargoes (Escobar, 2014) pose a much greater risk for the Eurasian landbridge as they might exacerbate transportation through the only landbridge state in Eurasia that currently cannot be detoured by rail. Being part of Russia, Crimea is not excluded from sanctions (e.g. by the EU) which might paralyse infrastructure initiatives such as the construction of a deep water port in Crimea introduced in Section 6.1 (Askins et al., 2014). Next to the different railway development initiatives of individual governments and political tensions, investments in Eurasian road network development, e.g., in the course of the New Eurasian Land Transport Initiative (NELTI) by the International Road Transport Union (IRU) (IRU, 2013) are potential inhibitors as they support a competitive transport mode. 7.2. Economic inhibitors Despite promising (macro) economic preconditions for intercontinental rail freight between Asia and Europe as outlined in Section 6.2, there are several economic circumstances that inhibit cargo transport via the Eurasian landbridge. The Trans-Siberian route which is currently the most frequented Eurasian landbridge is too far north to be the optimal route from production sites in China to markets in Western Europe (Hodgkinson, 1996). The use of the Trans-Siberian route for shipments between China and Western Europe in many cases increases cost and lead time and thus presents a strategic disadvantage in comparison to competing modes (Hodgkinson, 1996). Being at an infant state, the landbridge market is currently small and consequently very susceptible to demand fluctuation (Freight Business Journal, 2013) which is amplified through an imbalance of cargo demand between shipments directed west- respectively eastwards (Rodrigue et al., 2013b). The contemporarily low transport volumes amplify the common problem in rail transport of handling small shipments and consequently result in few departures which limits the flexibility for shippers and exacerbates market development. A low departure frequency presents a special challenge for shippers with rather small consignments that cannot fill an entire train and consequently makes the landbridge only interesting for shippers with sufficient volume to run dedicated trains. Interviewees warned that in case of (fast) demand increases capacity might be restrictive to landbridge growth. Shippers in general perceive rail freight as difficult in terms of handling and flexibility. This perception is amplified considering the fact that the landbridge is a relatively new alternative for today’s Eurasian supply chain management that makes potential customers hesitant in changing intercontinental transport modes. According to interviewees, the railway market itself is characterised by a power disequilibrium between mighty operators and rather weak railway companies which leads to sub-optimisation for the benefit of individual organisations without considering the landbridge product as a whole. Missing competition (especially

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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in Central Asia (northern and central east–west connection)) hampers the optimisation of network and services and presents a disadvantage in terms of market development (Binyon, 2013a; Hodgkinson, 1996). Poor cooperation between railway companies of different countries (Liliopoulou et al., 2005) exacerbates scheduling of through services and thus impacts landbridge lead time and reliability. The outdated mentality of railway companies which tends to ‘‘focus on today’s operations and production rather than tomorrow’s challenges’’ (Thompson and Kohon, 2012, p. 61) and thus results in a reactive, rather than proactive railway market inhibits the improvement of services and the adaptation to changing market requirements. The establishment of the landbridge as an additional option for intercontinental transport may further cause competition between different departments of logistics service providers that as a consequence compete rather than collaborate. The involvement of several countries and cultures in landbridge transport comes along with different perceptions concerning reliability. Interviews revealed that Western cultures perceive transport reliability as the deviation from the estimated time of arrival being as small as possible. In contrast to that, Central Asian states use time windows rather than exact times. While both systems function in themselves, the differences present a challenge for coordination of schedules and cooperation in case of delays (northern and central east–west connection). Compared to ocean transport, landbridge freight rates are higher which is mainly due to expensive border crossings as well as high tariffs in Central Asia and especially in Russia (Hämäläinen, 2007). An underlying reason to this is the landbridge monopoly of Russia as all contemporary routes cross Russian territory. Furthermore, the Russian transport market is managed with the aim of minimising theft rather than maximising efficiency which results in detours, additional handling and the need for safety guards to accompany trains. A comparison with the sea, air and road freight industries reveals that shipping and airlines operate in an established market with the pursuit of continuously taking costs out of the system. Examples are standardised container handling equipment across the globe and the increasing size of vessels to generate economies of scale. Referring to Fig. 1, it becomes apparent that rates are a crucial element of landbridge competitiveness and that high rates shrink the strategic niche that Eurasian rail freight can fill between contemporary intercontinental transport modes. Besides being higher in comparison to sea freight, landbridge rates are characterised as inflexible (Slack, 2000) and not transparent (Davydenko et al., 2012) which limits flexibility in terms of tailoring offers to individual customer needs. 7.3. Social inhibitors The research revealed that social factors mainly inhibit Eurasian rail freight in terms of poor security and missing expertise. Security relates to cargo and equipment theft as well as bribery (Binyon, 2013b). Theft and vandalism of cargo and equipment mainly occur during waiting times of trains at borders or sidings. Given the geographical extent of Eurasia, many of these sidings are located in remote areas and are thus difficult to control. From a strategic perspective, transport via the landbridge is especially attractive for shipping high value cargo. Considering this, theft obviously presents an immense financial risk for shippers and imposes additional costs for cargo protection and insurance. With regard to equipment, theft mainly affects generators, batteries, plugs, cables and diesel of reefer containers. Although this does not directly impact cargo, it can destroy an entire shipment if temperature control malfunctions. Furthermore, this makes container owners reluctant to send reefers across Eurasia. Bribery and especially its inconsistency inhibit intercontinental rail freight especially at border crossings (Luica, 2012a). While bribery in general lowers the

attractiveness of the landbridge in terms of trust and increased cost its inconsistency also impacts reliability by extending waiting times through negotiations. Social factors do not only inhibit intercontinental rail freight in terms of crime, poor education and a lack of training also cause missing expertise regarding railway development and management as well as supporting functions like human resources (Davydenko et al., 2012) and banking (Hastings, 1994). Missing expertise exacerbates route development and frequently is an underlying reason for inefficient operations, handling delays and deficient scheduling. 7.4. Technical inhibitors Trains running between Asia and Europe use the railway networks of several countries and hence pass different railway systems (Joong and Cho, 2007). Despite individual political regimes across Eurasia, the railway industry was generally established, managed and thus influenced by state owned organisations. While the railway market in (Western) Europe has been partially privatised recently (e.g. in the United Kingdom and the Netherlands), Eastern European and Asian railways remain under governmental control. State owned railway organisations had and still have a strong focus on local transport needs (comparable to the Americas (Thompson and Kohon, 2012)) or national railway development and hence neglect the creation of international railway standards to a large extent. Even in countries with privatised railway operations, operators often lack the perspective for developments outside their covered regions. As an example, no single British railway operator runs trains through the Channel Tunnel and not even DB Schenker, Europe’s largest rail operator, can use uniform equipment (e.g. locomotives) as it has to adapt to the individual technical characteristics of the countries it is operating in. Such individual railway market types and foci have caused various infrastructure and equipment related differences in the Eurasian railway network in terms of (loading) gauge, voltage, rolling stock (e.g. different buffer heights) and safety systems (Shirres, 2011; Binyon, 2013a). An extreme example is the construction of the Trans-Siberian railways (northern east–west connection) that was purposely built with a different gauge compared to Western Europe to exacerbate the invasion of German troops into Russia (Shirres, 2011). Next to politically motivated gauge differences, the Soviet Union’s limited international trade relations during the Cold War have had an impact on railway infrastructure as they predominantly required north–south transport links. As a consequence this has caused the absence of east–west railway links that are currently in need as alternatives to existing landbridge routes and to enhance the attraction of potential Central Asian customers (Otsuka, 2001). Furthermore, the poor economic conditions in many Central Asian states especially after the end of the Cold War have caused the Central Asian railway infrastructure to be in a dilapidated state (central east–west and north–south connection) with a rather low degree of electrification (Chang, 2012). Besides the railway network as such, supportive infrastructure for container handling and IT support is considered poor with exception of the Trans-Siberian route (Briginshaw, 2007). In combination with old equipment and poor equipment availability, this requires locomotive changes (e.g. from electrical to diesel locomotives), impairs safety, causes track downtimes and equipment failures (Fan et al., 2012) and thus has negative effects on supply chain lead time and reliability. Although Fig. 1 has characterised intercontinental rail freight between Asia and Europe as faster compared to sea freight, such circumstances can cause transit times to exceed those of sea freight in individual cases (Hodgkinson, 1996). As intercontinental trains pass various countries, they are planned and steered by different organisations. Different political and economic intentions, languages and times zones exacerbate

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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scheduling. This results in poor flexibility regarding the diversion of traffic on short notice and presents a threat of delays through route conflicts in networks with a high capacity utilisation (Goverde and Meng, 2011). The latter is amplified through differences in terms of top-speed, braking and acceleration profiles of individual train types (passenger, container, heavy bulk trains) (Fan et al., 2012) and the increased risk of capacity limitation in terms of poor infrastructure respectively intercontinental trains being set aside by as priority is predominantly given to passenger and national freight trains. 7.5. Legal inhibitors Due to political differences there is no legal uniformity concerning trade and rail freight across Eurasia which inhibits railway development as outlined previously (Rodrigue et al., 2013a). Missing legal uniformity further leads to extensive border crossing procedures (for the consequences on the performance of the Eurasian landbridge refer to Appendix B) and documentation (Binyon, 2013a) that extend lead time and negatively impact reliability. In extreme cases, the arbitrary application of border procedures can cause rail freight transit times to exceed those of sea freight (Kallas, 2012). A further legal inhibitor reported by an interviewee is the missing permission to ship LCL containers. As especially logistics service providers benefit from bundling small shipments, such regulations limit the landbridge market to large shippers and exacerbate market entry for a potential customer group with vast experience and expertise in intercontinental supply chain management. 7.6. Environmental inhibitors Even though rail freight drastically shortens the transport distance in comparison to sea freight, crossing Eurasia nevertheless requires an immense distance to be covered. A long transport distance limits the potential for lead time reduction and generally presents an increased risk for delays (Fan et al., 2012) and thus supply chain unreliability. Next to the long transport distance itself, crossing Eurasia comes along with bypassing rough terrain and natural obstacles like water (Gorshkov and Bagaturia, 2001) and mountains (Binyon, 2013b) which present an extreme challenge for route construction (especially north–south connection). Crossing Eurasia, the landbridge passes different climate zones with extreme temperatures (Jack, 2002) which present another challenge to network development. Furthermore, extreme temperatures and especially temperature fluctuation present an increased risk of cargo damage. Especially vulnerable with regard to temperature and moisture are electronics that are either transported by sea freight during winter or protected by costly packaging with insulation foil. The issue of global warming poses a further environmental threat to the Eurasian landbridge (northern and central east–west connection). Due to rising temperatures, the Artic Sea north of Russia can soon be ice free during summer months. This presents an opportunity for shipping lines to reduce voyage time by 12–15 days compared to routes through the Indian Ocean and the Mediterranean Sea (McKie, 2013) which offsets the current lead time advantage of rail over sea freight. 8. Strategies to mitigate inhibitors The above sections have introduced enabling and inhibiting factors of intermodal rail freight between Asia and Europe. The research additionally identified different strategies to mitigate inhibitors and turn weaknesses of the Eurasian landbridge into strengths. The landbridge’s geographical extent and the involvement of several countries and even more parties require the

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consideration of most strategies from a holistic point of view rather than an individual focus on single inhibitors. The most frequently mentioned strategy was the common development of railway infrastructure across Eurasia. This rather wide strategy comprises various sub-approaches. One approach is the construction of new lines (e.g. a second Trans-Siberian route and a southern east–west connection) to either extend the wide gauge network to Western Europe and Eastern Asia (Rodrigue et al., 2013a) or to establish a normal gauge line across Eurasia (Binyon, 2013a). Another approach is the modernisation and upgrade of already existing lines (especially central east–west and north–south connection) in terms of double tracks, electrification and the adaptation according to standardised loading heights (Hodgkinson, 1996; Brice, 2013). The development of infrastructure primarily aims at an increase of travel speed (Couto, 2011) and landbridge capacity. Given the immense geographical distance between Eastern Asia and Western Europe, an increase of travel speed can lead to enormous savings in lead time and thus considerably enhance the strategic attractiveness of the Eurasian landbridge (refer to Fig. 1). Next to travel speed and capacity, infrastructure development pursues the improvement of transport reliability and reduction of costs by simpler processes through reduced or even abolished gauge and locomotive changes (Shin-Kyuo, 2004). To reduce infrastructural differences and achieve common standards, the development of railway infrastructure requires a common approach and information sharing by all countries involved in rail freight across Eurasia (Novikova and Kennedy, 2012). For that reason infrastructure development largely depends on governmental influence. Next to railway network development, the establishment of supportive infrastructure in terms of IT (Luica, 2013) and terminals (Ilie, 2012b) is of immense importance for scheduling and execution, the provision of transparent services, the simplification of border crossings and the enlargement of the landbridge’s catchment area. The creation of international timetables, including the use of accurate traffic prediction models with special attention to bottlenecks (Goverde and Meng, 2011) such as stations (Landex and Wittrup Jensen, 2013) enhances the robustness of schedules. Together with common (considering the entire route (Kanai et al., 2011)) rather than local delay management and the use of computer supported (Espinosa-Aranda and García-Ródenas, 2013 and Goverde and Meng, 2011) measurement (Andersson et al., 2014), train control (Fan et al., 2012), automated signalling and dispatching systems (Goverde et al., 2013), this enhances capacity and improves supply chain reliability. The possibility of tracking shipments based on real time information is a standard service requirement of global shippers (Rohrhofer and Patzner, 2009). Referring to the potential threat of theft and vandalism, sharing real time information is furthermore a critical factor for gaining the trust of shippers. The need for terminals includes gauge changes and transhipment terminals (Otsuka, 2001). While technological advancements allow a considerable reduction of time spent for gauge changes and thus contribute to lead time reduction, a densification of the terminal network (especially around central east–west and north–south connection) connects the landbridge to a higher number of potential shippers. The density of the terminal network in Western Europe is satisfactory. In contrast to that, Eastern Europe and Central Asia are in need for improved connection to intercontinental transportation (Emerson and Vinokurov, 2009). Especially Central Asia that due to its geographical position cannot be served by sea freight (without extremely long pre- or post-haulage) has a large potential for increased trade and consequently cargo demand if connected to appropriate transport systems. The establishment of IT support as well as terminals for gauge changes and cargo transhipment is to a large extent achievable for companies in the logistics and transport industry. Governmental support is needed for the creation of rules regarding

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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IT support at international level and the provision of financial aid for construction and development projects. Besides developing railway networks and supporting the development of supporting infrastructure, governments are in the position to simplify border procedures (Emerson and Vinokurov, 2009) which are currently a major contributor to extended rail freight lead times. As lead time (together with cost) forms the basis for competitiveness of intercontinental rail freight, the reduction of time spent at borders through the simplification of procedures plays a crucial for the Eurasian landbridge in enhancing customer attractiveness. Attempts have already been made in terms of using a single way bill. Nevertheless, interviewees called for further actions to reduce time spent at customs, to abolish bribery and minimise the arbitrary application of border procedures. While such initiatives are generally under control of governments, logistics and transport companies are able to point out weaknesses and thus initiate governmental actions. Not only do infrastructural improvements contribute to the mitigation of inhibitors of the Eurasian landbridge, also the use of appropriate equipment improves reliability, reduces cost and thus enhances the attractiveness of intercontinental rail freight between Asia and Europe. The introduction of new locomotives reduces (Shirres, 2011) the risk of breakdowns and thus contributes to improved supply chain reliability. Locomotives with hybrid propulsion (Shin-Kyuo, 2004) reduce the number of locomotive changes that are necessary as not all tracks are electrified. Rolling stock with adjustable boogies considerably reduces time spent at gauge changes (Tennenbaum, 2001) and hence tackles a main contributor of extended transport time. The use of fast passenger locomotives for pulling rather light container trains (Gennady, 2004) increases speed and consequently reduces lead time. Heatable containers and insulation packaging allow the transportation of temperature sensitive cargo in winter months and hence make the landbridge attractive to a wider product and customer range. The employment of equipment is mainly pursued by railway companies, logistics service providers and shippers. As examined previously, freight rates are higher for intercontinental rail freight compared to sea freight. While it seems difficult for rail freight to undercut sea freight rates, a rate reduction nevertheless increases the landbridge competitiveness and makes it attractive to a wide range of products. The introduction of more competitive rates (Ilie, 2012a) can be mainly achieved through the integration of the different countries and systems (Kallas, 2012) to run, manage and support railway transport. In specific, this refers to the integration of networks and supportive infrastructure to realise standardised interoperability as outlined above, but also improved traffic management through joint scheduling and train steering. Furthermore, interviewees named the reduction of custom tariffs and administrative fees as well as the abolishment of monopolies (e.g. Russian Railways) through market liberalisation main contributors to the reduction of rail freight rates. The abolishment of monopolies however, is an easy thing to say, but hard to practice and must hence be approached critically. The abolishment of monopolies primarily requires extensive and enduring negotiations. As an indication, the privatisation of the German railways was recognised necessary from the 1950s on and initiated in 1993 to be realised until 2008 (Deutsch Bahn, 2014). However, the intention to completely privatise the German railway operations failed, mainly due to a continuous postponement of capital privatisation and the missing separation of network control (by Deutsche Bahn (DB) Netz AG) and train operations (DB AG, respectively, DB Schenker Rail AG). Instead, Deutsch Bahn is still 100% state-owned and operates most of the lines in Germany while third parties primarily run trains in the local passenger and freight market (Löhr, 2014). In addition, privatisation most likely comes with a further increase of the already immense number of stakeholders as former

Table 7 Summary of strategies to mitigate factors that inhibit Eurasian rail freight. Mitigation strategy

Main stakeholders involved

Construction of new lines Modernisation/upgrade of existing lines Supportive infrastructure

Governments Governments, rail network owners

Simplification of border procedures Sophisticated equipment

More competitive rates

Marketing Enhancing value propositions of railway transport

Logistics service providers, railway companies, intermodal operators, forwarders Governments Logistics service providers, railway companies, intermodal operators, forwarders, shippers Governments, logistics service providers, railway companies, intermodal operators, forwarders Railway companies Railway companies

state owned railway organisations might be split into (several) private companies for infrastructure, maintenance, passenger and freight transportation (as is the case with railways in Great Britain). Further, an increase in the number of stakeholders raises and diversifies objectives pursued by individual stakeholders. Finally, a free market is likely to decentralise functions such as planning or scheduling and thus hampers the creation of synergies and economies of scale which are of importance for the competitiveness of the Eurasian landbridge. For that reason, the abolishment of monopolies requires a listed approach that brings together requirements and responsibilities of the different stakeholders. Next to the reduction of freight rates, shippers value the standardisation of rates and the establishment of through rates as this makes calculations straightforward and transparent and increases cost stability. Rate reduction can only be achieved through joint initiatives and collaboration of various landbridge stakeholders like governments, logistics and transport companies. Besides the ‘‘hard’’ strategies to mitigate inhibitors that are focussed on infrastructure and equipment as outlined above, ‘‘soft’’ mitigation strategies pursued by railway companies refer to marketing and the enhancement of value propositions of rail freight. The landbridge is a rather new product in intercontinental supply chain management and is thus to be placed in the intercontinental transport market accordingly (Bauer, 2008). The occupation of a market niche between the established modes air and especially sea freight followed by expansion through cost and lead time reduction seems a reasonable market entry strategy. The success of the Eurasian landbridge as a valuable alternative for global supply chain management also depends on value propositions offered to customers (Uyanayev, 2008). Rail freight competitors sea, air and road transport already offer the management of complete door-to-door supply chain solutions as standard products. In contrast to that, railway companies traditionally focus on the provision of rail transport between terminals and leave further activities (pre- and post-haulage, storage, valued added services) to logistics service providers. Obviously, this exacerbates one-stop shopping and increases costs through interposing additional parties. An important factor in this is the ability of rail operators to consolidate small shipments of various shippers (Bektas and Crainic, 2007). This is necessary in order to make the Eurasian landbridge attractive to a broader customer base (e.g. shippers with smaller consignments) and to strengthen the competitive position through enhanced flexibility and an increased departure frequency. Comparing literature and survey research revealed a stronger focus of literature on strategic developments while practitioners rather mentioned operations related strategies. The strategies introduced above predominantly depend on successful initiatives

Please cite this article in press as: Rodemann, H., Templar, S. The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning & Management (2014), http://dx.doi.org/10.1016/j.jrtpm.2014.10.001

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of governments and railway companies and to a smaller extent on logistics and transport companies as well as shippers. Table 7 summarises the mitigation strategies introduced above and indicates the main stakeholders involved in each strategy. 9. Conclusions The success of today’s supply chains largely depends on their ability to accommodate global market trends such as      

The enhanced need for flexibility. Smaller, but more frequent orders. Shorter product-life-cycles. Reduced time-to-market. Increased transport distance of high value goods. Growing focus on sustainability.

Relating to trade between Asia and Europe, these developments can to a certain extent be facilitated by using intercontinental rail freight via the Eurasian landbridge. Rail freight offers shorter lead times than sea freight at lower cost and higher capacity compared to air and road freight. From a strategic point of view, these characteristics enable rail freight to fill a market niche and even compete with contemporary intercontinental transport. Potential landbridge customers are shippers with a cargo combination of high value that requires fast transport to minimise tied up capital and high volumes being too large to fly (at moderate cost). Examples are car manufactures and electronic producers. Furthermore, chemical companies are a potential customer group as dangerous goods can be handled more easily by train than by vessel. From a practical perspective however, there are many inhibiting factors to Eurasian rail freight. Especially the disparity of political intentions and strategies as well as the differences of railway systems in terms of infrastructure, equipment and management hamper competitiveness and put the landbridge continuity at danger by impacting essential modal choice criteria cost, lead time and reliability. Although the concept of landbridges is not new in terms of technology and management (refer to the North American landbridge), the geographical extent of the Eurasian landbridge presents unique circumstances regarding infrastructural and especially political differences as well as extreme climate conditions. For the example of Russia, the northern east–west (the TransSiberian route) connection already shows the landbridge potential as it presents the country’s most important transport axis. However, when it comes to international connections, differences in infrastructure, equipment and management as well as missing expertise related to poor education and lacking rail freight experience pose extreme challenges.

taking in a minor share of Eurasian (container) transport. The establishment of intercontinental rail freight as a valid alternative for Eurasian supply chain management and the extension of its market niche as indicated in Fig. 1 through the reduction of cost and lead time, very much depends on the collaboration of different governments and railway companies. While governments are required to pursue joint infrastructure development and the simplification of border procedures and tariff structures, railway companies are to collaborate to provide standardised equipment as well as coherent schedules and traffic management. A critical point in this refers to financing and executing development projects which is closely linked to the question of which economy or even organisation benefits most from the landbridge. Given the fact that all contemporary routes cross Russian territory, Russia is considered the current key country for a successful landbridge. However, contemplating its heavy infrastructure investments, China will probably take in the lead in the future. As long as the EU only focusses on European network development, its influence will not get beyond a consulting role. Subsequent to this research, the development of a detailed cost model of Eurasian rail freight that allows a comparison to competing modes and sensitivity studies in terms of departure/ destination location and consignment characteristics (weight, volume, value) as well as an investigation into the possibilities for time reduction at borders and gauge changes are food for thought for further research. In Section 3 it has been stated that the chosen geographical scope aimed at reflecting the existing landbridge routes at the start of this research. As current landbridge developments such as the construction of a southern east–west connection were recognised during this research, future investigation is suggested into potential landbridge routes to India and Indochina.

Acknowledgements At this point, the authors would like to express their unreserved thanks to the research sponsor, Cranfield University, School of Management that financed the research and furthermore contributed through the provision of contacts and invitations for industry events as well as facilities to conduct interviews and literature research (e.g. the use of the library and data bases). Without this support the research would have been impossible. In addition to that, we owe special thanks to the 24 interviewees for their time, willingness to contribute to this research and the engaging conversations we had. Every interview revealed a different perspective and consequently made this research diverse, rewarding and vivid.

9.1. Where is the Eurasian landbridge going from here? Appendix A. Overview of interviewees Considering the above, the current landbridge state can be described as technically feasible with infant market conditions

See Appendix Table 8.

Table 8 Summary of interviewees, Source: Author. Stakeholder’s key role

Organisation based in

Members/ employees

Turnover in $ (2012)

Main source of income

Primary stakeholder interaction

Interviewee based in

Interviewee’s nationality

Consultancy Consultancy Consultancy Forwarding company Forwarding agency Intermodal operator food industry Intermodal operator

Netherlands England Germany Russia China Netherlands

1 1 >20 >50 15 >100

N/A N/A N/A N/A N/A N/A

Consulting services

LSP, terminals, ports, railways, shippers

Forwarding services

Railway, intermodal operators Shippers, ports, railways, shipping lines, terminals

Netherlands England Germany Russia China Netherlands

Dutch English German Russian Chinese Dutch

Switzerland

>400

516 mil. $

Switzerland

Italian

Organisation of container transport by rail

(continued on next page)

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H. Rodemann, S. Templar / Journal of Rail Transport Planning & Management xxx (2014) xxx–xxx

Table 8 (continued) Stakeholder’s key role

Organisation based in

Members/ employees

Turnover in $ (2012)

Intermodal operator Lobbying (freight forwarders) Lobbying (railway industry) Lobbying (port communication) Logistics service provider Logistics service provider Logistics/forwarding services Port authority

Austria Switzerland

N/A >40,000

N/A N/A

England

>100

Belgium

Interviewee based in

Interviewee’s nationality

China Bulgaria

Chinese Bulgarian

N/A

England

English

6

N/A

England

English

Netherlands

>50,000

9.55 bn. $

Chinese

USA

>68,000

9.69 bn.$

Shippers, ports, terminals, China railways, air/shipping lines England

Latvia

25

6.63 mil. $

Cargo operations

Latvia

Latvian

Netherlands

>1200

796 mil. $

Netherlands

Dutch

Railway company

Germany

>52,000

6.5 bn. $

Germany

German

Car manufacturer Car manufacturer Shipping line

Japan Germany China

>300,000 >550,000 12,000

226 bn. $ 255 bn. $ 3.7 bn. $

Renting space to terminal owners, vessel calling fees Warehousing, logistics operations, transportation Car sales

Belgium Germany China

Turkish German Chinese

in

Russia

>3000

N/A

Railways, shipping lines, terminals Shipping lines, terminals, railways Shippers, railways, shipping lines, terminals LSP, shipping lines, ports, railways Shippers, LSP, railways, customs, governments Shippers, LSP, governments, railways, forwarders

Russia

Russian

in

Netherlands

>1600

N/A

Netherlands

Dutch

in

England

>1700

253 mil. $

England

English

in

England

>5000

571 mil. $

England

English

in

China

180

N/A

China

Chinese

Higher education transport Higher education logistics Higher education logistics Higher education transport Higher education transport

Main source of income

Primary stakeholder interaction

Funds and member fees

Governments, railways, ports, terminals

Warehousing, logistics operations, transport

Forwarding, transport, warehousing Funds and tuition fees

English

Appendix B. Performance of individual landbridge routes See Appendix Figs. 11–13.

Fig. 11. Time-to-road diagram, train Hamburg–Beijing, Source: Author based on information provided by Davydenko et al. (2012).

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H. Rodemann, S. Templar / Journal of Rail Transport Planning & Management xxx (2014) xxx–xxx

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Fig. 12. Time-to-road diagram, train Duisburg–Lanzou, Source: Author based on information provided by Davydenko et al. (2012).

Fig. 13. Time-to-road diagram, train Helsinki–Bandar Abbas, Source: Author based on information provided by Davydenko et al. (2012) and Searates.com (2014).

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