The takeover of GEFCO’s shares by Russian Railways (RZD) is a development opportunity for the company’s activity in the Eurasian area. This is due to the fact that RZD holds a top position in the transport market, ensuring a traffic flow of 1.3 Billion tonnes of freight per year and 1.3 Billion passengers per year. At the end of last year, the French group PSA Peugeot Citroën and RZD signed the contract on the sale of 75% in the capital of GEFCO’s logistics division for EUR 800 Million. The transaction allows the two companies to improve the attractiveness of freight transit flows on the Europe-Asia axis and to supply competitive transport services. For GEFCO, the transaction will consolidate its position in the international market by developing new future directions.
The eastern market has a huge potential for the development of business in the multimodal transport segment with the possibility to develop flows between Europe and the Moscow Region, as well as on the corridors from Russia to Central Asia-China, Kazakhstan, the competitiveness of railway transport being ensured by prices and transit time. These aspects have made the interest in the Eurasian railway market grow, as well as the need for partners and products ensuring multimodality.
Regarding GEFCO’s solutions for extending and developing the transport activity, a policy of strategic corridors is considered for the company (France-Russia, France-Spain, France-Slovakia, Germany-Turkey, the Baltic region and Central Asia), the supply of regular services for limited volumes and the development of industrial companies from Central Europe and Asia Minor.
Apart from activity development plans, there are challenges which require the appropriate approach that makes transport services competitive and efficient.
Mr. Christophe De KORVER, General Manager GEFCO Romania, has told us more in the interview below about competitiveness in the railway and logistics transport segment, the business development potential in the multimodal transport segment, on the two continents, and about the challenges the company is facing for providing attractive services.
RailwayPRO: What does it mean for GEFCO the takeover of the majority package of shares of the logistics division by RZD?
Christophe De Korver: Now GEFCO has a very strong partner to support the group in its development. The main assets beneficial for GEFCO are the access to a network covering Eurasia in its entirety and important growth opportunities in Russia and the region surrounding Russia.
RailwayPRO: How has GEFCO’s activity been influenced almost a year since the signing of the shareholding contract on the takeover of its logistics division?
Christophe De Korver: RZD Russian Railways took over at the end of 2012 a package of 75% of the shares of GEFCO Group. It is still too soon to discuss on the influence on the business – a transaction of such proportions needs time for accurate planning of a long-term strategy. What we can say for sure is that there is a strong focus of GEFCO on development in the Russia zone.
RailwayPRO: What do you think the new opportunities for the transport and logistics sectors are in Europe and Russia?
Christophe De Korver: We have been experiencing in the last period of time a shift from huge volumes made for Western Europe to alternative destinations of export, such as Russia zone, the Middle East and South Africa, where consumption is growing. Regarding the Russia area, there is more and more activity from Europe towards the region of Moscow and developing flows on corridors from Russia to Central Asia.
RailwayPRO: GEFCO can now easily expand its activity in Eurasia. What is the company’s development strategy and what countries in the region do you target for future extension of transport services?
Christophe De Korver: GEFCO currently operates in 18 countries on the Eurasian continent, with over 1,900 emplo-yees based everywhere from Dubai to Riga and global growth of 17% in 2012 for this dynamic and promising region. GEFCO is also actively involved in joint ventures with Latvian organisation
EMMA (Eurasia MultiModal Alliance), which operates rail distribution flows between Europe and Asia, and Algai, a Moscow-based automotive logistics specialist.
By joining RZD Group, GEFCO has at its disposal a rail network which greatly increases its opportunities for development not only within the countries in the Community of Independent States (CIS) but also in Asia. Our development in activities to and from Russia, Ukraine and Kazakhstan is our current priority in this region.
RailwayPRO: What are the challenges you are facing?
Christophe De Korver: One of the main challenges is related to customs restrictions, especially for rail freight and multimodal operations. Also, there is the challenge of unbalanced flows, which can create problems for returns of our means (wagons or trucks).
RailwayPRO: How would you describe the competitiveness of the railway and logistics transport segment in Europe? What about Asia? What are the main characteristics which make the difference between the two continents?
Christophe De Korver: In Europe, railway transport remains competitive on corridors (hub and spokes model) and on long distances. Otherwise, it is harder to be competitive versus road. To make a comparison between the 2 continents, there is a good railway network on both continents, however in Asia, the road infrastructure is worst. Moreover, Europe is industrialized almost everywhere, Asia has huge empty territories, which means less roads, less logistics infrastructures.
RailwayPRO: The largest share of freight volumes on the Europe-Asia axis is shipped by sea. How could railways attract a higher freight volume considering the advantages and disadvantages of the two transport modes? Should the two modes of transport compete against each other or should they complete one another?
Christophe De Korver: Railway could win a share by building competitive (from price and transit-time points of view) and reliable (from regularity, quality, backup solutions points of view) products. Rail has to overcome other difficulties such as security of the goods or weather. Today trans-Eurasian products are just at the beginning.
Train and sea-shipping should complete each other because they are competitive on two different types of traffics:
• Ships from ports to ports (for example Hong-Kong to Rotterdam)
• Trains on inland transportation (for example inner China to Central Europe)
Moreover, ships have a transport capa-city against which trains cannot compete. But for some types of goods trains seem to have a competitive advantage (fashion, white goods, new technology) due to a shorter transit-time. We can notice cooperation between the two modes of transportation in Europe where the train is used to reached the hinterlands of the ports (Hamburg, Antwerp, Rotterdam).
RailwayPRO: During the Railway Days 2013 Summit, you said the Eastern market has a huge potential for development of multimodal transport activities and it is possible to expand flows between Europe and the Moscow Region, as well as on the corridors from Russia to Central Europe-China, Kazakhstan. How do you ensure the competitiveness of railway transport on these routes?
Christophe De Korver: In order to ensure a competitiveness, we have to use optimally the infrastructures and equipment and, of course, optimize our network. You have to start with a leading customer that will guaranty a minimum volume of activity and competitiveness will improve through sales development and proposing products to a demanding market. The market research is indeed compulsory to reach these successes.
RailwayPRO: From your point of view, how can you attract a higher freight flow to railways, so as to make sure that railway transport is the backbone of the system, while the other transport modes become complementary?
Christophe De Korver: By being competitive, by offering a reliable solution. Price is today the most important criteria for the customers. The ecological factor is to be taken into consideration, as well, but we have to focus on what the customer needs. Moreover, today, not all goods can be transported by train or it is not competitive for some types of goods.
The price shall be the initiator of a new product and then the reliability shall enable our railway and multimodal solutions to perpetuate.
RailwayPRO: What are GEFCO’s solutions for the extension and development of its transport activity in Europe? What are the most competitive regions in Europe that meet the best features for railway development?
Christophe De Korver: At the moment, GEFCO offers the best network at the best price. Furthermore, we continue our development and growth in Eastern Europe (the Balkans in particular) and the development of the links between Europe and the rest of the world (Middle-East, Central Asia).
The most competitive region in Europe that meets the best features for railway development is Eastern and Central Europe, as there is the infrastructure and the know-how, adding to that the tendency of Europe to look toward East for growth.
RailwayPRO: How do you see the Romanian transport market and what is GEFCO’s strategy for development of ser-vices in Romania? What about Eastern and Central Europe?
Christophe De Korver: Romania remains an attractive destination for logistics and transportation due to its privileged positioning and the balance between expertise and costs, but still with limitations – and these limitations are mainly regarding infrastructure – lack of highways, lack on investments in rail infrastructure or in the infrastructure of Constanta port. For the near future, as we do not see a boost in domestic consumption level, we still focus on international transport. We research intensively new optimizing solutions for Russia zone and Asia.
Share on:
