Link: Korytarz Bałtyk-Adriatyk będzie priorytetem transportu intermodalnego w Polsce - IntermodalNews IntermodalNews

Original article in Polish

The Baltic-Adriatic corridor will be a priority for intermodal transport in Poland

The north-south direction should be a priority in Polish public investments. This also applies to access to our ports, especially the container terminals of Gdańsk and Gdynia, as well as border crossings with the Czech Republic and Slovakia - believes Dariusz Stefański, president of PCC Intermodal.

Łukasz Kuś, IntermodalNews.pl: The Polish intermodal industry will implement large investments in the coming years. Some of these projects will receive support from EU funds. How do you assess the planning and creation of infrastructure for intermodal transport in Poland?

Dariusz Stefański: For many years we have been saying loudly that there is no coherent and clearly defined long-term transport policy in our country, which is particularly visible in the area of ​​terminal investments. It seems that no one knows what the target network of connections should look like and what the location of intermodal terminals should be. Hence, terminal investments - very often with public funding - are implemented in a chaotic and ill-considered manner. So we have regions of our country where there are already many transshipment terminals and further investments are planned there, and regions where there is not a single intermodal terminal.

Therefore, a valid question arises whether public funds should be used to finance the construction of terminals in a region where several such facilities already operate. In my opinion, projects of new terminals in regions that currently have no access to intermodal transport should be preferred, and such investments should receive additional points in competitions for funding.

Another aspect is the co-financing of rolling stock investments from EU funds. The co-financing of rolling stock purchases, which has been practiced for several years, has basically only led to a significant increase in their prices. This mainly concerns locomotives, the purchase prices of which have almost doubled over the last few years. If we add to this the fact that the main beneficiaries of this co-financing are companies that rent locomotives, then it seems reasonable to ask about the sense and justification of such financial support from public funds.

What should be the priorities for investments in linear infrastructure in the coming years from the point of view of intermodal transport?

One thing needs to be emphasized. In the last decade, we complained that it was difficult to travel on the Polish rail network due to numerous repairs and track closures, which made punctual travel and at decent commercial speeds practically impossible. Today, we can see a significant improvement on the main routes used for intermodal transport. It is also clear that PKP PLK is placing increasing emphasis on improving the punctuality of trains, which is very important from the point of view of intermodal transport. I would be sinning if I said that I do not see any improvement in travel conditions on the Polish rail infrastructure. Today, travel on German tracks is getting worse, because the process of large-scale repairs and modernization of the rail infrastructure has begun there.

Considering that from the point of view of Polish ports we are most interested in the Baltic-Adriatic Corridor, we should do everything possible to improve the capacity at rail border crossings with the Czech Republic and Slovakia, so that we do not have problems with smooth passage and possible exchanges of locomotives there. We are doing quite well with rail transport in the east-west direction (to/from Ukraine or as part of the New Silk Road). However, in the north-south direction it is definitely worse. This is not only a problem with the infrastructure in Poland, but also in countries located to the south of us. For this reason, we do not yet carry out regular intermodal transport to Romania or Bulgaria, because it is inefficient and unprofitable. On these routes, intermodal transport is not yet able to compete with road transport, neither in terms of costs nor travel time.

Therefore, when asked what should be the priority in infrastructure investments today, I answer that the direction is north-south. This also applies to access to our ports, especially the container terminals in Gdańsk and Gdynia. The modernization of line no. 201 is of course important, but it will not solve the problems that intermodal transport is facing in the Tri-City ports. In the past, freight railways used marshalling yards, where trains were formed and dismantled based on the so-called marshalling humps. The world is changing, the needs of customers and their requirements in relation to the TSL industry are changing. Today, in the era of global containerization, port-based container consolidation and distribution centers are becoming a necessity, which, on the one hand, must ensure the efficiency of the work of sea terminals and improve the throughput of railway lines to/from ports, and on the other hand, ensure the optimal use of the cargo capacity of trains on long routes. It is difficult to develop intermodal transport if the average use of the train's operational capacity (so-called utilization) does not exceed 80% - which in practice means that 20% of the train runs "empty", transporting fresh air to and from ports.

Therefore, on this most congested part of the infrastructure, i.e. on the lines leading to port terminals, we cannot afford in the long term for trains to run underutilized. That is why we are working on finalizing the ICY (Intermodal Container Yard) Tczew project. This is an investment that must be built in the coming years to enable regular operation of 750-meter intermodal trains to/from ports and thus improve the efficiency of using sidings at sea terminals and the efficiency of using linear rail infrastructure.

The Port of Gdańsk is raising the issue of rail accessibility to the Northern Port and the need to build an alternative railway line, including to the Baltic Hub.

Of course, the more such railway lines lead to the port, the better. This will solve some of the problems with rail access for the Baltic Hub, but it will not improve the efficiency of using the siding at this terminal if short trains continue to arrive there and, in addition, arrive or depart not fully loaded with containers. There will still be a problem with planning the regular operation of the siding and optimal use of the allocated transshipment window. In order for the sea terminal to be able to use its railway siding effectively, the cranes there should work 24 hours a day, and full trains should arrive and depart regularly (e.g. every 4-5 hours). However, if the trains arrive "in herds", it is impossible to service them all at once, and if they arrive or depart not fully loaded with containers, we have inefficiency on both the terminal and the transport side.

Our idea is for the train to take containers from the sea terminal to all destinations, and their transshipment between trains would take place at the land terminal, where cargo from Gdynia and Gdańsk would be delivered. It makes no sense for containers to/from Warsaw to be carried by a separate train from Gdańsk and a separate train from Gdynia.

At what stage is work on the ICY Tczew project?

We are updating the application for an environmental decision, as the area of impact of the planned investment has increased. The terminal will not be connected to the existing PKP PLK infrastructure, but to the one that, according to the infrastructure manager's plans, will be built in the future, during the reconstruction and modernization of the railway junction in Zajączkowo Tczewski. For this reason, we must submit a new application for an environmental decision, which we expect to receive in the second half of the year. Work on the construction project will also last until the end of the year. At the same time, we will apply for co-financing of this investment from EU funds from the program that will be available.

The FENiKS program provides a relatively small pool of funds for intermodal projects, and the Tczew terminal is a very large project. However, we will be applying for funding from the FENiKS program for our terminal investment in Ropczyce.

How large a terminal do you plan to build in this town?

In the first phase of the investment, we want to build a facility with a transshipment capacity of 150,000 TEU per year. This terminal will take over the tasks that we are currently carrying out at the container depot in Kolbuszowa, whose operational capacity is practically exhausted. We assume that for the Podkarpacie region, we will carry out intermodal transshipments in the new terminal in Ropczyce, which will be built if we obtain appropriate funds for this purpose from the FENiKS program. We would like to launch this terminal before the end of 2028 and thus change the layout of our intermodal connections in southern Poland. We currently handle transport from and to Ukraine through the terminal in Gliwice, whose transshipment capacity is already used almost 100%. Therefore, we would like to transfer the handling of cargo routes to/from Ukraine to the terminal in Ropczyce, which will allow us to improve these transports and at the same time relieve the terminal in Gliwice, so that it can focus on handling cargo in the Upper Silesia region.

What is the current situation on line E 20 and at the terminals in Kutno and Frankfurt?

On the routes served by these terminals, freight train traffic is efficient. If there are no delays at the border, the train from Kutno to Frankfurt travels in 5 hours. This is already a decent result, compared to previous years, when this time was a dozen or so hours, and at the border the driver had to be changed. The situation is similar in the northern direction. From Kutno to the Tri-City, trains travel in 4-5 hours. Of course, these journeys could be even shorter, which would be more beneficial from the point of view of using the rolling stock, but I still think that on this section, today's travel times are really good and, importantly, competitive compared to road transport.

What is the current organisation of timetables for intermodal trains and cooperation with the infrastructure manager?

It depends on what we are talking about. We operate on most domestic routes based on annual timetables. I assume that modern intermodal cannot rely on starting trains when the appropriate amount of cargo is collected, as is the case with mass transport. Intermodal trains should be organised similarly to passenger transport, i.e. have a fixed timetable with specific departure and arrival times. Trains should run according to the agreed timetable even when they are not fully loaded. This is of course expensive, but it is necessary to adhere to the temporary transhipment "windows" at terminals, because this is the only way to improve the efficiency and punctuality of intermodal transport. Terminals cannot wait for hours with service for a delayed train to arrive.

However, they have to wait until the ship delivers the goods.

Unfortunately, there are also situations where several ships arrive at the port in a short period of time, unload and take full containers, but, for example, do not take empty containers from the port because they do not have time to do so. This causes overflow of storage yards and congestion at the sea terminal, which in turn transfers this "chain of misfortune" to intermodal operators by announcing that they do not accept empty containers from trains due to lack of space on the yard. And in such a situation, intermodal operators are forced to travel to the port with empty train sets for import cargo, incurring huge operating costs without covering them in revenue.

The situation of intermodal transport is even more complicated because, on the one hand, there are many warm words and assurances that it is an important industry that needs to be supported for social, ecological and environmental reasons; public funds are allocated for its development, it is supported by discounts on infrastructure fees, etc.; on the other hand, however, we have situations where intermodal is completely neglected.

An example of such a lack of consistency in the approach to intermodal transport as an industry that needs to be supported is the amendment to the Act on Property Taxes. The tax exemption for this reason covers both the railway infrastructure on PKP PLK lines and railway sidings located in sea ports, but the tax must be paid on railway sidings that are part of generally accessible land transshipment terminals. It is difficult to understand the sense and logic of such a procedure, especially since no other European country has such a strange regulation. The strangest thing about all this is that neither the Ministry of Infrastructure nor the Ministry of Finance are able to present the reasons for introducing this change that is unfavourable for the development of intermodal transport. This is all the more incomprehensible because during the public consultations the Ministry of Infrastructure received various reports and analyses indicating the harmfulness of depriving intermodal terminals of this tax relief.

The Office of Rail Transport also intervened in this matter.

Yes. It looked like a proverbial "cry in the wilderness", followed by surprise and disappointment with the effects of this amendment. There was a lack of partnership and transparency in the communication between the authorities and entrepreneurs. We do not even know what the motives and justification for imposing this tax on our industry are, which is why it is even more difficult for us to accept it.

At the European Union level, legislative work is also currently underway on regulations relevant to rail and intermodal transport, during which surprising things are happening. The draft Directive on capacity management prepared by the European Commission and adopted by the European Parliament was assessed positively by the industry, but later the EU Council adopted a version that was severely criticized by industry organizations.

When it comes to various EU regulations, I regret to say that the road transport industry, which has been anchored for decades as the leading branch of freight transport in the EU, is much stronger than rail in terms of lobbying. It is more effective. Intermodal transport does not have effective lobbyists. There is also a lack of understanding of the specifics of this industry and the benefits it brings to the environment and the economy.

In the previous term of the EP, a project was proposed that was to change the approach to combined transport. A definition was proposed, according to which it is an alternative to road transport that generates external costs lower by at least 40%. Any funds to support intermodal were not to go to transport operators, but to physical shippers of goods, who were to register in the IT system and declare the routes of cargo transport.

The system would calculate external costs of transport and enable their comparison for a given route and for different variants of transport organization: direct road transport and combinations using intermodal connections. A shipper choosing the intermodal variant, instead of direct road transport, would receive an appropriately calculated amount of support/compensation for this. However, it turned out that introducing this system would require the employment of over 2 thousand new EU officials, so there were voices that this is creating additional bureaucracy. It is therefore not known whether and when this idea can be implemented.

Unfortunately, there is not enough determination to implement modal shift in transport. The White Paper was published in 2011. 14 years have passed and during this time the mass of transported goods has increased and the share of rail in transport has decreased. It is therefore clear that what was proposed in that document did not work and new ideas need to be sought.

Is digitalization an idea for improving the competitiveness of railways?

Digitization is something from which there is no turning back. It gives us great opportunities in terms of data analysis. But analysis alone is not enough. The cargo must be physically moved. If the use of specific solutions and technologies is imposed by public administration, customs, etc., which is responsible for the tightness of the data processing system, then I see no problem in sharing the required data and at the same time drawing from this system what I need for the functioning of my business. Personally, however, I do not believe that any entrepreneur in the TSL industry will want to use an IT system created by their competitors, because they will not want to share sensitive data. However, if such a system is launched and managed by, for example, the National Revenue Administration, then everyone benefits from this system. So if a data exchange system is created, the supervisor of which will be a neutral public administration, then it may be acceptable and beneficial for everyone.

I am also afraid of further centralization trends. Consolidation in the sea freight market has in practice led to a kind of monopolization and disruption of market competition. We currently have 6-7 giants who have taken over the shipping market by 80% and are now trying to do exactly the same with the logistics and land freight market. I have the impression that global freight forwarders did not take up the gauntlet at the right time and reversing this trend will be extremely difficult. Today, global shipping companies are playing an increasingly important role in land logistics and they will probably shape the face of this industry in the coming years.

Further development of digitalization will mean that in the near future a client from any corner of the world will be able to use a digital comparison engine for door-to-door transport offers and use it to order the appropriate service. The role of the freight forwarder as the organizer of transport is greatly limited, because on one website you can order a container transport service on a "door-to-door" basis. Today, such a service is still relatively expensive and not available everywhere, but the development of digital technologies will change this quite quickly.

Ordering transportation will be similar to buying a plane ticket.

Exactly. In our industry, the era of business-to-business (B2B) relations is slowly ending, and the era of business-to-client (B2C) is beginning, where the customer is an individual shipper or recipient of goods, not a trader or freight forwarder. The Covid pandemic period fell on shipowners like the proverbial "manna from heaven". With the increased demand for consumer goods during this period, they raised freight prices to the point of absurdity and today they can afford takeovers and further consolidation. Freight rates have fallen slightly recently, so let's hope that some balance will return to the market.

It should also be noted that the situation on the freight market has a direct impact on the situation on the intermodal transport market. When the rates for transporting a container from Shanghai to Gdańsk were approaching the level of USD 20,000, and we were charging USD 500 for transport from Gdańsk to Kraków, intermodal was considered a cheap and effective solution. The costs of intermodal transport have remained practically unchanged, but in the meantime sea freight has fallen from USD 20,000 to USD 3,000 per container and suddenly customers claim that intermodal is expensive. And yet its cost has not changed, only the proportion between prices in sea and land transport is completely different today.

Land transport costs are much higher than sea transport.

Unfortunately, not all customers understand this.

Today there is also strong pressure from road transport, which is in crisis.

It is not known how this situation will develop. Until recently, there was a belief that we were losing the European market because of rising costs due to road tolls in Germany, the Mobility Package, higher driver salaries, etc. It was no longer profitable for Polish road carriers to provide intra-EU transport services. A large number of these carriers returned to the country with their rolling stock. And because they still have to pay leases for their vehicles, they started transporting containers around the country. This led to a drop in domestic transport rates to previously unheard-of levels. Today, truckers sometimes offer rates below operating costs. If we add to this the fact that a large number of Ukrainian companies have recently registered in Poland, which do not transport containers, but strip loads in Gdańsk and Gdynia and transport them on tarpaulins to Ukraine, then the situation on the domestic transport market does not look very optimistic.

There is currently not enough demand for transport services on the market, so the prices of these services are going down. I was counting on the situation on the intra-European transport market to improve quite quickly, but the economic crisis in Europe has caused demand to be limited there too.

What are your plans for the coming years?

We are preparing investments in Ropczyce and Tczew. This second terminal will fundamentally change our network of intermodal connections. We want to eventually free Kutno from the function of a hub for domestic connections (to and from the Tri-City ports). The terminal in Kutno will remain the main hub for connections in intra-European relations, while traffic to/from the ports will be taken over by ICY Tczew. This will allow for an increase in the number of connections in the north-south corridor while improving their utilization and significantly improving efficiency. After the launch of ICY Tczew, we plan to launch at least 6 connections a day to each of the ports as part of the so-called Port Shuttle Service (PCS).

In intra-European connections, we currently travel daily to Hamburg, Duisburg and Antwerp and twice daily to Rotterdam. On these connections, if necessary, we are ready to increase the number and frequency of connections as soon as the European economy starts to emerge from the recession. We also plan to launch regular intermodal connections in the Baltic-Adriatic corridor, but there the challenge remains to ensure the appropriate quality of service. It is possible that we will launch a test connection this year. We assume that in this part of Europe the main transport corridor should connect Koper/Trieste and Constanța/Burgas with Gdańsk and Gdynia. Intermodal transport should develop in this corridor, but significant investments and a significant improvement in the quality of rail infrastructure are still necessary.

And how is the Ukrainian direction developing?

After Russia's aggression against Ukraine, we decided to redirect our resources from Małaszewicze to handle Ukrainian transport via Medyka/Mościska. We currently go there 5 times a week. We have already observed a significant decrease in Ukrainian exports in overseas relations via Polish ports, which, when possible, return to Odessa. Mainly goods transported in intra-European relations between Ukraine and Germany or the Benelux countries remain, as well as some Ukrainian imports, especially from North America, which go through Polish ports. However, there is considerable competition from trucks here. However, I believe that after the end of the war, the region of western Ukraine will continue to use the intermodal corridor running through Poland, which has developed in recent years.