Learning about the development of rail freight between Europe and Asia has been one of the primary aims of the New Silk Road Network (NSRN). The emergence of rail freight along the New Silk Road as an alternative to sea and air has sparked interest within the forwarder’s community. However, it has always been the case that the biggest of the big transportation companies would have the capacities and the capabilities to initiate rail transport. For SMEs, the task has always been to gather resources and reliable information to conduct rail freight, a challenge for sure but not an impossible one. In this regard, we spoke with Polish Forwarding Company (PFC), a member of NSRN with strong rail freight services.
In our interview, we were joined by Miłosz Witkowski, who recently joined PFC as the Director of their rail department. The conversation is mainly centered around rail freight between Poland and China, the need for developing new routes and terminals, the effects of political unrest in the countries along the New Silk Road and finally, the approaching prospects that will develop the initiative for the better.
In conversation with Miłosz Witkowski Railfreight Director at PFC......
NSRN: PFC has a reputation for consistent and exponential growth since it was established. How has the journey progressed since its establishment, and what are the long-term goals for PFC in the supply chain market? We have also learned about your successful rail consoles between the EU and China in these past years. What are some of the significant projects you have undertaken so far, and what are some ongoing/future ones?
Miłosz: PFC was established in 2012 as a forwarding company by Bartosz Samulak, Mikolaj Mazuryk and Jaroslaw Macko. They worked in different forwarding companies and wanted to create something new on the market together that would take a different approach. Having worked in large international corporations as well as in small local companies, the founders realized the need to create a company that focused primarily on the customers. Through the company's establishment, PFC started to build a strong base on the Polish market. By joining agency networks and opening offices across Poland, we have now 68 people in our company and 9 branches.
For rail, especially, our primary goal is to develop a strong rail freight department and extend our LCL console in China. We are aiming to add new destinations in China and organize whole block trains; now, we have our service from Xi'an, but we are also looking to explore Chongqing and Chengdu in future. At the moment, since Xi'an went into lockdown due to cases of Covid-19, we also managed to include Wuhan as an alternative. We are also starting to develop our intermodal capabilities here in Poland and Europe. So it's not just container transport within Poland and Europe, but we are also beginning to extend our services into breakbulk and oversized cargo. This is something that we are closely focusing on this year.
In the previous years, the most critical achievement was the initiation of the railway console and FCL shipments as well. In the past years, due to the global supply chain challenges, many people depended on rail freight, giving an appropriate boost to the rail freight industry, which also motivated PFC to offer rail services.
NSRN: Furthermore, what advice would you give companies who are also looking to venture into having their own consoles on the China Rail?
Miłosz: The most crucial step is to acquire a reliable partner. This is because the Chinese market is massive, with many companies offering the products, but not all are up to mark, and one may face complications after the cargo arrives. So, it is critical to have a perfect and secure partner in China. Second, you also need to be prepared for consolidation in Poland, which means having substantial warehouse operations that can support the transportation.
Of course, the most challenging thing is to figure out if the company is trustworthy or not, and one way to do that is to find dependable partners through agent networks. Meeting them or trying test shipments is also a practical way around this problem. Often, in this industry, people are moving from one company to the other, which means they also inadvertently increase their network and provide the opportunity to explore new partnerships. It is usually a combination of all of these things.
NSRN: In 2020, PFC also opened a new office in Katowice, a testament to your company's expansion. Although headquartered in Warsaw, PFC is also located in Gdynia, Białystok, Lublin, Wrocław, Szczecin, Toruń. What other activities does the company undertake to establish itself in the competitive Polish market, which has ample opportunities but a growing number of players?
Miłosz: Yes, the Polish forwarding market is very competitive, but in PFC, we are focused on our customers and strongly emphasizes the services that we provide to them. We are not competing with prices; we are competing in terms of service. All the people in our team are hired because they are dedicated and resourceful because we want to offer the best service there is. This is the foundation of our company and what we constantly work on.
NSRN: Coming to the New Silk Road, Poland is one the foremost EU countries to receive the most traffic between the EU and China. This, of course, is a positive aspect, proving the viability of transporting goods via rail along the New Silk Road. However, concerns of congestions at Malaszewicze are of critical concern to clients. How do you think forwarders can tackle those concerns? What steps can companies take at a forwarding level to safeguard themselves against this?
Miłosz: Poland is a gateway to Europe and a border point for the European Union. The vast majority of the cargo coming from China via rail to Europe is through Poland. Of course, there have been some problems with rail, but it’s not just the problems in Małaszewicze as everybody constantly repeats. Many times, the cargo is stuck at the border in Brest, Belarus. There is only one bridge between them, making the capacity very limited. At the same time, there is a need to upgrade the infrastructure in Małaszewicze; there are plans to modernize and create “Park Logistyczny Małszewicze” by Cargotor (state owned company) and also build a new private (by CLIP) rail terminal there, so there is an interest from the Polish government and from the private sector. In my opinion, it's a slightly delayed interest because these developments should have happened three or four years ago, but better late than never.
There have reportedly been some issues on the Chinese side as well; in some cases, the Chinese railways cut down the trains planned, thereby not allowing some trains to go as scheduled. Even though you can book the containers, when it is on the terminal you can get a notification saying the train is not going as planned, so the container is just sitting there for one or two weeks. The other point is regarding border crossings in China, Kazakhstan, Russia, Mongolia; in all these points; there are congestions. But we know that China, Russia, and Kazakhstan are trying to upgrade the border rail terminals and infrastructure together, we hope that these developments will improve transit times.
However, the problems have interestingly also had some positive effects. We as forwarders have been pushed to find alternative routes to avoid the popular ones. Thereby we end up tackling the congestion problems, safeguarding ourselves from these congestion issues and at the same time finding innovative ways or border crossing points. There are many other border crossings apart from Małaszewicze and Brest. The rail operators are also aware of this and readily launch new routes. There is a connection coming from Ukraine to Poland to Sławków, which was quite good, but unfortunately, it was stopped, as Ukrainian authorities have banned the movement of trains coming from China into Poland. Some misunderstandings between Polish and Ukrainian authorities caused this, but we hope these issues don't persist for longer. But due to this issue, we have worked on another route between Belarus and Poland, which is further north of Małaszewicze and Brest, to Siemianówka.
We are currently using this new route for LCL and FCL shipments and are surprised that this is working very well. Other countries like Germany also use routes via Kaliningrad, Russia and then feeder containers by sea to Hamburg. But for Polish forwarders, from Braniewo is relatively not such a good alternative because haulage of containers from that point to various destinations in Poland can be expensive. But the point is, the congestion at Małaszewicze and Brest has promoted the development of new crossings and route alternatives. Countries along the New Silk Road need to work more together to develop better information exchanges; at the same time, the growing political unrest in the region, in Belarus, Ukraine, Russia and Kazakhstan, can be detrimental if not solved.
NSRN: As a growing company, we understand that your day to day is packed to the brim. What duties and responsibilities do you have to tackle in the day to keep the machine running smoothly?
Miłosz: I have been in the forwarding business for 12 years, and I have recently joined PFC as a rail director. Broadly, my duties include the creation of the rail department in the company. I am also responsible for rail activities, such as arranging the LCL console, managing the console activities such as pricing or backup for the sales team, looking for new alternatives, making new connections with agents, and so on. There is a lot of potential in this company, and I am happy to be here!
NSRN: Finally, as we have entered the New Year, what are some of your expectations regarding the logistics industry this year? Is this the year of the silver lining for the logistics industry? Or do we have another year of challenges in terms of covid regulations, congestion, lack of space and equipment and insurmountable charges?
Miłosz: I think this will be challenging too, just like last year, because on the one side, we have the pandemic going, and on the other, China also has their zero-covid policy, which has not helped at all. As I mentioned, Xi'an had closed because of Covid, and we have had to switch to another terminal. For sea freight, it is the same when a Chinese port closes, so supply chain can be hard to manage. Also, shortage of containers, congestions in main seaports will continue but I hope this will be the last year that we see problems due to covid and congestion.
Another issue is the political disruptions, especially in Ukraine, Russia, and Belarus. But I hope that generally, this year, things remain stable, and we will see some improvement in real transit time between China and Europe. New border crossings will gain new volumes, and new terminals such as the one in Hungary (East-West Gate) will also open new opportunities or routes. I think the Southern route via Turkey will continue to grow, and intermodal connections will also gain prominence as the routes expand eastwards to Vietnam, Korea or Japan.
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