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Interview with Liliana Krutonog, chief executive officer of Far East Land Bridge (FELB)

Introduction:

Far East Land Bridge Ltd. specialises in transporting 40-foot DV, HQ and 20-foot containers between the Far East (China, South Korea and Japan) and Russia and Europe via the Trans-Siberian railway.

The first pilot shipments commenced in 2007. The company has come a long way in recent years, increasing the frequency of rail shipments from one per week to six.

Far East Land Bridge maintains 6 offices in China, an office in Kazakhstan, regional representations in Italy and Germany, and the head office is situated in Europe, in Vienna. Over a hundred employees ensure the company’s smooth operation and the effective sale of its services.

Customers of the company gain a substantial financial benefit from the reduction of transit times compared with the alternative sea route (averaging up to 22 days).

In August 2020 Liliana Krutonog was appointed chief executive officer of Far East Land Bridge Ltd. One of the new director’s key responsibilities was to design and implement a new development strategy, including in European countries and China.


Liliana Krutonog has extensive experience of working with major international company groups. She worked on intermodal transportation for the Rail Cargo Group (Austria) for over 12 years. Between 2016 and 2018 she held the role of director of intermodal transport for a subsidiary of Czech Railways in Poland, working on the development of freight traffic in the border zone on the standard 1435 mm track gauge.

From 2018 to 2020 Liliana Krutonog was head of the eastern division of the CD Cargo Group (Czech Republic), where she managed a complex development strategy for the Czech railway system towards Russia, the CIS countries and China. She was also an authorised representative of Czech Railways within the framework of China’s international Belt and Road initiative, which seeks to improve existing and create new trade routes, transport and economic corridors that will link over 60 countries in Central Asia, Europe and Africa.

Ms Krutonog, you took up your position as CEO of Far East Land Bridge (FELB) at a very difficult time in mid-2020. The difficulties of doing business during the COVID-19 pandemic, with countries in lockdown and restricted access across borders – how did this affect the transport and logistics services of FELB and your activities in this new stage of your career?

Without a doubt, the coronavirus pandemic left its mark on the development of logistics services and affected the activities of FELB, but nevertheless, I would like to point out that despite these difficult circumstances we were able to exceed our budget by almost 100%, opening up new markets and embarking on a large number of new projects.

Among the most significant of these are projects carried out with the Shandong and Jinhua provinces of the People’s Republic of China and also direct agreements signed with a number of Chinese logistics platforms that have now become partners for us in China.

As for strengthening our position in Europe, FELB began to lease standard 1435-mm European-gauge wagons for the first time in the company’s history, to optimise transportation within Europe. We are planning to further add to our fleet of wagons in 2021 within various new projects.

I would also mention that we have signed a strategic cooperation agreement with CD Cargo Logistics, a subsidiary of Czech Railways, resulting in the addition to the product portfolio of FELB of services from key terminals in Eastern Europe – specifically in the Czech Republic (Brno, Obrnice, Kolín with exclusive conditions of use), plus Wrocław in Poland.

Signing the strategic cooperation agreement.
Photo: Liliana Krutonog, CEO of FELB; Jana Mlkvá, chairperson of the board of directors of CD Cargo Logistics
New 1435 mm standard gauge wagons
The terminal of Kolín, Czech Republic

What are the current volumes of transit container shipments and how are they evolving?

Despite the pandemic, 2020 overall was a record for FELB compared to recent years: we transported 105,000 TEU, representing a growth in 2020 of 30,920 TEU or +42%, which resulted in a substantial growth for the company in sales revenues of 28%. All this became possible thanks to the efficient and well-coordinated work of the various teams at FELB, in the Austrian and Chinese offices.

Also, it is worth pointing out that this positive result is linked to a general growth in freight containerisation and an increase in international container traffic. I would stress that this growth in shipments has been made possible by the active development of technology for faster container trains that have enabled railways to become competitive with sea transport, and our services are actively sought after by the owners of high-value freight in Europe and China, for whom delivery times and the minimisation of the periods in which their funds are blocked in bank accounts are of primary importance.

And although it may seem strange, the COVID-19 pandemic has had certain positive effects for rail transit. Because of the coronavirus quarantine restrictions in most countries of the world and the difficulty of providing empty containers at the places of origin of the freight, the unit charges for container transport by sea have increased substantially, resulting in turn in a significant channelling of freight onto the railway, which is now seen as the most stable and reliable mode of transport.

I would point out here that the key factor for any further increase in the competitiveness of rail transit services between China and Europe in the near future will be the speed of delivery of freight, marked in the first instance by the daily route speed of container trains, and I would like to mention the successes of the Russian railways in systematically addressing this task.

FELB is known in the market as one of the largest international transit operators. Recently you changed the company logo and redesigned the website. Why was this necessary? What are the new projects and approaches to the logistics business that you intend to embark on in this new phase of development?

Changes to the company logo were suggested some time ago, and I think 2020 was the right time – for that year is remembered by all of us for numerous changes, both at work and in our everyday lives.

In designing the new logo we tried to approach the colours of the Russian Railways’ logo  ‘РЖД’ (RZD) – and I think we did reasonably well. We also updated the company website.

Among the new projects we intend to complete, I would particularly like to mention our plans to increase FELB’s business in Eastern Europe and also new projects in the southern regions of Europe.

What else do you need to undertake in order to continue moving as fast as you were moving in 2020 and to accelerate the development of the business? How do you see the company in a year’s time and in terms of its strategy up to 2025?

Last year was characterised by an acute shortage of equipment – specifically, of containers carrying Chinese freight. We felt this particularly towards the end of the year, when we were unable to transport some of the freight of our regular customers from China. The situation was made more difficult by the fact that the Chinese railways changed some of the slots for trains destined from China to Europe.

Because of this, one of the most important steps for us is to expand the fleet of FELB containers in the next few years. We also need to increase the number of wagons owned by us or available to us on long-term lease.

In this regard, I would mention that in 2020 our main shareholder changed to the joint stock company ‘RZD BusinessActive’, set up in November 2020 and that is a 100% subsidiary of RZD Logistics.

Every month our parent company is increasing its fleet of platform 1520 wagons and we are placing our hopes on their reliability and support in 2021; according to plans that have been disclosed, by 2024-2025 RZD BusinessActive aims to have a rolling stock of the order of 32,000 well wagons and 95,000 high-capacity containers. As for FELB, we are ready to increase our ‘fleet’ of standard-gauge 1435-mm wagons, which are crucial to enable quick and seamless border crossings and efficient reloading of trains without our own stock.

We are seeking to increase the number of express freight trains and to broaden the range of freight transported. We have built up a body of experience in operating container trains with specialised containers, and to manage these projects effectively we also use a well-established network of our own representatives and agent partners in the various countries of Europe, Russia, the CIS states and the Asia-Pacific region.

Taking these factors into account, we are working together with our partners on developing a range of measures for attracting container transit movements along the routes of the ‘East-West’ transport corridor, including working with the leaders of the Chinese provinces to maintain Chinese subsidies for container transport up to 2024 and beyond, and addressing questions of updating the border crossings and border services in Belarus, Russia and China, accelerating the handling of freight streams at the borders and developing terminals close to borders.

Given the development of industry clusters in northern and north-western China and also the partnering in recent years of the economies of neighbouring countries and the fact that the rate of development of Chinese foreign trade with European countries will only increase as a result of the Chinese government’s Belt and Road initiative, we are expecting to significantly increase the volumes of our trains and to broaden our transport directions and routes. And we are wholly looking forward to participating in this interesting and far-reaching activity.

International transport corridors

Thank you, Ms Krutonog, for your interview, which will be of great interest to our readers. We wish you continuing success in developing the business and implementing new projects.

Insets:

2020 was a record year for FELB: we transported 105,000 TEU – which was 30,920 TEU, or 42% more than for any analogous period in previous years

Our services are actively sought after by the owners of high-value freight in Europe and China, for whom delivery times and the minimisation of the periods in which their funds are blocked in bank accounts are of primary importance

In designing the new logo we tried to approach the colours of the Russian Railways’ logo ‘РЖД’ (RZD) We also updated the company website