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Polish freight group PKP sees rising demand on China rail route
June 3, 2016 / 10:55 AM / a year ago

Polish freight group PKP sees rising demand on China rail route

WARSAW (Reuters) - Polish freight group PKP Cargo PKPP.WA is benefiting from rising demand for rail transport between China and Europe, a route that is developing as a modern day Silk Road.

PKP Cargo started operating cargo trains from China in 2014 and says the business, though still in its infancy, has since become one of PKP’s fastest growing segments.

The company now operates 20 such trains each week, carrying mostly high value-added goods from China bound for Western Europe. On the return journey, the trains carry Polish food exports, among other things.

“We are receiving signals from clients that demand for these transports will continue to rise,” said Iwona Skurzewska, who heads PKP Cargo’s unit responsible for the China route.

PKP Cargo location in Poland gives it an edge over rivals elsewhere.

“We have the natural advantage of the geographic location thanks to which we can become a hub handling trade between Western Europe and China,” PKP Cargo’s board member Grzegorz Fingas said at the Reuters Eastern Europe Investment Summit.

It usually takes PKP’s trains 11-14 days to get from China to central Europe, Skurzewska said, adding the company was working on further shortening the time.

In comparison, it takes big container ships take 25-30 days to sail from Shanghai to Rotterdam depending on speed, according to the www.sea-distances.org website.

Rail transport is more expensive than marine transport - dominated by firms such as Denmark’s A.P. Moller-Maersk (MAERSKb.CO), but is cheaper than air transport.

NEW SILK ROAD

Over the past two decades, Chinese and western European ports like Shanghai, Hamburg or Rotterdam have flourished handling the bulk of the rapidly growing European Union-China trade that topped 520 billion euros ($580 billion) last year.

But this might change with the development of the land trade route from Asia to Europe, part of the so-called new Silk Road, backed by the governments, including China and European Union member Poland.

It is also part of China’s One Belt, One Road initiative of boosting ties between Europe and Asia.

“We are seeing and feeling the support from authorities, which see the potential in goods trade between Asia and Europe. This supports us and helps us in business,” Skurzewska said.

A delegation from Chinese President Xi Jinping - expected to arrive in Poland in the coming weeks - is scheduled to visit some of PKP Cargo’s terminals, Skurzewska said.

“We are happy to further tighten our co-operation with Chinese partners and hope to expand our business contacts,” she said, asked about the visit.

While PKP has competitors on the route, like smaller domestic rival PCC Intermodal PCIP.WA, it says nearly all containers sent by rail to Europe from China pass though its Malaszewicze terminal near the Belarusian border.

The trains on their way to China pass through Russia, on which the EU has imposed sanctions after the Ukrainian crisis, but Skurzewska said there were no problems with Russian transit.

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Reporting by Marcin Goettig, Adrian Krajewski and Pawel Sobczak; Writing by Marcin Goettig. Editing by Jane Merriman

Our Standards:The Thomson Reuters Trust Principles.
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