Forum on

Sustainable Transport Connectivity

between Asia and Europe

Sustainable transport and connectivity

Developments and challenges

Raghu Dayal

AITD

Virtual: Bangkok 5-6 October 2021

Environmentally sustainable: different modes

Global GhG emissions from transportation

▪ Cars (40%)

▪ Trucks (34%)

▪ Planes (11%)

▪ Boats (11%)

▪ Trains (4%)

Mode of Transport

kg of CO2

per ton-mile

Air cargo 0.8063

Truck 0.1693

Train 0.1048

Sea freight 0.0403

Sea freight tops as most sustainable mode

Different modes: relative attributes

For freightDifferent modes can have economic and environmental advantages in different situations.Capacity, cost, and service differences enable each mode to target particular market niches.

▪ Rail transport has environmental advantages over road transport for both passengersand freight.

▪ Road transport, though less environmentally friendly, provides convenientaccessibility for individuals and freight; can also be more economical for low volumefreights, and more flexible as well.

▪ Road and air transport are generally used for high-value, low volume/weight freightthat is also more time-sensitive.

▪ Railways and inland waterways usually move lower-value, higher volume/weightfreights.

▪ Increasing the share of freight carried by modes with low carbon intensities (inCO2/tkm) is the most effective way of de-carbonizing logistics.

Major modal shifts are unlikely without substantial changes in costs/pricing, and effectiveregulatory measures.

▪ Policy measures that may affect transport mode choices include economic instruments (e.g. fueltaxes, congestion and/or emission charges), labour and safety regulations, and investments ininfrastructure and service improvement.Not all freight can be moved effectively by all modes.

Contd…

For passengers▪ Private motorisation (cars) generally dominates inland passenger transport.

▪ In most European countries, bus/coach transport constitutes less than 15% of totalpassenger transport▪ in USA, more than 90% of all inland passenger transport is by private car.▪ In the EU, the private car share of passenger transport was over 80% some years ago;

there is no indication of a shift towards more environment- friendly modes.▪ In urban areas, public transport (usually by buses and/or electrified rail) is much more

significant.Accessible and affordable mass public transport is critical for management of trafficcongestion and for environment; also for economic and social inclusion of the low-incomehouseholds, the elderly, and people with special needs.▪ The car having to be used by many travellers for the “first/last mile”, a well-integrated

transport interchange facility becomes essential, providing park and ride facilities,besides frequent public transport connectivity to the centre of a town/city.

▪ Well designed and organized interchanges, where there is seamless transfer from onemode to another, will also facilitate the transfer of passengers from the car to publictransport.

In some cases, this “carrot” will not be enough; it may need a “stick” too, e.g.,▪ higher road costs for car users, and road calming preferential lane measures, leading to

longer journey times for those using the car.

Asia- Europe witnessing steady rise

in block container trains…

Euro-Asian trade has largely been transported by sea: more than 95% of thevolume (in weight) and nearly 70% of the value (in US$); air cargo less than2% by volume, though over 30% by value; railways carried 1% of volume,more than 2% of the value.▪ Of late, block liner trains on the TAR Northern Corridor carrying both FCL

as well as LCL cargo, turn ‘Iron Silk Road’ into China-Europe trade artery,transport high value, time-sensitive freight, achieving transit of 15-20 daysfor the 11,500 km journey.

▪ According to Global Times, China 7,323 freight trains ran between Chinaand Europe during January-June, up 43% y-o-y. More than 1,000 freighttrains ran every month for past over 15 consecutive months.

▪ Rail freight here is faster than sea freight, more cost-effective than airfreight.

For high value electronic goods, for example, a 40 ft container can hold up to22,000 kg of goods. By train the cost would be about $ 8,000; by sea, it wouldcost around $ 4,000; by air, cost would rise to $ 32,000.

While a development to cherish and

expand, it must also compel to consider…

▪ Rail freight business needs be considered in its entirety, to include intra-

regional/sub-regional traffic streams.

▪ Shorter lead cargoes moving within region/sub-regions, generally by road,

would yield more environmental benefit when shifted to rail, in

comparison to maritime long haul inter-continental freight shifted to rail.

Elusive targets of significant Shift2Rail

The EU has steadily developed its transport policy under the overarching

target of more sustainable mobility.

▪ Its main strategy has relied on promoting co-modality, i.e., optimally

combining various modes of transport.

▪ Yet, the EU aim to promote intermodal transport, thereby enhancing a

modal shift from road transport to short-sea shipping, rail and inland

waterways, or a combination of these, has achieved little. Intermodal

transport still accounts for only 2-4% of volume.

Shift2Rail demands a paradigm shift…

▪ Shift2Rail will not happen only by counting positive points in favour of it as a

sustainable mode.

▪ Rail is clearly a preferred modal choice -- safe, energy-efficient, land use-efficient,

operationally predictable, with high throughput capacity per unit of transport, and,

of course, environmentally benign.

▪ Railways is a preferred mode, provided there be a minimum critical mass.

It needs to facilitate and promote the creation of critical mass, converting/consolidating

LTL/LWL freight into train loads, in partnership with roads and other modes.

▪ Transportation sector is profoundly impacted by the tsunami of change.

▪ The new ecosystem demands transport services to be seamless and swift, inclusive

and integrated.

▪ The nature of rail freight being transported is changing from heavy bulk

commodities to lighter high-value goods, generally moving in smaller

consignment volumes, and require much higher velocity, also quality of

service.

▪ As has been flagged in the UNESCAP study report, sustainability is an

important purpose, but so is effectiveness and competitiveness.

▪ Competitiveness of intermodal transport compared to other modes is

determined in terms of cost as well as service or quality issues.

▪ Improving the cost-efficiency of road-rail intermodal transport in short

distances depends strongly on improving the efficiency of pre- and post-

haulage activities, the first mile and the last mile, which typically represent

40% of the total transport costs in intermodal transport.

▪ Competitiveness of rail connections could be improved by reducing the

transit times and improving the load factors, as well as by establishment of

harmonized contractual conditions for carriage.

▪ A possible policy measure that can lead to a greater use of railway services

is internalization of external costs in transport prices.

▪ Policymakers need to create a fair mode-neutral framework, which allows

for all costs involved to be reflected in the price of the service.

INSTC: A salient step towards

sustainable connectivity

Russia, Iran andIndia signed theagreement forthe INSTCproject on 16May 2002.

Main aim: promoting safe,economical and sustainableaccess to international marketthrough multimodal transportbetween countries of PersianGulf, India and Russia, CIS,Europe.

Joined by Azerbaijan, Armenia, Belarus,Kazakhstan, Kyrgyzstan, Tajikistan,,Turkey, Ukraine , Oman, Syria

Integrated network…

▪ Primarily two routes, also involving other alternate routes, connect theINSTC member countries.

▪ Route 1 - linking India to Azerbaijan via Iran

▪ JNPT (Mumbai) - Bandar Abbas (by sea)

▪ Bandar Abbas - Astara (on Iran-Azerbaijan border, also touchingCaspian Sea) (by road)

▪ Route 2 - connecting India and Russia via Iran

▪ JNPT - Bandar Abbas (by sea)

▪ Bandar Abbas - Amirabad (by road)

▪ Amirabad - Astrakhan (by sea).

▪ Iran’s strategic location makes it a bridge

▪ between South and West,

▪ between the Indian Ocean and the landlocked countries of CentralAsia.

Mumbai–Mediterranean corridor

▪ Development of freighttransport corridorsbetween a Mumbai portand the Mediterraneanagreed by Iran, Azerbaijan,Georgia and Ukraine inJanuary 2016.

▪ Three routes agreed.

All start with the maritimeleg from Mumbai to theport of Bandar Abbas, andthen by rail through Iran.

Land and Caspian Seashipping options are thenoffered to Azerbaijan, withonward rail transport toGeorgia’s Black Sea portsof Batumi and Poti.

Pushing the project forward…

▪ The Container Corporation of India (CONCOR) and the RZD Logistics

(joint stock company of Russian Railways) collaborate for seamless

transportation of containerized cargo on the corridor under a single invoice

through the designated ports in Iran such as, but not limited to, Bandar

Abbas and Chabahar ports.

▪ CONCOR allots its own empty containers to Indian exporters at its

ICDs/CFSs and arranges for the loaded containers to be moved through

Indian west coast ports of Nhava Sheva/Mundra up to Chabahar/Bandar

Abbas port in Iran.

▪ RZD Logistics, in turn, would arrange transportation of loaded containers

onwards from Chabahar/Bandar Abbas port to ICD Vorsino/ Yekaterinburg

in Russia.

INSTC tested

On 22 September 2016, 2X20 foot containers dispatched from JNPT (Mumbai)arrived in the “Freight Village Vosnio” (Russia) on 12 October 2016.

▪ The transit time was 23 days.

▪ Containers with industrial radiators sailed from JNPT to Bandar Abbas,then transported by rail to Rasht station; from there delivered by road toAstara, reloaded on rail, and finally delivered to destination in Russia.

▪ PJSC TransContainer provided containers for loading in India andensured supply of 1,520mm gauge rolling stock.

▪ Iranian Railways arranged transport of cargo from Bandar Abbas toAstara.

▪ ADY Express organized transportation on the routeAstara-Samur.

▪ JSC RZD Logistics delivered the cargo from Yalama to Vorsino.

INSTC: cheaper and faster

• Against the cargo moving over the 8,700 Mumbai-Moscow nauticalmiles through the traditional maritime route involving transit of 38-45days, the INSTC 2,200 nautical miles plus 3,000 km overland journeyreduce the transit to just 20-22 days.

• The cost of carriage is less than on the conventional sea route. Forexample, it costs approx. US$ 3,725-4,725/TEU from Mundra port toICD Vorsino (Moscow) via INSTC vs $ 4,200-5,000 by conventional searoute via the Suez Canal.

• Likewise the 16,130 km conventional sea route between India andFinland involves a transit of around 45 days; the multimodal INSTCroute reduces the distance to 9,390 km, requiring transit of just 24-27days.

INSTC faces challenges

Iran having beenembargoed by Officeof Foreign AssetsControl, US Treasury,banks do not releaseBRC (bank realisationcertificate). BRCissued by a bankhelps exporters availof incentives, importduty exemptions, andother financialassistance providedby government.

Not necessary to reinvent the wheel• Several initiatives and templates evolved for trade and

transit facilitation.To save time and cost, these can be adopted and adapted.

• Low level of trade critical mass• Lack of common border crossing rules• Problems related to language, banking, insurance, customs

and other regulatory procedures and data exchange• Balancing of equipment, wagon shortage, load limitations.• Major shipping lines like MSC, Maersk, CMA CGM do not

operate between India and Iran.• Higher freight rates charged by NVOCC for shipper-owned

container (SOC) slots.

US sanctions on Iran:

Nothing daunting

Problems

Immense new possibilities

▪ It would be prudent to take advantage of the transport initiatives in the Central Asian region, e.g.,

▪ the Organization of the Black Sea Economic Cooperation (BSEC) which leans heavily towards Europe, and

▪ the recent Ashgabat Agreement.

▪ India joined the Ashgabat Agreement in January 2018, which envisages creation of a transport corridor between CARs and the Persian Gulf.

▪ India’s accession to the Ashgabat Agreement allows it to take advantage of rail connectivity in Central Asia, mainly focused on utilizing the Iran-Turkmenistan-Kazakhstan railway line.

▪ In March 2013, Iran inaugurated the port of Astara, south-west of the Caspian Sea.

▪ The port has been integrated with INSTC to improve its maritime connectivity across the Caspian Sea.

▪ The proposed 315km Armenia-Iran railway, the Southern Armenia Railway project, forms a key missing link in the INSTC between the Black Sea and the Persian Gulf.

▪ The Southern Armenia Railway would create the shortest transportation route from the ports of the Black Sea to the ports of the Persian Gulf.

Several initiatives to improve connectivity as also to expand economic space.

▪ Alongside Bandar Abbas on the Strait of Hormuz, the port of Chabahar on theGulf of Oman – as Iran’s sole Indian Ocean port may well be a key feeder portto the INSTC.

▪ India investing in the Chabahar container terminal project as well a connectingrail line.

▪ Chabahar port could be linked to INSTC as its second entry point, onceChabahar – Zahedan rail line is built.

• The proposed Chabahar to Zahedan line, extended up to Mashad, willprovide a direct, shorter, and easier access to the CARs. Mashad isalready connected to Sarakhs on Iran-Turkmenistan boarder.

▪ The completion of Turkmen-Kazakh section of the North South railway lineprovides an alternative to the main INSTC route for connecting to Kazakhstanand beyond from the port of Bandar Abbas.

• This route can also be used from the Chabahar port once Chabahar-Zahedan-Mashhad line is commissioned.

Green shoots in the region…

INSTC: Reach and extent

Linking India with Central Asia, Russia and potentially the Baltic,Nordic and Arctic regions.

Alongside the North Sea-Baltic Corridor, INSTC may synchronisewith the Scandinavian-Mediterranean (ScanMed) Corridor,

▪ stretching from the Finnish-Russian border to Sweden, Norwayand Denmark, and

▪ further southwards to connect these Nordic and Arctic stateswith Germany, Austria, Italy, even Malta.

In due course, INSTC could connect with the planned ArcticCorridor,

▪ connecting Finland and Europe to the deep-water ports of theArctic Ocean and the western tip of the Northern Sea Route.

▪ The Arctic Corridor, once complete, is envisaged to be theshortest, most direct route to transport goods between Asia andEurope.

▪ Integrated with the upcoming high capacity Chabahar port, andpossible partnership with Eurasian Economic Union, INSTCadds to its potential to be a high density transport corridor.

▪ Recently, Nurminen Logistics, a Finnish logistics company, rantheir first block load of thirty-two 40ft containers from Vuosaari(Finland) in June 2021 via INSTC to India.

Containers reached Nhava Sheva port in Mumbai within 30 days.

Arctic Corridor

Thank You