”Strong volume growth”
It is the Chinese themselves who are banking ever more on the railways for their exports to Western Europe. The company Far East Land Bridge is one of the most important players in these corridors. Felb CEO Wilhelm Patzner elaborated on last year’s results, prospects and plans for 2018, as well as the changes that are looming for the routes in a discussion with Christian Doepgen.
Mr Patzner, what were Felb’s results like in 2017?
We’ve had a difficult but successful year. The success is that we registered a total volume of 70,000 teu handled, almost twice what we managed in the previous year. We also increased our revenues to USD 170 million. The difficulties lay in the fact that our growth showed up the limitations that our capacities present us with. We experienced some bottlenecks in Poland.
Transit times are your top selling point...
Every operator sells time! In 2016 we actually achieved 16-day runs on the routes between China and Western Europe. In 2017 we averaged transit times of 21 days – on account of infrastructure work in Poland that was only announced at short notice.
How did you react?
Naturally this resulted in numerous customer complaints. We took many corrective measures, and were thus able to bring the transit times down to today’s 17 to 19 days again – despite ongoing strong volume growth on the routes.
Did your clients accept this?
They stayed loyal to us because we communicated with them in an open way. On top of this, 2017 was characterised by the effects of Hanjin’s bankruptcy. Many new clients who booked passages as an emergency measure in the first half of 2017 have now returned to maritime services. We were able to keep many of them on board on a permanent basis too, however.
Have the goods changed much?
We continue to ship higher-value goods. Our westbound services increasingly handle goods that will be offered in the retail segment’s sales, however. These are new product groups, that make the best of our short transit times.
Have you seen any regional innovations?
Yes. Italy is one good example. We presented our services to 100 forwarders from this important market in Milan four weeks ago. Today we’ve already booked 15 Italian containers on our newest train from Western Europe via Budapest to Changsha – and demand is continuing to rise. A lot of fruit is exported to China too. A lack of reefer containers is currently putting the brakes on this interesting activity, however.
How many routes does Felb serve?
De facto there are three corridors; the number of routes is relative. Our blocktrains currently serve seven Chinese and six European destinations. Of course we link up many more stations through our partners. One of the pioneering roles we’ve assumed and that we’re proud of is a route from Changsha through Mongolia and Russia via Dobra to Budapest, which we opened in 2017. And a few weeks ago we launched a new weekly eastbound train that can carry 41 teu.
How is the LCL segment coming along?
It has a great potential, especially for medium-sized forwarders with part-loads. We support these partners with both east as well as westbound services. Chinese FCL and LCL traffic towards Russia has also become a new pillar of our activities since 2016. We’re talking about 10,000 LCL teu, including whiteware and industrial goods.
Is there a trend towards more paired goods flows on these routes?
We already have a much better balance than others. Thanks to the automotive segment 40% of our traffic is already eastbound. In 2018 we want to achieve a split of 45% eastbound and 55% westbound traffic.
You introduced the transport of hazardous goods in October 2017. How is business going in this field?
So well that we’re taking the risk of launching our own blocktrain in May. We’ve also received some requests to handle tank containers. As they’re not allowed on Chinese railtracks there are plans to link Japan, Korea and perhaps Shanghai through shortsea traffic to and from the Russian Pacific port of Vostochny.
Felb once had a fleet of 7,000 of its own containers. Is this still the case?
Our aim is to be ‘asset light’. We’ve now been able to reduce this figure to 6,000 units, becoming more efficient by increasing our turnaround frequency per box.
What’s your personal motto?
I believe in the motivation of Felb’s employees to grow personally and improve operationally. My greatest performance is having assembled such a great team.