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New Rail Connection to China Launches in November

The dream of creating the “new Silk Road by rail” took a big step forward at RailForum 2017, as it was announced that the first container train from Kouvola, Finland, will start its journey to Xi’an, China, on 10 November, 2017. After the first train, the connection is planned to become a weekly occurrence, with one inbound and one outbound train.

Locking down the date is an important milestone in the venture which seeks to route a considerable amount of goods in a novel way. Chinese cargo bound for Europe will travel west from Xi’an, going through Kazakhstan and Russia to reach Finland in 10-12 days. Transporting the same goods on ships, for instance, would take more than three times that time.

Delivering the welcoming speech at Railforum 2017, Kouvola Mayor Marita Toikka remarked that the new route to/from Asia will provide a “new logistics concept” that is both flexible and fast. Anne Berner, Minister of Transport and Communications, echoed that sentiment by commenting that, in the global context, rail creates vitality and the new connection between Asia and Finland is “most welcome”.

The Minister recalled Kouvola’s stellar track record as a “great logistics city” and noted that also the current trends support rail traffic as logistics are becoming more resource-efficient and mindful of their carbon footprint. She defined Finland’s forte as “connecting people, goods and data” in new and innovative ways, believing that the new venture will be able to carry on this tradition.

Reboot the Silk Road

In her presentation, Nancy Li, General Director, Scan-China International Link, Finland, showed that Xi’an, one-time capital of China, is an inland port brimming with potential. With a population of more than 8 million people, Xi’an was actually the eastern starting point of the original Silk Road trading route.

Xi’an has an important role in the Chinese “One Belt, One Road” agenda, specifically with regards to One Belt: according to the strategy, the land-based “belt” stretches from China to Europe, while the sea “road” links maritime traffic. Li commented that Xi’an is poised to “connect east and west” as the new route provides both reliability and efficiency.

Great investments have also been made both in Kazakhstan and Russia to make this all work. Murat Nurtleuov, the Kazakhstan ambassador to Finland, said that the state has made infrastructure investments to the tune of 26 billion USD, with 6 billion more to materialize by 2020.

- New connections give new opportunities, Nurtleuov said, adding that multimodal competence and over-all quality of the operations will determine its future.

Yana Kuzina, Vice President, Freight Village Russia, commented that by working together it is possible for all the stakeholders to be successful and expand their business.

- There is fantastic potential in the new connection, she said.      

Text by Sami Anteroinen, Dialog Designs Oy
Foto by Johannes Wiehn: Kouvola Mayor Marita Toikka remarked that the new route to/from Asia will provide a “new logistics concept” that is both flexible and fast.​

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Make the Connection

RailForum 2017 provided a comprehensive overview of what’s happening on the tracks now and in the future. Hosted by news anchor Peter Nyman, the event attracted logistics professionals from around the world to Kuusankoskitalo, Kouvola, on 28 September. Under the heading, LOCAL NEWS, the seminar guests received Finnish viewpoints into the evolution of rail.

Jari Grönlund, Director at Unytrade Oy, remarked that the new connection to China is not unheard as such – already in the 1990’s there were serious attempts to promote that connection, but the winds were not favourable for the venture. Now, with sufficient political will and economic upside, Grönlund believes that the connection is ripe and ready. The timing is right, since the competition is facing some serious problems:

“Looking at the German route, for instance, there is a lot of congestion and rescheduling is needed daily for container trains heading to and from Germany.”

According to Grönlund, the Kouvola – Xi’an connection can get the job done in ten days, if everything runs smoothly. This means one day in Finland, two days in Russia, four days in Kazakhstan and three in China. The annual volume could be as much as three million containers.

“With the delivery speed of 10-12 days, the new weekly connection could really be a big thing for Finland.”

Flow of Goods, Flow of Data

Pasi Toivanen, Senior Customs Officer from Finnish Customs, assured that the shared objective of the various customs authorities along the new connection is simple: make foreign trade flow smoothly.

“However, when you’re dealing with three different customs zones, it is not always easy to find the solutions that work.” One problem is that while EU countries automatically share info with each other, the same courtesy is not extended to non-member states.

“Smooth legal procedures are required to accelerate border crossings and technological solutions can be used to improve the exchange of information,” he sums up, adding that security and flexibility are the watch words in the customs operations.  Sometimes the two go hand in hand: if one were to load three containers into one train wagon instead of the customary two, you could increase the volume and prevent unauthorised access to the goods.

Building on Tradition

Ilkka Seppänen, Director at VR Transpoint, commented that Kouvola is well positioned to serve as the westernmost starting point of the new connection, since it has the required capacity and expertise.

“Kouvola has extensive storage services available, for instance.”

According to Seppänen, strategic planning is the key for the success of Kouvola – Xi’an. The first thing is to recognise what are the actual needs of the customers and then come up with the dependability, efficiency and pricing to woe them. Finland is somewhat of a pioneer in all this, with a quarter of the goods being transported on rail.

“That 25% is a rather big share of over-all goods volume in European comparison,” Seppänen adds.

Let’s Get This Party Started

Seppänen points out that the new venture is following in the footsteps of the Trans-Siberian Rail (TSR) which would deliver goods from Finland to Vladivostok in ten days (and vice versa). He recalls TSR being extremely reliable and is wishing for same type of effectiveness for Kouvola – Xi’an connection.

“After all, there are already pulp trains going from Finland to Northwest China, so there’s some foundation to build on – and I believe that the new connection will be a success.”  

Text by Sami Anteroinen, Dialog Designs Oy
​Foto by Johannes Wiehn: Audience

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Come Together, Right Now

 

RailForum 2017 provided a comprehensive overview of what’s happening on the tracks now and in the future. Hosted by news anchor Peter Nyman, the event attracted logistics professionals from around the world to Kuusankoskitalo, Kouvola, on 28 September. Under the heading, BREAKING NEWS, a panel of experts assembled to discuss all things rail.

The panel participants were Ilkka Seppänen, Director, VR Transpoint Oy; Jari Grönlund, Director, Unytrade Oy; Markku Koskinen, Director, HaminaKotka Satama Oy; Pasi Toivanen, Senior Customs Officer, Finnish Customs; Matti Toivanen, Managing Director, Kuehne + Nagel Ltd; Tomi Hautala, Managing Director, Propentus Oy.  

Addressing blockchain, which was one red-hot topic of the day, Matti Toivanen commented that blockchain has potential to turn the transport business upside-down with its power to eliminate friction in the logistics chain. Still, in the final analysis, the Kouvola – Xi’an connection lives and dies with its customers.

“You need the sufficient demand to make this long-term,” Toivanen pointed out.

Forget Borders

Tomi Hautala – whose company Propentus is involved in developing the breakthrough blockchain innovation for rail – remarked that neither data or goods should be deterred by national borders.

“We need to take people away from the equation wherever we can,” Hautala said, referring to the automated nature of blockchain.

Pasi Toivanen commented that the new connection has a good shot at success, since the necessary political will to make things happen is there – as the lack of that will has been the downfall of many previous projects. Jari Grönlund added that decision-making had now, finally, reached the highest level and that all partners are committed to the venture.

“Talking about the starting situation in Finland’s end, all we need is 41 containers a week to get things rolling.”     

Reaching 1K

According to Ilkka Seppänen, there’s capacity on the rails to form the “standard” container train which is 800 metres long. “When you have trains that are longer than one kilometre, that requires some special consideration, but it can be done, too.” 

Markku Koskinen points out that rail beats road in many regards: for one thing, there has been congestion in the past at the Finnish-Russian border stations with lines of trucks reaching on for kilometres.

“Nobody wants to go back to that situation, not when the train is faster and more convenient,” Koskinen said.

Hold the Cold

In addition, the cold chain has been streamlined to allow for extensive transport of food industry products.

“There’s still some peculiarities, which means, for instance, that one can export milk powder from Poland to Russia, but not from Finland to Russia,” said Matti Toivanen.

Tomi Hautala commented that the technology part is often the easy part – it’s dealing with laws and regulations that slows you down and frustrates you. Ilkka Seppänen noted that the situation is improving in that regard, too:

“Preliminary information on goods, for example, can be relayed electronically and fluently.”   

RRT Shows Promise

One big part of the equation is Kouvola’s Rail-Road Terminal (RRT) which plays a significant role in the creation of the local multimodal logistics platform. RRT is now in its second phase and the panel participants view the project as key for the over-all success of the new connection.

“So far, the terminal traffic is mostly trucks. The terminal has the capacity to handle one incoming container train per day,” Jari Grönlund said.   

Text by Sami Anteroinen, Dialog Designs Oy
Foto by Johannes Wiehn: A Panel of Experts discussing.

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Mission Possible

RailForum 2017 provided a comprehensive overview of what’s happening on the tracks now and in the future. Hosted by news anchor Peter Nyman, the event attracted logistics professionals from around the world to Kuusankoskitalo, Kouvola, on 28 September. Under the heading, INTERNATIONAL NEWS, the seminar guests received key info on the emerging “Silk Road 2.0”.

Nancy Li, General Director, Scan-China International Link, Finland, gave a presentation which focused on Xi’an, an up-and-coming inland port with a population of more than 8 million people. Xi’an, the eastern starting point of the original Silk Road, is now poised to make a comeback to the big scene. Backed by the Chinese policy of “One Belt, One Road”, Xi’an can achieve great things in the future. The Xi’an logistics area is also a free-trade zone. 

According to Li, the Xi’an inland port is on its way to becoming an international conglomerate with special prowess in multimodal operations which were launched in October 2016. Combining rail with air and sea will yield the best results, she believes.

“We are creating a portside industrial ecosystem,” she says, adding that multimodal transport targets “seamless” connections.     

Container trains leaving from Xi’an can reach Kouvola in 14-15 days, she says, adding that Xi’an can both send and receive one train per week.

“There is a modern container facility at the centre of Xi’an and, also, a cold-chain logistics base,” she says. Already such companies as online giant Alibaba have a strong presence there.    

The Missing Link

Murat Nurtleuov, the Kazakhstan ambassador to Finland, comments that since Kazakhstan is a landlocked country, it has to be creative in developing its logistics. Henceforth, the state made the decision to start heavy investments in infrastructure (26 billion USD to date) and has realised the Khorgos logistics area on the border of China and Kazakhstan. This China/Kazakhstan free-trade -zone has literally emerged from nowhere and is now getting ready for a bright future, complete with robotics, automation and digital economy.

“Europa and Asia are the biggest continents and we want to boost the connections between these two,” says Nurtleuov, adding that the EU is already the biggest investor in the country.

“And with regards to Finland, we are Finland’s biggest trade partner in Central Asia and Finland is our biggest trade partner in the Nordics,” he says, calling Finland a “strategic partner” for Kazakhstan.

Success via Collaboration

Alexander Ostrovsky, the Belarussian ambassador for Finland, says that the issue of building logistics corridors often comes down to constructing solutions that work.

“There will always be challenges, but for example in Belarus, we revamped our tariff policy last year to make way for practices that are more simple and better optimised,” Ostrovsky says.

He believes that container trains running along the Silk Road will face tough competition from other modes of transport, but collaboration will help to overcome the obstacles.

“The focus must be in making freight as efficient as possible.”  

Thunder on the Tracks

Chen Si, Director at Hellman Worldwide Logistics, says that the more efficient utilisation of the Eurasian land bridge makes perfect sense.

“Multimodal services are now better able to support industries such as automotive, fashion or retail.”

Just one example: chemical industries can take advantage of the service providers’ containment tanks which are fully temperature controlled.

According to a Hellmann study, industry players taking freight to/from China are interested in e.g. reliable lead times, simple customs, flexibility and – of course – competitive prices. As infrastructure and terminals keep developing, Si expects that there will be a lot of action along the tracks.

“We believe that the Eurasian land bridge will be utilised more and more in the future.”       

Text by Sami Anteroinen, Dialog Designs Oy
Foto by Johannes Wiehn: Mr. Zhaslan Khamzin, KTZE Khorgos Gateway, Mr. Murat Nurtleuov, Ambassador of Kazakhstan and Mr. Almat Karimov, KTZ Express at Railforum 2017 in Kouvola

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Blockchain reinvents rail

IBM Fellow John Cohn believes that blockchain technology is set to revolutionize rail traffic – and Kouvola will be in the thick of it. Appearing at RailForum 2017, Cohn called blockchain the digital disruption that rail has been waiting for.

If anyone has a handle on emerging new tech such as blockchain, it is John Cohn. He has been with IBM for 35 years, achieving the designation ‘IBM Fellow’ a decade ago. IBM Fellow is the highest technical rank within IBM. Cohn is also the Chief Scientist for all things IoT and “Chief Agitator” at the company. With more than seventy (70!) patents under his belt, it is no wonder he has a pretty wide license to roam and seek innovation wherever it may surface.

Tracing the evolution of rail traffic at RailForum 2017, Cohn says that the transition from horse-drawn wagons and steam engines to such out-of-the-box concepts as HyperLoop has been a remarkable one – but the best is yet to come.

“Never in all my years have I seen something that has as much disruptive power,” he says about blockchain on rail. Taking the integrated approach of blockchain from the digital world – which gave us Bitcoin, for example – and putting it to work in the very physical world of logistics is a real gamechanger. 

What if…?

Cohn and his colleagues had written a paper on the potential of blockchain in late 2014 and Mika Lammi from Kouvola Innovation Oy had happened to stumble onto it. Lammi was convinced that blockchain could be introduced into container traffic in a big way and the two men started a dialogue.

The key take-away was this: in the blockchain logistics system, you only need to trust the system, not the individual player. Via shared ledgers and smart contracts, one can build a safe transport system that is shared, replicated and permissioned – eliminating fraud. Blockchain is very good at reconciling multipartner problems that are often the bane of logistics. In fact, Cohn argues that the cost of various “friction” at border zones, for instance, is greater than that of the transport itself.  

“With blockchain, the over-all time used in goods transport will decrease, as will the risk involved. At the same time, efficiency and trust are increased,” he sums up.

Billion Dollar Opportunity

And what’s at stake here? - The total annual value of global trade is estimated to be around 1.8 trillion USD – and according to Cohn, blockchain could help save about 10% of that staggering amount.   

Pushing forward with their project, IBM and Kouvola Innovation Oy recruited another player, Kouvola-based Propentus Oy, to hone their concept under the name SmartLog. Using the IBM’s HyperLedger 1.0 framework, the project is launching its first pilots to companies in October 2017. Funded by EU Interreg Central Baltic Programme, the over-all goal is to “start something big”, as Cohn puts it.

“I have been very impressed by Kouvola’s progress,” he says, joking that “playing with trains” has been a real treat.   

“I think that Kouvola is the perfect place to try this concept out – small enough to be daring. As it turns out, it may be easier to do it here than elsewhere,” he says, adding that the new innovation will work, too.

“I bet my badge on it.”

Text by Sami Anteroinen, Dialog Designs Oy
Foto by Johannes Wiehn: John Cohn speaking in Railforum 2017 -seminar in Kouvola

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Standards Needed for Blockchain

’Blockchains and standardising’ seminar attracted professionals from a range of fields to Kuusankoskitalo, Kouvola, on 27 September. 

Probably the most expected speech of the day was delivered by IBM Fellow John Cohn who is also the Chief Scientist for IoT in the company. He remarked that “crazy, disruptive moments” do occur – and that blockchain is certainly one such milestone in human history. Still, the future is no monolith:

“There will not be one blockchain system to rule the world, but, instead, many different systems.”

For example, the EU Commission has recognised the importance of blockchain as a “complex, controversial and fast-moving” technology. Making sense of this technology becomes so much easier when there’s proper standardisation in place. This calls for people to get together and agree on certain things.

United Front

Arto Leikari, researcher for VTT Technical Research Centre of Finland, is heading ‘BOND - Blockchains Boosting Finnish Industry’ project. Launched in October 2016, the project features VTT, Aalto University and Research Institute of the Finnish Economy Etla as well as nine companies – among them Kouvola Innovation, Fortum and Nokia.

According to Leikari, the standardisation of blockchain is now under way with ISO/TC 307 seminar which was held in April 2017 in Sydney, Australia. Leikari was in the Finnish delegation.

“At the seminar, we set up five study groups to further the cause of standardisation.”

Get the Terms Right

Expert Elina Huttunen from the Finnish Standards Association SFS was also present in Sydney. She pointed out that agreeing on common terminology is the starting point for the work.

“After the study groups have done their work, the proposals will be put under a vote, with every country having one vote,” she explains, adding that membership in the Finnish national committee is open to all.

“Presently, we have a committee of four, while the Chinese have 4,000 members – but it’s still one vote each.”    

Privacy vs Transparency

Jarno Salonen, another researcher from VTT, provided an interesting example of blockchain use: the Finnish health and social reform. Having started and stalled numerous times by now, the ‘SOTE’ project certainly needs all the help it can get.

For example, the citizens could really benefit from “smart prescriptions” which mimic, in a sense, the “smart contracts” of blockchain. The problems, however, occur when you need to balance privacy and openness issues.    

“Granting permission is tricky to realise in this context,” Salonen said. In addition, while presently there’s dynamic data and passive data out there, they don’t mingle very fluently.

Blow Up All Silos!

To close the day, Mika Lammi, Head of IoT Business Development, Kouvola Innovation Oy, gave a recap of SmartLog project which is funded by EU Interreg Central Baltic programme. Launched in September 2016, the project has funding for three years.

“The industry problem is that while goods are moving, the information is not – it is too often locked away in silos, with no way to retrieve it effectively.” When the logistics chain involves, say, 50 companies, it soon becomes a real issue that data is handicapped in such manner.

“When the owners and the operators of the transportation chain set up a blockchain system, every action is recorded into the system using concise format and content,” Lammi describes the “total visibility” scenario that is the aim of SmartLog.

The Spaghetti Incident

As there’s more information – detailed, specific, useful information – the amount of manual routines decreases dramatically and the entire process is sped up considerably.

“Millions of euros can be saved in this way.”

Still, blockchain requires collaboration and common ground rules. According to Lammi, within 5-10 years there will be so many rival blockchain systems that standardisation will turn into a “question of life and death”.

“The risk is seeing blockchain turn into one big spaghetti that nobody can manage.” 

Text by Sami Anteroinen, Dialog Designs Oy
Foto by Johannes Wiehn: IBM Fellow John Cohn (left) and Mika Lammi, Head of IoT Business Development, Kouvola Innovation Oy