Landlock no more? Trans Asia Train

Landlock no more?

Pan-Asian railway set in train
By David Fullbrook

BANGKOK - A seamless railway spanning Asia is moving closer, with trial runs inspiring officials and shippers, promising a boost for economic growth and jobs. Whether those benefits arrive on time depends on 27 governments - due to sign an agreement in 2006 - giving the project high priority.

Faster shipping can reduce costs, making goods more competitive, translating into more sales, higher profits and more jobs. Ripples go even further in a world of just-in-time manufacturing, allowing suppliers, producers and retailers to stock less, releasing money from inventories. "Logistics costs, including transport, storage, warehousing, packaging and related value-adding services, account for 10-40% of the delivered cost of goods," says Pierre Chartier, an economic affairs officer overseeing railway projects at the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

Shipping freight across Asia and, even on to Europe, is today far from smooth sailing. Many important links between national and regional networks exist only on planners' maps, where they have been for decades, or even longer. A railway from Yunnan in southern China to Myanmar or Thailand was being called for in the 1880s. "The goal of the Trans-Asian Railway is to assist member countries take full advantage of their past investment in railways and promote a greater utilization of rail to meet the ever-increasing demand for efficient transport infrastructure and services due to the growing international trade," says Chartier.

ESCAP officers are also trying to include services for people. Public transport, like trains, is a lifeline for poor people, making working in far-off places affordable and palatable because traveling home to visit their families is easier. In some areas, links have come and gone, such as those between Cambodia and Thailand, or a link from China's Xinjiang to Kazakhstan that was completed in the mid-90s, only to fall into disuse a few years later before being restored last year.

Links bring their own problems. Railway gauges abruptly change at borders, requiring switching cargo from one set of rail cars to another. Though containers have made this faster and more secure, there is significant room for improvement, probably adapting systems and technology that allow ports such as Hong Kong, Shenzhen and Singapore to load and unload giant cargo vessels in just a few hours.

Customs, quarantine and security inspections, and paperwork further slow a goods train's progress. If officials can agree on common standards and technology, they will cut shipping times and costs significantly. It's not easy though. "It's possible, but getting everybody coordinated and agreed on all the standards is tough," says Ravindran Devagunam, who leads transport consulting for Deloitte in Singapore.

ESCAP rail experts are now revising a draft agreement accepted by 27 Asian countries in November 2004 at the Intergovernmental Agreement on the Trans-Asian Railway Network meeting. They hope rail officials from these countries will agree on a final agreement in November this year, with transport ministers signing it a year later. Governments signed a similar agreement for the Asian Highway Network last year.

With no formal power to make governments listen, the only tool for the ESCAP experts is the fine art of argument, debate and persuasion. They organized demonstration trains to fire-up interest. "A positive outcome has been the interest shown by a number of freight forwarders to make increased utilization of rail services in the future," says Chartier. One train hauled containers from Lianyungang in China to Almaty in Kazakhstan, covering 5,000 kilometer in just over seven days. Another train from Brest in Belarus to Ulan Bator in Mongolia covered 7,200 km in less than nine days. These trains show the feasibility of running regular scheduled services similar to those shipping lines provide between ports around the world. Most rail shipments in Asia and to Europe now are long-term contracts shipping bulk commodities like oil.

Increasing world trade means opportunities are growing. Meanwhile environmental concerns are rising too. Road transport pollutes more, is less safe, and only really efficient over short distances. Increasing congestion in sea lanes is attracting pirates, especially in the Malacca Strait, raising fears over safety and disruption. "If synergies are developed, member countries will be in a position to take full advantage of the potential benefits offered by railway transport. At the same time, railway companies will be able to capitalize on long-distance movements for which they are economically better suited than other surface modes. This is especially important for landlocked countries," says Chartier.

Of the world's 30 landlocked states, 12 are in Asia. Cut off from the sea, landlocked countries are usually noticeably poorer and less developed than coastal states. Politically volatile Central Asian states are a case in point. Better access to foreign markets could brighten their economic prospects and make supplies of commodities and minerals, especially oil, more reliable.

Most of the world's oil ships by sea through vulnerable choke points like the Strait of Hormuz, the Suez Canal and the Singapore Strait. Their nearest sea ports are at least a few thousand kilometers away along tenuous routes and major markets like Europe and the Far East even further. Routes between the far ends of Eurasia are half the distance of sea routes between the two coasts. "Given the long distances by land within Asia and between Asia and Europe, railways seem to have a bright future ahead," says Chartier.

Goods traveling by train from the Korean Peninsula to Europe will cover about 11,000 kilometers, half the length of a journey by sea. Freight trains from Russia's Far East coast opposite Japan can reach Finland in 11 days, Germany in less than 15. However, do not expect shares in shipping lines to collapse. They are efficient and well established. They will be tough competitors for coast-to-coast traffic. "Between Asia and Europe, I think the sea channels would be a lot more cost-efficient, they are very well established. The benefits will be intra-Asia, especially for landlocked countries," says Devagunam.

This railway is not going to appear overnight. Four corridors grew out of the Asian Land Transport Infrastructure Development (ALTID) project that began in 1992. In 1995, ESCAP officers and national officials identified a northern corridor combining elements of railways in China, the Koreas, Mongolia, Kazakhstan and Russia. They also agreed a corridor covering the Association of Southeast Asian Nations (ASEAN). Four years later, they finished drawing a southern corridor across their maps stretching from Yunnan and Thailand by way of Myanmar, Bangladesh, India, Pakistan and Iran to Turkey. In 2001, they drew up a corridor linking northern Europe to the Persian Gulf through Russia, Central Asia and the Caucasus.

A quick glance at the map reveals more than a few gaps. Railways of the Association of Southeast Asian Nations (ASEAN), where they exist, are generally in a pretty poor state, with double-track - which makes journeys much faster - rare. That is starting to change. Malaysia is double-tracking its railways. Thailand just may start work this year on nationwide double-tracking, a $10 billion project, after thinking it over for a few decades or so. Worse, perhaps, is the southern route. Linking China and Thailand to Bangladesh will require a new railway across Myanmar, plus a long link from central Iran to Pakistan.

Missing rails are not the only challenge. Hopes wax and wane with the moon for running trains from South Korea to Russia, or China, via North Korea. Reliability is not Myanmar's forte, though Chinese pressure and a little money should smooth things there. India's concern about opening up the Myanmar border may play a role in slowing the project. Railways in general need upgrading, and not just hardware like better rails, points or signaling. Many railways simply lack enough wagons.

Management needs to improve, putting punctuality and service first. Shippers also need to sharpen up to reassure wary customers. International public and private collaboration is also not what it should be. "For the railways of Asia to compete effectively and capture a larger part of the market, there is an urgent need for greater cooperation," says Chartier.

There are some signs this is improving. "Azerbaijan, the Islamic Republic of Iran and the Russian Federation have signed a cooperative agreement to develop the North-South corridor linking northern Europe to the port of Bandar Abbas on the Persian Gulf, and Malaysia and Thailand have now been cooperating for over five years to develop and operate a container land-bridge between Port Klang and Bangkok," says Chartier.

To get things moving, governments need to step back, focus on creating the rules that offer attractive opportunities to private money and skilled logistics firms. From small acorns do big trees grow, but only if well watered and tended. That is the real challenge - whether governments are prepared to make good on fine platitudes, smiles and handshakes. That will take money, which some do not have or would rather spend on other things. "If it happens, it's great, but to be honest I don't see it happening in the next five years," says Devagunam.