STUDY
Eurasian rail corridors
What opportunities for freight stakeholders?

Content
Background3

Study objectives

4

Status of Eurasian rail cargo transport

5

Potential of Eurasian rail cargo transport

9

Trade volume distribution between Northern 10
and Southern routes
Gap analysis in Eurasian rail transport 12
Recommendations for Eurasian rail stakeholders 15

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© International Union of Railways (UIC)
Paris, October 2017
ISBN 978-2-7461-2653-4

STUDY - Eurasian rail corridors: what
opportunities for freight stakeholders?
Author: Roland Berger
Design: Marina Grzanka
This brochure is a publication of the
INTERNATIONAL UNION OF RAILWAYS (UIC)
16 rue Jean Rey, F - 75015 PARIS
www.uic.org

Background
Given the continuing global and regional economic
development, cargo traffic flows between Asia
and Europe have steadily increased in the lasttwo decades and are expected to rise still further.
Ocean shipping accounts for more than 90% of
these services.
Rail transport on the Asia-Europe route is growing fast but its shareremains limited. Disadvantages in border crossings, reliability,
infrastructure and other factors are still impeding the growth here,
while falling sea freight rates aggravate the competition.
Nevertheless, business initiatives to improve the competitiveness andquality of rail transport are becoming more numerous on the NorthernEurasian rail routes and, more recently, on the Southern routes, too.
China, Iran and Turkey are investing particularly heavily and promoting
the Southern infrastructure links to Europe along the former Silk Road
trading routes in a development that would seem to indicate a wish
to promote alternative routes for future business. At the same time,
Europe is investing in its cargo rail by creating common standards
for the interoperability of networks in the nine RFCs1 and the TransEuropean Transport Networks.
As the worldwide railway organisation, UIC is particularly committed tosupporting the successful implementation of international rail freight
services linking Asia to Europe. Indeed, that is why the ICOMOD2 study
was commissioned back in 2011 to evaluate the possible potential ofthese services. Now, six years on, the development of intercontinental
rail freight corridors is increasingly becoming a reality. Every week
sees the public announcement of new initiatives and logistics services
linking Asia to Europe and vice versa.

1. (Rail Freight Corridors as defined in Regulation 913/2010)
2. International Combined Traffic, UIC Study commissioned to Roland Berger

Eurasian Rail Corridors 3

Study objectives
In continuation of UIC’s earlier initiatives and to follow up on ICOMOD, this study aims to assess theviability of the Eurasian rail freight routes, including the Southern routes, and the interconnection ofthese corridors with the European RFCs. The study has three main objectives:

ProvideAssessRecommendan overview of the traffic
volumes, market players,
infrastructure and performanceof the rail routes, plus forecast
their development and potential
until 2027.

the key success factors, bestpractices and impeding factors
for the initiatives.

how stakeholders can improveor reset their business activities
and market the new alternatives;and set up a migration plan for
UIC to support its members.

4 Eurasian Rail Corridors

Status of Eurasian rail
cargo transport
Eurasian rail cargo transport has grown significantly in recent years. The number of operated trains rocketedfrom ~300 in 2014 to nearly 1,800 in 2016, while the transport volume grew from 25,000 TEU to 145,000 TEU(Figure 1). Despite this strong development, rail transport still has a low intermodal market share of ~1% in the
trade between Asia and Europe. The bulk of freight is transported by ship (more than 90%).

%
0.4
4
1

R+
G
CA

1,777

815

~65,000308
2014~145,000~25,000
2015

2016

2014

2015

2016

Figure 1: Development of rail freight transport between Asia and Europe from 2014 to 2016
# trains (left) and TEU (right)33. 2016: Roland Berger calculations based on interviews with key market players or stakeholders of the transport chain

Eurasian Rail Corridors 5

Interviews with relevant stakeholders
confirmed that :Increase indestinations to 15 inEurope and more than
16 in China

Reduction of transit
time and increased
punctuality

Significant
decrease of theft anddamage rates to a level
now lower than sea
shipping

Interviews with relevant
stakeholders confirmedthat a number of
improvements have
driven the volume
development on
Eurasian rail routes:

Upgradingand extension of
infrastructure, e.g. in
Kazakhstan

However, the market development and competition
from other transport modes have prevented railtransport from achieving a higher share of the market.
Freight rates for container shipping by sea have fallen
significantly since 2011, with the price of rail transport
now 3 to 4 times higher than ocean shipping (theSCFI Shanghai–Europe ranged at around USD 900
per TEU in the first half of 2017). China’s economic
growth has cooled down, and overall trade between
Asia and Europe stagnated in 2015 and 2016. Finally,
there is still room for efficiency and quality gains inareas such as waiting times and processes for bordercrossings and customs, and in reliability and client
information to increase the attractiveness of railtransport for logistics service providers.

4. Shanghai Containerized Freight Index

6 Eurasian Rail Corridors

Reduction of freightrates thanks to Chinese
subsidies

Targeting of suitablecustomers and regions,e.g. Western China

Ease of bordercrossings through thecommon consignment
note, Eurasian Customs
Union and local
improvements

Nevertheless, the countries along the Silk Road
have invested significantly in the last few years ininfrastructure and the promotion of Eurasian railtransport to facilitate competitive services andtransport growth. China’s “One Belt, One Road”(OBOR) initiative is a particularly strong driver of thedevelopment of existing and new Eurasian rail routes.
China launched OBOR in 2013 to better integratedifferent parts of Asia, Europe and Russia, citing plans
for a “Silk Road Economic Belt” and a “Maritime Silk
Road of the 21st Century”. Currently, OBOR supports
rail cargo projects by financing activities on theexisting Northern routes (e.g. subsidies for trains andnew destinations) and making investments in railway
infrastructure and terminals along the Southernroutes.

Khabarovsk
4

AmazarHelsinki

Svilengrad
Istanbul

Zabaykalsk
Irkutsk

Moscow

Malaszewicze
Chop
Brest
Dobra
ZahonySuifenhe

Yekaterinburg
IletskNovosibirsk

Astana

7
Poti
Kars

Omsk

DostykKandagach
1

Aktau
Baku

Tabriz6

TehranBandar Emam
Bandar Abbas

Mary

Sarakhs
Bafq

Manzhouli

Zamyn-Uud
Ulan-Ude
Naushki
Beijing
3 Erenhot
Shanghai

Alashankou

Khorgos
Almaty5

2

Vostochny
Vladivostok

UrumqiTashkent
Mazar-e-Sharif
New Delhi

Mirjaveh

Mumbai2,000 kmTrack gauge
1,520 mm
1,435 mm
1,676 mmFigure 2: Main Eurasian routes with track gauge (schematic – conical projection to minimise visual distortion of
distances, numbering based on route usage for Eurasian rail cargo transport)

The vast majority of container trains use the Northernroutes via Russia and Kazakhstan (Figure 2) withwell-established operations, high reliability and good
infrastructure. The Kazakh routes (no. 1) with bordercrossing at Khorgos or Alashankou/Dostyk havea length of ~10,000 km and a transit time of ~16
days; the Trans-Siberian route (no. 2) via Manzhouli/
Zabaykalsk is 11,000 km in length with a transit timeof ~17 days. These two routes are the fastest andoffer sufficient capacity, while possible alternatives(such as no. 3) require improvement.

In addition to the Europe-Asia routes already in placein North Asia, new routes via Iran and Turkey are being
developed for rail cargo (no. 5 – 7). For Eurasian rail
cargo as referred to in this study, the Southern routes
include the countries of Kazakhstan, Uzbekistan,
Turkmenistan, Iran, Azerbaijan, Georgia and Turkey
before reaching Bulgaria in the EU via Svilengrad/
Kapikule. The rail routes (including a shipment byferry) have already been established but ongoing
infrastructure projects have a number of gaps toclose to enable a convenient service. The terminals
along the Silk Road in particular show a number of
deficiencies and require considerable investmentsin the future. Making the new routes a success will
necessitate significant changes in operations, pricing,tariffs and customs.

Eurasian Rail Corridors 7

Helsinki
Oslo
Stockholm

GdyniaBremerhaven

Swinoujscie

4
Kaunas1

Hamburg Poznan Warsaw
Rotterdam Amsterdam
Hanover
Malaszewicze
BerlinLondonAntwerp
KatowiceKrakow
Zeebrugge
Duisburg
CologneZilinaLe HavreCiernaLuxembourg Prague
Metz
ZahonyParis
MunichBratislava
ViennaStrasbourg
Budapest
Basel
Arad
Bucharest
Kelebia
Ljubljana
Amberieux
VeronaConstanta
Koper
Bordeaux
TriesteBilbaoLyon Genoa
Sofia
Ravenna
Svilengrad

2

LisbonSines

3Barcelona

MadridAlmeria
Algeciras

PalermoInterconnection points of routes from Asia to
European Rail Freight Corridors
1

Malaszewicze – Brest (RFC 8)

2

Cierna – Chop (RFC 9) and Zahony – Chop (RFC 6)

3 Svilengrad – Kapikule (RFC 7)
4 Via Stockholm (RFC 3)

Athens/Thriasio

European Rail Freight Corridors
RFC 1: Rhine – Alpine
RFC 2: North Sea – Mediterranean
RFC 3: Scandinavian – Mediterranean
RFC 4: Atlantic
RFC 5: Baltic – Adriatic
RFC 6: Mediterranean
RFC 7: Orient – East Mediterranean
RFC 8: North Sea – Baltic
RFC 9: Rhine – Danube or Czech – Slovak
RFC 11: Amber

Figure 3: Schematic map of Rail Freight Corridors in Europe – does not include all potential RFC connections,sections forming the focus of this study shown by bold lines5

Four RFCs (Figure 3) are directly relevant as gateways for Eurasian rail transport (RFC 6 – 9); RFC 3 is ofno significance at the moment. The connecting point to the European Freight Corridors is in most cases
the border-crossing terminal of Malaszewicze/Brest. This entry point to RFC 8 channels by far the highest
proportion of Eurasian traffic, mainly because of its proximity to routings from Moscow and to Central Europe’s
distribution hubs in Duisburg and Hamburg. The interconnection points to RFC 9 and RFC 6 were used much
more intensely in the past until the political situation in Ukraine led to a switch to Brest. The other entry points
to the European Union play only a minor role.

5. Initiatives regarding RFC 10 exist, but no official implementation decision has been taken. For RFC 9, only thesection from Cierna to Prague has been implemented, other routes are to be implemented by 2030. RFC 11 is to belaunched in 2018

8 Eurasian Rail Corridors

Potential of Eurasian rail
cargo transport
The potential of Eurasian rail freight transport including
the Silk Road has been evaluated based on 2016 data andforecast for 2027. The analysis encompasses 38 countries
in Europe and Asia: the 28 countries of the European Union
plus Japan, South Korea, China, Mongolia and Kazakhstan.
South Asia (India, Pakistan, Bangladesh), Iran and Turkey
are treated separately as long-term upside potential.
Russia, Ukraine, Belarus, etc. are considered as transit
countries.
The total traffic potential between the 28 European and five
Asian countries is forecast to reach 25.6 m TEU in 2027
for sea, air and rail transport combined, compared to 11.1
m TEU in 2016. This implies a CAGR6 of 8% between 2016
and 2027 for the overall TEU potential. The imbalanceof westbound and eastbound traffic flows will decreaseslightly to 59% westbound and 41% eastbound in 2027.

Market share rail

1.2%

2.5%

810

CAGR 14.7%
636
30
276

141

Forecast: Railshifted from air

330

2016

Forecast: Railshifted from sea

2027

Forecast: Rail

2030

Rail Present

Figure 4: Rail potential in the base case forecast [‘000 TEU]7

For 2027, total rail potential of around 636,000 TEU is
forecast, with a significant amount coming from a shift from sea transport (Figure 4), which equates to 21 trains
per day in 2027 (assumption: 82 TEU per train). This total rail potential includes existing rail volumes increasingover time and a shift from sea to rail, including the growth in sea transport. A small potential shift from air
freight is also considered likely. The extrapolated forecast for the period through 2030 shows a total rail cargovolume of approximately 810,000 TEU.

In addition to thebase case forecast,
two further scenarios
have been developedwith varying key
assumptions.

742,000
TEU

437,000
TEU

The “best case” forecast shows
742,000 TEU in 2027 (CAGR
16.3%) based on a strong trade

In the “worst case” scenario,
437,000 TEU are forecast for2027 (CAGR 10.8%) based on thevolume development and an increase intime-sensitive goods, stable subsidies,
investments in infrastructure, anincrease in sea freight rates and theapproval of transport of hazardous
goods by rail.

slow development of trade volumes, adecrease in time-sensitive goods, an
end to subsidies from China, low sea
freight rates, insufficient investments
in infrastructure and no shift of goods
from air.

6. Compound Annual Growth Rate
7. Rail shifted from air: Rough estimate based on shift factors of 5% from overall Asia-Europe air traffic

Eurasian Rail Corridors 9

Trade volume distribution
between Northern andSouthern routes

The Southern routes’ share of the traffic potential for2027 is projected to reach 19,000 TEU, corresponding
to 3% of Eurasian rail traffic (Figure 5). Bulgaria,
Greece and Romania are the countries identified as
preferred partners for Eurasian rail freight through theSouthern routes. Other European countries are muchcloser to the established Northern route. Overall, thepotential of Southern routes is seen more in multi-leg
traffic to new regional markets than as a route forEurasian transports. If other expected internationaltraffic (e.g. Asia – Iran/Turkey, EU – Iran/Turkey,
EU – Pakistan/India/Bangladesh) is accounted forin addition, the traffic on the Southern routes could
reach 389,000 TEU by 2027.

10 Eurasian Rail Corridors

The precondition for the development of thisupside scenario is the existence of sufficient pricecompetitiveness with sea transport, as the timeadvantage of rail decreases the closer the origin
and destination countries are. Furthermore, issuesof security and trans-border shipments, customs
and bureaucracy need to be addressed. Higher
infrastructure capacities are needed to make rail
freight possible in greater quantities, which will
require further investments on Southern routes.
Economic growth and political stability in Iran andTurkey, as well as between India and Pakistan,
are other inherent preconditions for the stabledevelopment of traffic.

617

19
Figure 5: Trade volume distribution between Northernand Southern routes 2027 [‘000 TEU]

The evolution of RFC connections in Eurasian railtransport will depend on the success of future
expansion plans and political decisions. RFC 8, withthe entry point at Brest/Malaszewicze, will remain
the main entry point to the European Union withan estimated share of more than 50%. The bordercrossing terminals are in need of expansion in order
to avoid becoming a bottleneck of Eurasian rail
freight. RFC 6 and 9 are currently of limited use owing
to the political uncertainty in Ukraine. If this conflictends and the rail infrastructure is developed, theforecast foresees the potential for around one third ofEurasian rail transport to be routed via these RFCs.

The entry point through the Baltic region (also
RFC 8) has not been used regularly to date, as theinfrastructure is not ready, but a recent Chinese cargotransit agreement between Lithuanian railways andUnited Transport and Logistics Company (JSC UTLC)
highlights the future potential of this route, which isestimated at 8% of the overall Eurasian rail freight.
RFC 7 (via Romania and Bulgaria) is used for freight
to/from Turkey and has the potential to serve Middle
East transports in particular, with freight volumes
from East Asia being quite small at present andexpected to remain so in the future. If the Southernrail routes are implemented as planned, the share ofthis entry point is also likely to be 8%.

Eurasian Rail Corridors 11

Gap analysis in Eurasianrail transport
Northern routes
Interviews with relevant stakeholders confirmed that the success factors for Eurasianrail freight have remained largely constant in recent years (Figure 6). The establishmentof regular services has improved the fulfilment of the success factors – the focus in the
coming years should lie on efficiency gains in operations as well as on broader service
differentiation.

Past growth was based on major improvements ininfrastructure, customs and procedures, routes andfrequencies. Although rail is more reliable than sea
freight, shippers need greater reliability and better
information on arrival times. The strengthening ofeastwards traffic volumes needs to be developed
further through targeted marketing and an increase inmulti-leg eastwards transportation.

Price competitiveness versus sea transport hasdeteriorated with low sea freight rates, and potential
is seen in a stronger consolidation and better balanceof operations. Moreover, rail freight should strive for
efficiency gains in order to become independent of thesubsidies that are granted at the moment. Given theincrease in volumes, bottlenecks at key transfer points
on the established routes are predicted. Aside from
infrastructure development, the tailored coordinationof traffic flows can increase system capacity.

Southern routes
On the Southern routes, the same success factors and expectations are highlighted as on the established
Northern routes, yet there is an even bigger gap to be closed (Figure 7). Operators are generally open to
Southern routes as long as they offer a competitive service level and price. That said, they currently facea number of challenges concerning transport time, reliability and operating costs due to numerous bordercrossings and changes in transport mode. Nevertheless, chances are seen to exploit new markets (e.g. Iran,
Caucasus region) and to bypass capacity or political constraints on the Northern routes.

12 Eurasian Rail Corridors

Parameter

Importancefor rail link

Gap 2017

Changes since 2011 and comments for the Northern Routes> Speed gains of approx. two days since 2011
> Gaps seen mostly inside Europe (slow transportation, delays)> Rail now more reliable than sea> Especially shippers still see need for improvement and more information> Continuously smaller eastwards transport volumes, changing only slowly> Alternatives like multi-leg returns make transport more complicated> Suitable goods are targeted and LCL offers were introduced> Still potential, e.g. in chemicals, temperature controlled goods and air freight> No pure price competition but more competition through low sea freight rates> Potential for more cost efficiency and less dependence on subsidies> Frequency increased strongly in recent years> Many trains are still on request instead of regular trains> Network has increased in past years> Next step should be consolidation for more efficient geographical coverage> Imbalance of traffic complicates return of platforms/containers

Transport time
Reliability
Balanced quantities
Target goods
Price
Frequency,
flexibility
Target geographical coverage
Availability> Improvements in customs in recent years, partly seen as "problem solved"> More potential at Chinese border and through electronic documentation

Customs

Figure 6: Prioritisation and evaluation of success factors – Analysis of interviews8

Parameter
Transport time
Reliability
Balanced quantities
Target goods
Price
Frequency,
flexibility
Target geographical coverage

Importancefor rail link

Gap 2017

Comments regarding Southern routes> Speed slower than Northern routes (e.g. 17-20 days China-Turkey)> Long distance, more border crossings/customs or mode changes> No established regular services yet> Trial services TRACECA (DHL 2016) with delays of more than 4 days each
> Smaller eastwards transport volumes are expected> Need to examine possibilities for multi-leg transportation> Target goods in European O/Ds for Southern routes (East Europe) and in
new O/Ds (Turkey, Iran) need to be specified and seasonality considered> Even greater competition from sea freight through shorter distance and goodaccessibility of Middle East and East European countries> High network costs in Iran and Turkey> Routes not established as regular services yet> Routes not established as regular services yet

Availability> Routes not established as regular services yet

Customs> Many transit countries are not part of a customs unit (Ukraine, Iran,
Azerbaijan and Turkmenistan)
Figure 7: Evaluation of success factors for Southern routes – Analysis of interviews98. Legend: Greater filling of Harvey Balls indicates higher importance; greater filling of gap indicates higher gap,
direction of arrow shows progress since 2011 (upwards = positive, downwards = negative). Gap depicts overall view of
established routes (Northern routes), progress arrow may be flat/negative if expectations have risen at the same level
as results.
9. Legend: Greater filling of Harvey Balls indicates higher importance; greater filling of gap indicates higher gap
Eurasian Rail Corridors 13

Eurasian rail freight operators use
the infrastructure of European Rail
Freight Corridors (RFCs) whenentering the EU. However, they do
not necessarily use the dedicated
RFC capacity, nor do they haveto stay on RFC infrastructure
throughout the whole of the trip in
Europe. The insights generated in
the interviews show that a large
proportion of operators are notsatisfied with the value added by
the RFCs.

14 Eurasian Rail Corridors

Procedures at border crossingsstem partly from historic state
contracts or rules that limit
capacity and lead to longer
employment of resources andchallenge operations. Interviewees
mentioned repeatedly that RFC
development and harmonisationends at European borders.
One step could be to facilitate
exchange with infrastructure
managers on the other side of
the border about their respective
railways’ needs and expectations,e.g. by inviting them to attend
RFC meetings. More intensive
exchange could help get the needsof European railways and shippers
included in the development of
new infrastructure in neighbouring
non-EU countries.

Within the RFCs, the players’
expectations regarding priceand service quality are often not
met due to the many changesof locomotives and personnel
that take place as a result of thelimited interoperability. Little
prioritisation of freight trains in
the network leads to delays within
Europe and infrastructure works
are not sufficiently coordinatedbetween countries. Generally,
operators confirmed the limited
acknowledgement of RFCs in theEurasian rail freight “ecosystem”– they are only really known by theEuropean railways that conduct
operations in Europe.

Recommendations forEurasian rail stakeholders
The focus of operators and railways should be on operational efficiency andon customer-friendly product development. Operators and railways needto address problems with European rail infrastructure more intensively andendeavour to improve customer services. Measures to improve operating
efficiency should be the next step on established routes in order to reach longterm sustainable cost structures. Information on the status of trains should be
improved, as should the adaptation of services and offers to customer needs.
For operations in Europe, the expectations and needs of railway operators
should be communicated and promoted more intensely. Especially theadvantages and functions of the RFCs need to be promoted to a broader circleof actors in Eurasian railway transport.
In order to develop the potential of the Silk Road projects, it will be necessary to continuously enhance
the infrastructure, processes and service quality along the Southern routes. Investments in infrastructure,
cooperation with neighbouring states and the revision of customs and border crossing procedures are needed
to close the gap and meet client requirements. Furthermore, raising awareness and consulting authorities
on rail freight requirements is recommended, along with improved collaboration and communication withneighbouring railways and ferry services to allow for a smooth transfer.
Logistics companies need to offer additional value to their clients through easier handling of the full productspectrum. Rail acceptance should be fostered by offering rail as an alternative to clients, educating them about
the benefits and steps that the client can take to maximise the potential offered by rail. Product development
should also be enhanced by logistics companies. Knowledge of client needs could help them tailor products
better, for instance by providing greater information and transparency, introducing faster connections or price/time differences for the routes. Finally, new target regions could be used as stepping stones toward Asia bydeveloping products for markets along the Southern routes.

Eurasian Rail Corridors 15

UIC is the worldwide organisation for the promotionof rail transport at a global level and collaborative
development of the railway system. It brings together
some 200 members on all 5 continents, among themrail operators, infrastructure managers, railway service
providers, etc. UIC maintains close cooperation
links with all actors in the rail transport domain rightaround the world, including manufacturers, railway
associations, public authorities and stakeholders inother domains and sectors whose experiences may bebeneficial to rail development. The UIC’s main tasks
include understanding the business needs of the rail
community, developing programmes of innovation
to identify solutions to those needs and preparing
and publishing a series of documents known as IRS
that facilitate the implementation of the innovative
solutions.

Roland Berger, founded in 1967, is the only leading
global consultancy of German heritage and European
origin. With 2,400 employees working from 34
countries, it has successful operations in all majorinternational markets. Its 50 offices are located in
the key global business hubs. The consultancy is anindependent partnership owned exclusively by 220
Partners. The Transportation Competence Centre ofRoland Berger has supported many railway operatorsand infrastructure managers in their transformation.

In case of questions, pleasecontact Ms. Sandra Géhénot,
Freight Director, gehenot@uic.org