RLL Container Report - 19 April 2017
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 19 April 2017
The Amazing, Shrinking Europe..
There is clear evidence that Europe is shrinking. On the 4th of April, I caught a flight from Skavsta, a provincial airport to the south of Stockholm, to Warsaw, where I had lunch in the Old Town before taking a connecting flight to Kutaisi in Georgia, arriving in time for a late supper. The new rail connection linking Iran with Istanbul and Europe will also shrink the continent as it runs from Teheran through Azerbaijan and then crosses into Georgia. The broad-gauge line passes between the capital Tbilisi and Rustavi before heading some 200 km to the west to the rail junction at Akhalkalaki. It is at this point that the containers are switched to a parallel standard gauge line that stretches 1,450 km West all the way to Istanbul. The metropolis on the Bosphoros, marks the hallway point between the Iranian capital and Europe’s inland intermodal super-hub at Duisburg.
The new transport corridor will be a boon to European industry, providing the continent with a relatively fast access to the Middle East country and its rapidly expanding market of 88 million consumers. For their part, Iranian producers of fruit and vegetables will gain access to a huge new market that will, especially in winter, have a near insatiable demand for fresh produce. Shipping lines serving the Persian Gulf trade can respond immediately to any upturn in demand for temperature-controlled capacity. Refrigerated containers can either be purchased or leased from the specialist suppliers. Additional reefer plugs can be added relatively quickly. The railways, on the other hand, will have a steep learning curve, as well as a deficit in reefer slot capacity. They will also face competition from Iranian trucking companies that will have access to modern European reefer vehicles that can be supplied from a wide number of factories in Europe. This competition will benefit consumers at either end of the supply chain.
However, the Achilles Heel of the supply chain will be the road network. Although Georgia has embarked on a major programme of upgrading its road network, its inhabitants were even quicker to purchase imported cars that are now clogging up the main arteries in the Caucasus region. The situation in Armenia gives cause for concern, as I witnessed how convoys of up to six heavy trucks tried to pick their way through a crumbling road network that is desperately in need of major investment. Journey speeds are low and traffic is channelled through the centre of market towns that are simply not designed to cope with the technological advances being made by truck designers that allow higher axle weights. The European Union has done some very useful work in upgrading the border crossing points and reducing the time spent transiting from Georgia to Armenia but much more technical assistance and investment will be required if the region is to function fully as a major transit hub for the region.
In the interim, the rail network will rise to the challenge with the new Baku-Tbilisi-Kars line taking much of the strain on the East-West corridor. There is also talk of a shorter second line from Tabriz via Armenia all the way to Kars. The rail network in Armenia, called the South Caucasian Railway, is owned and operated by Russian Railways, which would be capable and willing to operate such a line that would add the required additional freight capacity.
John Keir, Ross Learmont Ltd.
19 April 2017
Copyright ©, 2017, John Keir