The Dragon rides the rails
Posted on August 09, 2018 by Lucie Maluck, Images by Shutterstock, mtu-Archiv
China’s rise as a global rail technology player.
Mention transport technology capable of transforming entire countries, and people immediately think of artificial intelligence, flying taxis and driverless cars, not locomotives, freight cars, sheet metal and steel. But that is exactly what China is exporting –locomotives and rolling stock. And by doing so, the Middle Kingdom is getting the economy on track in countries like Argentina, South Africa and Madagascar.
When China started out in Madagascar, there was a single working locomotive and a ramshackle rail system to work with. In 2008, the local operator Marda Rail received five locomotives for its modernization program and delivery of the Chinese locomotives marked a turning point for the African island nation. According to the World Bank that assisted with financial arrangements, the project played a major role in revitalizing freight transport.
China has already completed its own rail modernization program. Today, the country has around 124,000 kilometers of track and the world’s biggest express network. The Chinese market is saturated, and the country is now exporting its modern rail technology. China Railway Rolling Stock Corporation (CRRC) is the biggest rail company in the world – half as big again as the combined rail divisions of its competitors Alstom, Bombardier and Siemens. In 2015, this huge concern earned around 11% of its €32 billion revenues from foreign transactions. Its customers are located right around the globe, from New Zealand to Madagascar, South Africa and Argentina. And cooperation with the Chinese state is excellent: CRRC delivers the equipment, and the state supports customers financially by making favorable credit available.
Investment in Argentina
Argentina is a case in point. At one time, the country’s rail system ranked among the world’s best and the breathtaking classical-style Retiro Station in Buenos Aires still provides a reminder of that era. But by the start of the 21st century, the once-famous rail network had deteriorated to the point where trains were limited to 5 kph over wide areas. In 2010, the Argentine government announced a rail rejuvenation program – with assistance from China. The Middle Kingdom made $10 billion of low-interest credit available over a 19-year period for various projects.
The Argentine government invested the funds in trains from China, and in 2013, CNR Corporation, a predecessor of CRRC, delivered 20 locomotives for Argentina’s passenger trains. At the same time, the state-owned construction and engineering concern China Machinery and Engineering Corp (CMEC) took on a contract worth $2.4 billion to commence work on repairing almost 5,000 kilometers of track on the Belgrano freight rail system in northern Argentina. During the course of the project CMEC increased the finance involved by a further $2.4 billion as part of a contract that also covered the supply of 100 new diesel locomotives from CRRC. The entire fleet, powered by 2,200 kW engines from mtu, will be in service by mid-2018 and modernization of the Belgrano routes will be completed in 2019. That means a huge boost for Argentina’s agriculture sector. Currently, 96% of cereal crops transported within the country are carried by truck. Rail transport is almost four times more energy-efficient and is therefore much cheaper.
Trains for industrial transformation
CRRC’s first customer west of China was the New Zealand rail operator KiwiRail. During the 1980s, New Zealand set out on the path from an agriculture-based structure to a modern market economy. Alongside tourism, the export of milk, timber and other products like goat meat, lamb and butter played a significant role. For its transport system, the island state in the Pacific opted for a 10-year plan to modernize its ailing rail network. In 2009, KiwiRail purchased 20 diesel locomotives from CRRC predecessor CNR Dalian. Follow-up orders in 2013, 2015 and 2017 increased the number of vehicles ordered to 63, and with new trains in service, in 2016 KiwiRail was able to transport in excess of 100 million tons of freight.
China’s breakthrough in the western marketplace
Shortly after the conclusion of the first contract with KiwiRail, Chinese manufacturer CSR Ziyang, a CRRC subsidiary, won an order worth around €12.7 million to supply trains to Australian company SCT Logistics. Powered by 20-cylinder mtu Series 4000 engines each delivering 3,000 kW, these trains have been in service hauling heavy freight and ore in Australia since 2012. For CRRC, this order represented the definitive breakthrough in the western marketplace and it was followed by further rail contracts with various Australian operators like Bradken, Pacific National and Qube.
The new ‘Silk Road’: China to Europe by rail
And Chinese ‘Rail Mania’ continues to flourish. With its ‘New Silk Road’ project, Beijing has launched a logistics initiative costing billions and intended to create giant new railroads linking China with Europe. By investing in a range of construction projects involving highways, rail tracks, pipelines, power plants, telecommunications networks, harbors and airports, China plans to connect the land and water masses of Europe and Asia. An 11,000-kilometer rail link already connects the Chinese city of Chongqing with the German logistics center in Duisburg, where 25 trains from China now arrive every week. The newly completed rail link costs only half as much as airfreight and is twice as fast as sea freight, making it ideal both for time-sensitive cargo like promotional goods and for high-end products like automobile parts and electronics.
Cooperation: mtu and CRRC
At the end of 2017, mtu and CRRC further consolidated their successful cooperation by signing a strategic partnership agreement. The document confirms that in future CRRC will continue to consider mtu engines as drive solutions for diesel railcars and locomotives. The two companies also expressed their intention to work jointly on future drive solutions such as hybrid drives and gas engines. Over recent years, CRRC has already placed orders for 500 mtu Series 4000 engines. “An mtu engine costs CRRC more than an engine from the competition,” said Tony Chan who heads engine sales for China at mtu. “But the mtu engine is lighter and smaller it uses less fuel. And the customers are full of praise for the quality of our customer service,” he added.