Kris Kosmala general manager for Asia Pacific at Quintiq
After 17 years in Asia, Kris Kosmala has seen the rail industry’s major success stories firsthand and believes he knows how others in the region can capitalize
You’ve been in Asia for 17 years, what changes to the rail industry have you seen in that time?
The sophistication of the business. When I first arrived here most countries took a haphazard approach to planning because labour, land and resources were cheap. Now the costs are increasing and operators are having to become more sophisticated. This is most evident in China.
It used to be that manufactures had no interest in what I was offering when it came to better planning and logistics but now efficiency is key to every business. Now in China everyone is trying to maximise the resources they have rather than acquiring new ones.
Landing in Beijing for the first time I remember there was one empty terminal at the airport, you could shoot a cannon through it and not hit anybody it was so empty. Now they have five packed terminals. China, Singapore and Malaysia have changed so much and grown at such a rapid pace that necessitates sophistication.
In the Chinese summer you can beat the plane from Shanghai to Beijing by train, imagine being able to move cargo that fast. It took one hundred years for this sophistication to be achieved in Europe, it’s still taking its time in North America and these guys in China have done in a few decades.
Is that the case across the region?
In Australia there is still enough land to build wider roads, however along the north-south corridor between Melbourne and Brisbane there isn’t the space to build a road wide enough which is why they’ve gone for this Inland Rail project which bypasses Sydney.
In India they cannot build wider roads in their high density metropolitan areas, all of this increasing road traffic is squeezed into a resource that cannot be made bigger. Moving cargo in India is very expensive by road and by rail, congestion and inefficient technology results in a loss of time for every journey.
India is a strange economy, their railway districts are uniquely organised, PM Modi announced promising plans to unclog the roads but there hasn’t been much action on this. Great talk and potential but there’s no integration and sporadic investment in the type of optimisation technology that Quintiq provides.
At this moment the big challenge is getting the country’s network to the level of sophistication where scheduling makes sense, if you make a fantastic timetable but nothing runs on time anyway then an optimisation plan doesn’t help.
What is Quintiq’s main area of interest in Asia Pacific?
Helping to make enterprises more competitive through the use of modern technology. For me, sophistication equals integration. In Guangzhou the main airport is integrated with a railway is and attached to a road. It was a well thought out air and rail transport strategy rather than just plonking an airport down in the middle of nowhere and catering to planes and that’s it.
Bangkok’s second international airport took forever to get connected by rail, the smaller airport of Don Mueang has no rail connection. Bangkok wants to be a major transport shipment hub, but they still think that everything can be put on a road and fight congestion by building an adjacent lane. As long as the land is cheap, it does make sense financially but when land becomes scarce that changes.
Indonesia and Philippines have a similarity as they are both archipelagos with an intra-island connectivity that is being designed around freight. Jakarta and Surabaya are two cities on opposite ends of Java island, most vessels dock in Jakarta because it’s the capital but also because the port at Surabaya is too shallow. Import/export companies in Surabaya need a fantastic railway to carry their goods to Jakarta but that doesn’t exist, the railway is barely capable of carrying cargo.
So, Indonesia is redeveloping the whole lane. This line will blend passenger and freight and will require a high degree of optimisation. It’s the same situation in The Phillippines, Luzon island has a main port in Manila and a few like, Clark Bay, in the south. These ports could offset the marine traffic from Manila but it’s impossible to travel across both of these islands by truck. The future I want to see would be an intermodal journey of vessels and trains moving cargo between Borneo and Indonesian and Philippine islands.
How would you pitch your service in these situations?
Our offering is about project task optimisation, we can improve the existing network but building a network from scratch is actually an identical situation. Mathematical optimisation tools concern themselves with the act of planning, they consider the timespan allowed, the resources that are available and the workload that needs to be performed.
Is the East Coast railway being built in Peninsula Malaysia an example of this intermodal strategy?
There are hardly any ports on the east coast of Peninsula Malaysia, all the ports are on the west coast, like Port Klang, so rail could help to create new shipping lanes and improve efficiency. At this moment, what Malaysia needs to do is figure out how to inject cargo and freight trains onto this high-speed network as well as building new tracks.
Once that railway moves up north across the border and to Bangkok then it will be obvious that rail is a far better way to move cargo, but it cannot be an afterthought it has to be front and centre at the planning stage.
Do you see China-Europe rail as more viable than the China-ASEAN rail?
The major rail lane coming from the OBOR (One Belt One Road) is the route that links dry ports in Europe with major Chinese cities, a number of these central Asian economies will benefit from the network effect. In the future, there will be a need for our solutions because there will be feeder trains or local trains which will need to be synergized with the main line.
In terms of freight, rail offers real time inventory, it takes 15 days to get to Europe versus 45 days by ship, so even with the higher cost the real time inventory that companies can run cancels out these fears. I believe freight to Europe will dominate the discussion for now but the Chinese economy is going through a transition period, many companies will move their factories to Southeast Asia instead of automating.
When this happens, the ports will be effected but rail will actually benefit from this if the infrastructure is in place to support the growth of exporting companies there.
What issues concerning network management do you see facing the Asia Pacific region in the next five to ten years?
Integration. In the past, everyone did their own little thing, in the future we have to have an integrated system of control for the track and the train. The more data we can get in real time the easier it is to adjust the network dynamically instead of planning a day in advance.
So regional traffic control centres will have to be set up so that freight and passenger trains are all on everyone’s radar, signalling and control and connected gauges. With the exception of OBOR which is building a network linking so many economies, in places like Thailand and Vietnam the major projects are being built in isolation.
If you remember the ERTMS (European Railway Traffic Management System) was legislated in Europe and then each government helped the companies to roll out the system. Everyone understood the value of it, the same thing must take hold in Asia.
Australia has ports on the opposite sides of a huge, round shaped land mass, it’s a simple process to offload containers on the west coast then move them by rail to the east coast. Then road transportation was liberalized, taxes lowered and the routes were changed so they allowed these huge trucks to compete with freight and then rail sunk.
In many Asian countries they are still big on building roads, rail is not seen in the same light, as long as they persist in building roads cheaply and then widening when necessary, rail has no chance. Building a heavy rail is much more expensive than just simply paving another three metres on the side of the road. In Australia they build an airport and then build a railway 20 years later when they think it makes sense, in the meantime they build a road and send buses up it. I was hoping that OBOR would bring this all together, but at the moment its still investment funding for infrastructure projects and not yet at that next layer.
Kris Kosmala is general manager for Asia Pacific at Quintiq