On track to development

On January 23, 2019, the First "Future and Perspective" Railway Development Congress took place in Warsaw. The PKP SA Group organized the event to present and discuss the developmental direction of rail transport in Poland. What track are Polish railways on? Head of the EU Rail Freight Division at AsstrA-Associated Traffic AG, Ewa Trochimiuk, discusses some takeaways from the event.

Where are Polish railways headed?

We all face this question, which is why this Congress gathered not only representatives of the government, railways, and major market players but also public opinion leaders, representatives of social organizations and local governments, and figures from the world of science. During the nine discussion panels, the most important issues regarding railways, passengers, and businesses were discussed. These issues included investments, EU funds, ecology, electromobility, innovation, security, future budget prospects, a Central Communication Port (a project aimed at the construction of a new airport which will be located approximately 40 km southwest of Warsaw, and is planned to replace Warsaw Chopin Airport), and freight transport development. Prime Minister Mateusz Morawiecki opened the Congress with an announcement that his government intends to develop rail transport in Poland and that within the next 10-12 years about 100 billion zlotys will be spent on railway investments. This money will come from the state budget as well as from European funds. To date, 66 billion PLN has already been allocated for investments, with 40 billion EUR to come from the European Union.

Now is the time for investing in infrastructure and logistics centers. Some initiatives – such as the intermodal terminal development project in Małaszewicze – will be co-financed. Last year, international transportation and logistics services provider AsstrA-Associated Traffic AG opened an office in Małaszewicze to offer rail and intermodal transport services. The representative office is AsstrA’s seventh in Poland. Małaszewicze is the site of one of the most important international railway transshipment terminals where the most trains from China arrive in Europe. There, goods are transshipped from broad gauge rolling stock (1520 mm) to standard gauge rolling stock (1435 mm). Intermodal transport services are a key component of AsstrA’s offerings and offer a future alternative to road transport.

The government’s plans mean great prospects for the development of Polish railways.

Currently, Poland is executing the largest railway program in Europe. The country is building an entire network to facilitate the transport of goods through Poland in every direction, with connections served between the Baltic, Adriatic, and Black Seas. PKP has signed agreements with the Italian and Lithuanian railways as well as with Visegrad Group (a cultural and political alliance of four Central European states – the Czech Republic, Hungary, Poland and Slovakia) railways. PKP Cargo, Lithuanian Railways (LG), and the Italian rail company Mercitalia believe that together they can best capitalize on the boom in cargo transport between North and South Europe, especially between seaports. Demand has been steadily growing for several years, as evidenced by the increase in intermodal transport in Poland and in Europe. Certainly in coming years this trend will continue, with ever more goods transported by container vessels between Europe and other continents, especially Asia. These changes can have positive effects. This is an opportunity for AsstrA’s clients – and AsstrA’s Europe Container Division.

What about the New Silk Road?

Yes, China is developing railways on the New Silk Road. However, rail transport accounts for only a small percentage of shipments from China. Most of the cargo will be sent by ships, and the containers will be transshipped to trucks and railway platforms from ports. The importance of railways in the North-South transport corridor is expected to increase over the next few years. Why? It has been crowded on roads for a long time and, most importantly, road transport is less environmentally friendly than rail. As we know, environmental issues are of particular importance nowadays in the European Union.

There is a lot of talk about the Middle Kingdom’s new industrial policy. Will it affect the railways?

That is right, China is implementing a new industrial policy. By 2025 they want to move away from less innovative industries with lower profit margins. The Middle Kingdom intends to develop new industries around new technologies and knowledge about, for example, artificial intelligence, advanced integrated circuits, biopharmaceutics, and the latest generation of cellular mobile communications called "5th Generation", 5G. There are therefore many investments in genetics research and artificial intelligence and a diminishing focus on food and cosmetics.

At present, around 4,000 containers are transshipped in Małaszewicze per month. That’s almost 12 full train-to-train transfers per day. At this rate, the Małaszewicze terminal’s reloading capacity can soon be exhausted. It is estimated that in 2030 trains will transport 1 million TEUs from China to Europe – five times more than in 2017.

PKP Cargo is well aware of this prediction and is therefore investing in Małaszewicze. By 2026, the capacity of Europe’s largest dry port will have quadrupled. By then, it will be able to reload as much as 50 train pairs per day. Małaszewicze is therefore a highly strategic location with great possibilities for AsstrA. Currently, most of the trains on the New Silk Road from China to Europe pass through Poland via this main Terespol-Małaszewicze border crossing point.

It is worth noting that our Chinese partners want to launch a third terminal in Poland for container transport. They have expressed interest the city of Sławków, which can service 1,000 container trains per year, i.e. three a day. The two existing terminals are located in Małaszewicze and Łódź. As PKP Broad Gauge Metallurgy Line Management Board President Zbigniew Tracichleb emphasized during the Congress, at the last meeting of the International Trans-Caspian Transport Route (TMTM as abbreviated in Russian) corridor management committee, freight rates and container train routes have been agreed amongst the railways.

Presumably, the offerings will be particularly attractive to Polish food exporters who can bypass the Russian embargo and shorten transit times to China via the trans-Caspian rail corridor. AsstrA’s Chinese Department has been closely observing and cheering on the project for several years. The corporate group can extend its offerings for clients and give them an opportunity to carry goods AsstrA otherwise transports by sea because of the embargo.

Does Poland, therefore, have a chance to become one of the most important logistics hubs in Europe?

One of Poland's biggest advantages is being strategically well situated for logistics hubs. The AsstrA Group has always cooperated with PKP Cargo to effectively combine road and rail transport. The synergy of these two offerings gives AsstrA customers greater opportunities and allows the corporate group’s specialists to offer a wider range of services. Polish railways are on excellent development track.