Rail is the solution when one thinks about a greener

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1 5/2014 (5), 29 SEPTEMBER Think transport Think energy ACE Green The Arctic- -Central European Green Transport Corridor The Green Vision By Przemysław Myszka The idea of establishing an eco-friendly and efficient corridor for transporting seafood, industrial minerals as well as other goods between the north of Scandinavia and continental Europe has been on the agenda for many years. Today, the possibility of making this concept come true is perhaps closer than ever. The ACE Green project is about setting up a new and direct intermodal service, linking the northern parts of Norway via south-east Sweden to the north of Poland. Rail is the solution when one thinks about a greener alternative to road haulage. The ACE Green project is all about setting up a new and direct intermodal service, linking the northern parts of Norway (the Port of Bodø) via south-east Sweden (harbour in Karlskrona) to the north of Poland (Gdynia seaport), not only for the extensive Norwegian salmon industry, but also for others willing to facilitate their trades thanks to rails. The service in question is meant to become a viable competition in terms of lead times, reliability and service quality for the up-to-date prevailing truck carriages. In addition, the environmentallyfriendly tag of rail transports isn t without meaning for many cargo owners and shippers in Scandinavia, giving thus railroads a better marketing image over fumy lorries. However, in order to realise this unique opportunity, a higher level of cooperation among commercial transport operators and decisionmakers must take place. One of the main goals of the ACE Green initiative is to involve relevant stakeholders to a much higher degree. This is to be done mainly by reducing the economic risk for logistics companies and their customers during the corridor s start-up phase, when problems can occur by not putting enough cargo on the rails. Therefore, the project wants to bring to life a corridor management organisation, which will oversee the as swift as possible set-up of a robust logistics chain all the way from Norway via Sweden to Poland. The organisation, owned and run by forwarders and terminal operators, will feature a fixed-price terminal- 5/2014! BTJ Think Tank! 1

2 One of the main goals of the ACE Green initiative is to involve relevant stakeholders by reducing the economic risk for logistics companies and their customers during the corridor s startup phase. to-terminal system for containers and semitrailers. Though commercial in nature, the corridor management organisation may require public support (both on regional & national levels) during its early days to grow strong and afterwards carry out the business on its own. The potential of the ACE Green corridor goes far beyond Norway-Sweden-Poland as further links can be established. Northwards, the route can stretch from Bodø to Kirkenes from where Asian markets can be reached due to the more and more ice-free Northern Sea Passage. Looking to the south, the Baltic-Adriatic Corridor starts in Gdynia with a regular rail connection from the Polish seaport to the harbour in Koper, Slovenia. Combined together, these routes form the Arctic-to-Adriatic Corridor (A2A), making it possible to ship freight on rail almost along the whole connection, with the Gdynia-Karlskrona ferry as a sound seaborne link between the North and the South in the very middle of the A2A. The ACE Green project is open to anyone who can contribute to its realisation. Through numerous seminars and undertakings, this initiative will make its way into reality step-by-step. Hopefully, the first train will soon depart from Bodø to Gdynia, bringing new quality into the logistics world.! Piotr Frąckowiak Intermodal Manager BCT Baltic Container Terminal Gdynia Photo: BCT The Polish and South-European freight bound for Scandinavia is usually carried by road, Today, customers wish to be offered a complete logistic solution provided by one partner. This is a great challenge for operators and carriers throughout the chain. mainly via Germany and Denmark. The truck traffic is well developed on this route. Vehicles are available and seek employment, offering fast transit and a considerable degree of flexibility. But the long-distance motor transport is expensive and annoying for everyone. It overcrowds European motorways and agglomerations, produces noise and much pollution, destroys the environment. Hence the European Union s and individual states efforts aimed at the road traffic reduction. The Intermodal Green Transport Corridor connecting Arctic to Central and Southern Europe eliminates the longdistance road transport and may become and optimum solution. However, to attract the freight carried by traditional roads it has to meet a number of requirements. The integration and co-ordination of all elements of the intermodal transport chain is the key. Today, customers wish to be offered a complete logistic solution provided by one partner. This is a great challenge for operators and carriers throughout the chain. Only close co-operation between the stakeholders, a shared vision and goal, a synergized win-win approach will yield competitive intermodal products capable of redirecting the freights and livening the corridor up. 5/2014! BTJ Think Tank! 2

3 Piotr Szczęsnowicz Scandinavian Department, C.Hartwig Gdynia S.A. C.Hartwig Gdynia finds the idea of establishing ACE Green very interesting and potentially fruitful for the current and future parties involved. This corridor could hopefully help the transport from Northern Scandinavia to Central Europe and further to be not only cost-efficient and time-saving, but also environmentally-friendly. We are very impressed by the amount of work and results already achieved by the team which is in charge of the project. But there are still things to be discussed. In order to attract more northbound cargo the proposed by Ace Green freight prices, transit times must be competitive to the ones offered by truckers. Multiple transport/equipment options must be on offer, container, trailer and part load shipments possible. Cooperation with forwarders/transport companies situated on the rail path of the project will be essential to finalize the delivery of cargo. TransBaltic Extension, ACE Green, along with other such projects focused on improving transport corridors are one way for forward- ers and logistics operators to offer a reliable transport service to customers. Already operational regular rail links from Western Europe to/from Eastern states of the EU have proven that such corridors are working and could be the future of European transport. In order to attract more northbound cargo the proposed by Ace Green freight prices, transit times must be competitive to the ones offered by truckers. Marcin Barankiewicz Transport Business Development Manager IKEA Transport & Services North Europe Roads are becoming crowded, drivers are in shortage year after year. The intermodal solution opens new opportunities for the industry, with new capacities and stability in operations. both in terms of trains from terminals and vessels from the ports. High operational precision is also a must. Required minimum levels for departures are 2-3 per week with stable lead times. We can accept an increased lead time compared to road transportation but it has to be stable and predictable. The transport solution should be available and reliable all year around. Of course the cost level needs to be competitive compared to road transportation which in principle requires, that the intermodal terminals must be located close to points of origin and destination. In our case we have the production business located around Poznań, Gdynia, Wroclaw therefore the terminals in this area are crucial to place our volumes in the future corridor. On the receiving side terminals in key industrial regions are needed, just to mention Oslo, Malmo, Goteborg, Stockholm, Helsinki.! How can projects like TB E contribute to transport and logistics companies business operations?! What is necessary in order to make the service in question attractive enough for IKEA to use it? IKEA is one of the main exporters from Poland to the Scandinavian countries. Last year we have delivered over full truck loads with furniture. For our business, due to the scale and large share of Just in Time deliveries, it is important to get frequent departures, Roads are getting crowded, drivers are on shortage year by year. It is clear that the growth of volumes cannot be handled by conventional solutions road trucking or conventional rail. The intermodal solution opens for the industry new opportunities with new capacities and stability in operations. Green intermodal transport is supporting IKEAs ambitions of long term sustainable transportation set-ups with reduced emissions and impact on the environment. The need is on the market, and projects like TBE play an important role to lead the development, listen to the needs and deliver solutions which are supporting the business of the many stakeholders. 5/2014! BTJ Think Tank! 3

4 Jon L. Gjemble Senior Advisor Logistics, TransLog Gjemble! How can we influence speeding up the upgrade of the Meråkerbanen/Atlantbanan rail connections? There is a lack of many upgrading investments in Norwegian railway infrastructure, and priority in time and money is hard to realize. Since November 2013, the Atlantbanan has been closed to railway traffic due to insufficient railway construction at Stora Helvetet near Storlien; the railway line will be closed until autumn The traffic will resume for one year, before the rail line will be closed again for further works that are designed to finish in Regarding upgrading Meråkerbanen, we expect that the railway line will be closed several times during electrification and other railway works during the investment period. We have tried our best to have the upgrading works at Meråkerbanen completed before schedule. Despite the arguments we used, it has resulted in a situation where we need to accept the given time schedule, unless we want to lose the whole investment altogether. We have concluded to accept the time schedule (see the table) and from now on and until 2018 we will focus on using the railway line Trondheim-Kongsvinger-Hallsberg-Karlskrona for cargo to and from Southern Sweden and Eastern Europe. The cargo flow in the North East Cargo Link corridor has to be transported by trailers on roads until Detailed plans for upgrading the Meråkerbanen railway line Investments Year Total cost Electrification (Trønderbanen inclusive) NOK 2,611 mln Station and crossing adaptions NOK 668 mln The effort to comply with the SECA regulations is enormous. On average about 5,000 ships trade in the SECA area. More than 2,000 ships stay within the SECA area 100% of their operating time. As we all know, in the European SECA (Sulphur Emission Control Area) the highest permitted sulphur content of fuel will fall to 0.1% from January 1st, Therefore, a ship owner must switch to LSMGO (Low Sulphur Gas Oil, LNG, methanol or another fuel with the required sulphur level. Alternatively, the ship can be equipped so that it is capable of reducing the sulphur level in the exhaust gas to an equivalent level. The exhaust gases can be adapted by installing scrubbers in the ship. The effort to comply with the regulation is enormous. On average about 5,000 ships trade in the SECA area. More than 2,000 ships stay within the SECA area 100% of their operating time. A large majority of the fuel consumed is HFO (Heavy Fuel Oil). According to surveys, most of the ship owners have/or plan to switch to LSMGO in Marine fuel represents a minor share of the overall European diesel market. Therefore, it will be possible to meet the additional demand for LSMGO, which is estimated to be mln tn. The long-term price difference between LSMGO and HFO is expected to stay at today s level of USD per tonne if the current oil price remains stable. Scrubber installations are going on and planned for ships built after The payback time for a scrubber installation is only one or two years for ships trading 100% in the SECA area. An LNG supply chain is currently being built. The current challenge regarding LNG is that the price of LNG is not competitive and the distribution is too costly due to the low LNG bunkering volumes. For newbuildings, LNG is more favourable and an increasingly larger share of the new ships will use LNG. DNV GL expects that the current European LNG-fleet will grow from 66 ships in 2013 to 400 ships in It is expected that economies of scale will have an effect gradually, and the price of LNG and the logistic costs will decrease making LNG an attractive fuel towards The SECA Directive will therefore influence short sea shipping to and from Muruvik as well. Photo: XXX The current challenge regarding LNG is that the price of LNG is not competitive and the distribution is too costly due to the low LNG bunkering volumes.! Could the Hell/Muruvik terminal in Trøndelag play the role of an export and import terminal for Sweden and Finland in the perspective of the upcoming SECA regulations enforcement? The Muruvik terminal (privately owned) can load/unload vessels up to 10 m of draft. They can also load/unload cargo trains (containers, trailers, cargo wagons) and trailers. The terminal is mainly used for vessels and trailers today, but the railway line of 3 x 200 m is ready for use. The terminal owner is willing to invest more in the terminal if higher volumes will come, and more investments are necessary. Based on today s knowledge, we see no direct arguments to support Muruvik becoming a more important terminal for Sweden and Finland in the future. 5/2014! BTJ Think Tank! 4

5 Monika Konsor-Fąferek Marketing & Development Director PCC Intermodal S.A. The ACE Green Corridor Project, showing synergy with initiatives aimed at developing competitive trade exchange and effective logistic solutions in the Baltic-Adriatic corridor, is in line with an idea which PCC Intermodal has been disseminating for 10 years now. And although it is a good thing that there are so many debates, discussions and projects focussed around this subject, it should be stated clearly that while we do not have to worry about freight chains, it is infrastructure that still remains a problem in the process of building the North-South s competitiveness. The nodal infrastructure we have in Poland keeps improving, the linear is modernized on a continual basis (we should be able to see the effects of modernization in 2-3 years), but there is still one neuralgic issue we have to face namely, the logistic aspects of handling shipments in the hinterland facilities at the ports of Gdańsk and Gdynia, to optimize the inland movement of freight to/from the south of Europe. This is where I wish to stress again and again that a dry port in the hinterland of Gdańsk and Gdynia will allow all of us to manage the flow of cargo volumes between Scandinavia and Southern Europe better and to develop an offer capable of transferring much of the long-distance carriage from roads to rails. Transport alone is not enough today we need smart logistic solutions to guarantee an optimized time of transportation, translating into maximum cost-effectiveness. For logistics to be able to support transport, and for transport to be able to stimulate trade exchange, tools (Intermodal Container Yard) and a synergy of actions is needed. The example of trains from China to Europe we arrange these days shows remarkably well that the railway is a golden solution: what can wait and is showing a significant price flexibility will be carried by sea; what is in a great hurry, light and of high value, while at the The ACE Green Corridor is an exquisite initiative, which needs support and an active approach from various stakeholders. same time not forming large and dense load flows, will take airborne transport; heavy and regular shipments in need of a fast but not express delivery, showing moderate price flexibility will, on the other hand, be seeking solutions offering the highest added value in terms of cost and operation (since time is a cost too!). For the latter category of freight, intermodal transport (railway + road) will be an ideal choice. The ACE Green Corridor is an exquisite initiative, which needs support and an active approach from various stakeholders. As an intermodal operator operating a regular network of railway connections and five of its own terminals (Kutno, Brzeg Dolny, Gliwice, Frankfurt Oder, and Dębica) and two partnering terminals: Duisburg and Małaszewicze/Brześć, we are its great supporter. We regard the initiative of building an open, commonly accessible dry port in the Pomerania region to be our special contribution to the development of the corridor s potential, an interface enabling optimization of supply chains from Scandinavia, via Central Europe, to the South and East. tional demand for LSMGO, which is estimated to be mln tn. The long-term price difference between LSMGO and HFO is expected to stay at today s level of USD per tonne if the current oil price remains stable. Scrubber installations are going on and planned for ships built after The payback time for a scrubber installation is only one or two years for ships trading 100% in the SECA area. An LNG supply chain is currently being built. The current challenge regarding LNG is that the price of LNG is not competitive and the distribution is too costly due to the low LNG bunkering volumes. For newbuildings, LNG is more favourable and an increasingly larger share of the new ships will use LNG. DNV GL expects that the current European LNG-fleet will grow from 66 ships in 2013 to 400 ships in It is expected that economies of scale will have an effect gradually, and the price of LNG and the logistic costs will decrease making LNG an attractive fuel towards The SECA Directive will therefore influence short sea shipping to and from Muruvik as well. Photos: PCC The logistic aspects of handling shipments in the hinterland facilities at the ports of Gdańsk and Gdynia is still a neuralgic issue we have to face to optimize the inland movement of freight to/ from the south of Europe. 5/2014! BTJ Think Tank! 5

6 Christer Kjellberg Group Freight Rail & System Manager Stena Line Group Freight, Stena Line Scandinavia AB Photos: Stena Line! How can we get the 3Links partners to adapt the work of the ACE Green project in regards to Trondheim and possibly other terminals in northern Norway to be included in this network? Transport is quite a dynamic business. Everything is moving and changing, starting from behaviours and modes, through pricing, operators vanishing and popping up, to the issues regarding the environment. We at Stena Line have very close relations with the TransBaltic Extension project and its participants. At the moment I am cooperating with the communities of Region Örebro and Karlskrona, in order to find a geographical area with freight owners interested in changing their transport patterns and behaviours - this is actually what we are looking for in Trondheim. And the other aspect of our cooperation is to create a paper/proper product, which is equally good or better than the one done in the existing production method, which could fuel transport to/from Norway and Poland. In Stena Line we don t believe in that this method will change, unless a better pricing is in place. I would also like to emphasize to the project coordinators that there is no use in trying to sell green transport, it doesn t exist. They can only The goods are already moving to Poland, so in order to create a modal shift from lorries to rail, you actually have to be better. make a good service if they are better, that is, competitive in quality, time and cost-efficiency to the existing transport possibilities. The goods are already moving to Poland, so in order to create a modal shift from lorries to rail, you actually have to be better.! Is there a possibility for ACE Green to attract more northbound cargo from Poland to Northern Scandinavia including cargo from Southern and Eastern Europe? I am not sure you could attract more goods within the concept of moving something with rail instead of lorries. On the other hand, if you create a better logistics alternative, including rail, with the possibility of goods being shipped without drivers and arrive like that to the Port of Gdynia, perhaps on a train this would make the uptake area for freight going in this corridor bigger. If you therefore extend the aim by funnelling freight and increasing the role of rail, you will have a better uptake area for that type of corridor. But this is only cost-effective if you take away the drivers.! How can projects like TB Ex contribute to transport and logistics business operations? If you can establish a new way of thinking on some issues and attract the interest of businesses, which could gather around a table, learn, clarify things and look at different opportunities in order to discuss them, then you have achieved something. In terms of communicating between different actors operating in various ways, projects like that bring them closer to cooperation, sometimes creating chances which didn t take place before. This is actually thrilling in initiatives like the Trans Baltic Extension. What I would like to emphasize at the end, is that we should look in the direction of the freight owners more, not only the operators, because operators will leave as soon as the prices are not good enough. With such a project as TB Ex you can actually wake up the goods owners and by that perhaps get other transport solutions in place, because they actually want things to happen. The closer you get to the customers and the more demands they can make on transportation, the closer you get to bettering the transport system. Publisher Baltic Press sp. z o.o.! Address ul. Pułaskiego 8, Gdynia, Poland! tel , tel ! website Editorial Team Editor-in-Chief Lena Lorenc lena@baltic-press.com! Features Editor Przemysław Myszka przemek@baltic-press.com! English Language Editor Alison Nissen alison@baltic-press.com! Art Director Danuta Sawicka danuta@baltic-press.com! Head of Marketing & Sales Przemysław Opłocki po@baltic-press.com! Marketing & Sales Manager Anna Dąbrowska anna@baltic-press.com! President of the Board Bogdan Ołdakowski! If you wish to share your feedback or have information for us, do not hesitate to contact us at: editorial@baltic-press.com. 5/2014! BTJ Think Tank! 6