The current capacity shortage is not a temporary congestion problem – an interview with Attila Czöndör, CEO of Rail Cargo Terminal – BILK
While rail freight volumes have been on a downward trend for years, the intermodal segment is capable of growing even despite the recession, partly thanks to the rise of semi-trailer and swap body transport within Europe. However, Budapest (and Hungary) is not prepared to handle such large volumes of traffic, which could become a structural competitive disadvantage for the Hungarian economy in the medium term.
– There is ongoing interest in rail transportation of semi-trailers, but road hauliers are regularly faced with the fact that the service is not available to the requested destination. What is the reason for this?
– There are several reasons for this. The Rail Cargo Terminal – BILK, like other terminals in Budapest, was typically built as a maritime terminal, which means that its transhipment and storage capacity is optimized for stackable containers, not trailers and swap bodies, which can only be stored next to each other. For this reason, if the containers were replaced by semi-trailers, the utilization of the terminal capacity would fall to a fraction, so its operation would not be economical. Moreover, Hungarian needs alone cannot fill trains operating regularly to Western Europe. In order for Hungarian road hauliers to have trains operating regularly in many directions at their disposal, transit traffic is also necessary. The stable basis for the traffic of more than 30 trains per month, also carrying semi-trailers, departing from RCT-BILK to Western Europe is that the majority of Rail Cargo Group's traffic on the Turkish-German axis is transhipped here. In other words, BILK plays a hub role in distributing traffic from Turkey to various Western European destinations. Combining Turkish traffic with other continental and port traffic makes it possible to connect RCT-BILK with the group's other own terminals, from where the cargo is delivered to North Sea ports or Italian terminals with further transhipment. The more Budapest can function as a regional hub, the more trains can run regularly in different directions and the more trains can be used by Hungarian customers. However, in order to achieve progress in this, significantly greater railway and terminal capacity than is currently available would be needed. If Budapest's intermodal rail and terminal capacity is not expanded while demand continues to grow, the current capacity shortage may not become a temporary congestion problem, but a permanent, structural competitive disadvantage.
"What exactly does that mean?"
– Without sufficient terminal time slots, predictable train capacity and fast handling, carriers keep semi-trailer and container traffic partly on the road or divert it to alternative Central European hubs – such as Vienna, Bratislava, Žilina or Kürtös. At a strategic level, Hungary may lose the opportunity to play a regional consolidation and gateway role in freight traffic between the Balkans, Turkey and Western Europe. The Turkey-Germany corridor is particularly sensitive, where growing intermodal demand could easily be diverted to other routes, even bypassing Hungary. From an economic perspective, limited intermodal capacity may discourage logistics and industrial investments, reducing the region’s attractiveness for foreign capital investments and weakening the resilience of supply chains in crisis situations. Budapest could turn from a potential growth hub in the European intermodal transport network into a bottleneck that the market is consciously avoiding. This could lead to a deterioration in the competitiveness of the Hungarian logistics sector, a decrease in the share of rail and a weakening of Hungary's strategic importance.
"What can be done to prevent this from happening?"
– The main task for Hungary is to increase Budapest's throughput capacity for continental intermodal traffic. This requires increasing rail transit capacity, mainly by implementing the long-planned V0 investment, and by building at least one terminal in the Budapest area that is suitable for the transhipment of a large number of semi-trailers with and without cranes. In this regard, Hungary also has obligations towards the EU: the so-called TEN-T Regulation No. 2024/1679/EU requires Member States to prepare an analysis of the multimodal freight terminals on their territory by July 2027, with particular regard to existing and future capacity needs, bottlenecks, network connections and the level of digitalisation, and then to develop an action plan to address the identified shortcomings within 12 months, which they must then obviously implement.
– The implementation of these developments could take years at best. In the short term, can operators and terminals implement developments that would increase capacities?
– This is always possible, but its impact is very limited; service providers will not be able to solve Budapest’s capacity problem on their own. Rail Cargo Group has invested heavily in continental traffic in recent times, significantly increasing its capacity for transporting non-cranable trailers. In June this year, a development was completed at our terminal in Prerov, Czech Republic, which increased the storage capacity from 1,300 to 3,000 TEUs and also made it possible to handle semi-trailers. At RCT-BILK, where the storage space can no longer be physically expanded, we are continuously working on solutions that reduce the storage time of units and increase the utilization of storage areas. In May this year, our terminal, in addition to continuing to handle significant container traffic with the Adriatic ports of Piraeus and Hamburg, already handled more than 100 continental trains. Duisburg traffic has actually tripled in the last 2 years, but further significant growth is only possible at the expense of other traffic. The development of rural terminals is also helping Budapest's situation. Rail Cargo Operator – Hungaria, which handles maritime traffic, and Rail Cargo Operator – Austria, which is responsible for continental freight, both organize trains to rural terminals, but they are more intended to serve the needs of local industry. They cannot take over the turntable function that Budapest currently performs.
– Which traffics would have the greatest growth potential if more terminal and route capacity were available?
– There is already significant potential in diverting the curtain trucks currently running on Hungarian highways to rail, which is also strengthened by the increase in road transport costs, the European driver shortage, stricter environmental requirements and the saturation of the main road corridors. In terms of international transport routes, the greatest growth potential lies in the consolidation and distribution of Chinese, Ukrainian and Turkish traffic in Budapest. Rail Cargo Group is already transporting and distributing containers arriving from China via Turkey via the Central Corridor, without touching Russia, in combination with Turkish volumes, primarily to destinations in Austria, Germany and Italy. If it were possible to connect these traffics with Chinese, Polish and Ukrainian traffics arriving via the Northern Corridor, it would enable Hungary to establish an exceptionally good intermodal railway connection with the most important European economic regions through transit traffic, thereby becoming a decisive and unavoidable logistics center of the Central European region.
– What steps have been taken so far to achieve this?
– In Budapest, capacities have not been able to keep up with the growth in demand over the past 10 years. I see that a common thinking has begun about supporting intermodal traffic, but it is certain that traffic cannot be diverted from the M1 to the railway without having a place where semi-trailers and swap bodies can be loaded onto trains. Therefore, a 4th terminal capable of handling a large amount of continental traffic would be needed in the Budapest area, preferably in a location that is close enough to the M0 to handle the import-export traffic of the Budapest region, while at the same time the handled transit traffic would burden the scarce Budapest railway capacities as little as possible, whether it is about routes or the storage of empty sets. Incidentally, this would also be important from the perspective of passenger transport and, within this, suburban transport in Budapest. Based on the above parameters, the area between the M0 and the planned V0 could be the most suitable for this. If the V0 is not built, a long-term solution for freight train transit in Budapest will have to be found in another way. Regardless, a new terminal will still have to be located near the M0, but outside Budapest. Traffic that covers longer distances and does not only cross borders within the EU – such as Turkish or Greek traffic – will not run as accurately and predictably as shorter intra-EU traffic in the foreseeable future, so if we want a new terminal to function as a buffer, thereby relieving the railway network, there is also a need for adequate storage capacity near the terminal, which a larger marshalling yard can provide. We are currently seeing that more and more companies involved in international intermodal traffic and terminal operations are interested in the Budapest region and would be willing to invest in terminal capacities. In addition, the EU also supports the development of intermodal traffic, so the conditions are in place for Budapest to become the most significant intermodal center in the region, while sparing state resources and involving private capital and EU subsidies.
Gregory Ando