Our trump cards are our network and our good reputation
Uwe Leuschner gives an insight into present challenges and longterm prospects between Russia and the European Union.
Uwe Leuschner is Senior Vice-President Business Development Eurasia at DB Cargo AG and General Manager of DB Cargo’s national subsidiary in Russia.
Mr Leuschner, cooperation between the Eurasian Economic Union and the EU is very complicated at the moment. What impact is this having on DB Cargo Russia’s business?
LEUSCHNER: At the moment, there are various factors that are having an impact on the activities of the German business community in Russia in general, as well as those of DB Cargo Russia. The economic crisis is being surmounted only slowly, the political environment remains difficult, and the EU sanctions have been extended. This means rail freight transport is still adversely affected – and this is having several consequences for our business. Russia’s imports and exports have stabilised at a lower level, because the country is transacting less foreign trade. This means fewer goods are being transported, and local products are replacing imports. However, we are good at responding quickly to changing economic and political conditions. We have demonstrated this, for example, by switching transit transport operations between the EU and China to DB Cargo Russia. We have tapped new partners and potential here and are looking ahead to this year with great optimism.
How does the Russian rail freight transport market look – and how are you responding to these challenges?
LEUSCHNER: The Russian rail freight transport market is still heavily monopolised. As a result, it is hard to offer competitive conditions or operate freely. In addition, as a rail freight forwarder, we have to cope with infrastructure that is often out of date. This leads to technical problems in tracking and tracing and in calculating journey times, but also at frontier stations. We are therefore trying to find alternative ways and options, including cross-border solutions and multimodal offers. In addition, we are currently seeing a shift in transport operations between Russia and Europe, with more goods being carried by heavy goods vehicle rather than by rail. This, too, is a challenge.
What particular requirements do Russian customers make of you as DB Cargo Russia?
LEUSCHNER: Our customers in Russia expect us to provide good quality and a high standard of service. That means reliability in the form of assured journey times, as well as competitive prices and modern IT services.
And what about customers from the EU? What are the specific requirements that you have to meet there?
LEUSCHNER: We have a range of specialist expertise that is very attractive to our customers. This includes significant regional know-how as well as recognition from authorities and rail operators in the Eurasian Economic Union – especially from RZD and its subsidiaries. Naturally, close cooperation with our partners is a requirement for high quality in our services. We collaborate very closely with the joint venture UTLC (RZD, KTZ and BC), the rail and wagon operator Eurosib, Kazakhstan’s KTZ, the Belarusian BC and rail companies in the Caucasus. Our advantage is that we can buy capacity from these operators directly. In addition, we offer our European customers preand post-rail haulage, warehousing and customs clearance in conjunction with our partners. Over the years, DB Cargo Russia has earned a good reputation in the Eurasian market. Our capital today consists, above all, of our excellent network, which is based on a respectful relationship with our partners.
You have been active in Russia with a rail transport subsidiary of your own since the 1990s. What has changed over the years?
LEUSCHNER: In the past, DB Cargo Russia dealt with conventional rail freight transport operations in Russia, but for more than two years we have been the active agent for carrier services within the transit corridor between China and Europe. DB Cargo Russia is “responsible” for broad-gauge line 1520 and normally deals with transport operations in and from the Eurasian countries, the EU and China and within this region.
That includes the famous China train ...
LEUSCHNER: Correct. Eight years ago, we ran the first container trains from China to Europe. Since then, this rail-based land bridge has become a well-established product: in 2016, about 40,000 containers were carried by train between Europe and China. With our DB Cargo, we are now well on the way to increasing that figure further: in 2017 alone we, as DB, are planning for around 65,000 to 75,000 containers. As DB Cargo Russia, we are currently in the position of transporting at least one container train between China and Europe every day. However, we are also preparing for new markets – for example, in the Middle East – and devising new routes and corridor solutions.
Which customers are especially important there?
LEUSCHNER: All our customers are equally important to us. In transport between China and Europe, however, the electronic, textile, automotive and chemical industries are particularly active. At the same time, we are trying to find special solutions for large customers and projects, such as our industrial or automotive partners, and, of course, for projects that we are pursuing jointly with Russian State Railways, RZD. Some time ago, you moved into a new DB Cargo Russia head office.
Why was that?
LEUSCHNER: The reasons for that were mainly organisational. We are now closer to our DB partner AO Schenker, so DB Schenker Russia, and in addition, the new head office has better conditions, especially with regard to its IT connections.
Interview Axel Novak