Deutsche Bahn, China Strike Rail Freight Deal

Deutsche Bahn, China Strike Rail Freight Deal

Germany's Deutsche Bahn signed an agreement with Beijing to develop China's rail freight transport and supervise the construction of high-speed rail lines.

Europe's largest rail cargo company and the Chinese Ministry of Railways said Dec. 7 they will cooperate on developing rail freight transport between Asia and Europe.

"German expertise and German technology will play an important role in stepping up co-operation. Rail is the backbone of our freight transport," Jan Mucke, Secretary of State at Germany's Ministry of Transport said at a joint signing of a Memorandum of Understanding in Beijing.

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"Germany offers growth potential for our customers and for us," said Karl-Friedrich Rausch, a member of the management board of DB Mobility responsible for transportation and logistics.

"The more Chinese production sites that move from the coast inland, the more interesting rail transport to Europe becomes for manufacturers. We want to meet this demand," Rausch said.

Deutsche Bahn will also work with Russia's state railway RZD to boost rail transport between Europe and Asia, Rausch said.

Trans Eurasia Logistics, a joint venture majority owned by Deutsche Bahn and RZD, launched the first scheduled direct rail freight service between central Germany and Moscow earlier in the year. Deutsche Bahn claimed strong shipper demand for the weekly service which takes seven days to cover the 1,375-mile voyage.

DB International, Deutsche Bahn's consultancy unit, earlier this year won a contract worth $40 million to supervise the construction of nine high-speed routes in China.

On Monday, Russian Prime Minister Vladimir Putin outlined a $14 billion investment to expand capacity on the Trans Siberian Railway.

Moscow plans to upgrade the Baikal-Amur-Mainline, one of two tracks that runs parallel to the main Trans Siberian track on the northern side and takes a more direct route to the Pacific coast.

Putin said modernization of key Russian Pacific ports, including Vanino and Nakhodka, is being held back by bottlenecks on the BAM railway.

Rail accounts for less than three percent of freight traffic between Asia and Europe with the Trans Siberian Railway failing to win cargoes from container shipping lines, even during periods of high freight rates.

Rail transit times are around 12 days shorter than ocean voyages and the gap has widened since ocean carriers introduced extra slow steaming to cap fuel costs.

Deutsche Bahn has tested direct container rail services between China and the port of Hamburg.

-- Contact Bruce Barnard at