Archive for Big-Train

Can China finance Eurasia Railway One Belt & One Road Strategic Plan?

The mid year 2015 Chinese stock market fundamentals and the overall Chinese structural debt may put a crimp in this debt financing of proposed rail/road foreign projects.

This cited Journal of Commerce report remains extremely optimistic about China’s willingness to write the necessary big foreign investment checks.

Time will tell. Time is always the acid test of any strategy.

Even if financed, these Chinese sponsored rail projects may not see the first trains until well after my death.

But the maps look “cool”.

See the map and JOC story at

Mongolia premier pledges to end Tavan Tolgoi coal mine & railroad delays

From the Financial Times news report comes this upbeat news from Mongolia.

The headline:

Is this just more public relations political hype? Another “junk” rated bond issue to please voters? Is this necessary? Probably a bad idea. Again.

More long delayed plans for the east-west low margin financial feasibility railroad towards Japan? These sound more like a belief in Santa Clause than a sound strategic recovery for the nation.

I would wish more then this for my many Mongolian friends I have worked with.

The good news is that there is a way to make Mongolians strategic winners” if they pull together on tactics and engineering that are sound best practices.


For the FT report, log onto:,Authorised=false.html?

Here are a few of the reported public relations statements in the news report. ——- Saikhanbileg Chimed indicated that “Mongolia planned to launch another sovereign bond as the country seeks to get “back to business” following two years of slowing growth in gross domestic product, plummeting foreign direct investment and rating agency downgrades of its junk-rated “Chinggis” bonds.”

“Official approval for investors to start work on the Tavan Tolgoi (TT) coking coal mine in the Gobi desert should follow soon after a review of the investor agreement in parliament this month, Mr Saikhanbileg told the Financial Times in an interview.”

Investors in the project include China’s Shenhua Energy and Japan’s Sumitomo Corp. “TT will be unlocked in the very near future,” he said.


“Several members of Mongolia’s parliament have raised objections to financial and legal aspects of the TT investor agreement, raising the possibility that the mine… …could suffer a similar fate to that of Oyu Tolgoi, a $5bn copper mine, where an expansion project was unblocked in May only after two years of wrangling. This year, Mongolia resorted to a mobile phone referendum to shore up public support for the project…

The minister still believes in 220km rail line from the mine into China — delayed now for more than three years.

Mr Saikhanbileg also told the FT reporters that he also believes in a second potential rail project that would run east-west about 1,300km to reach coal markets in Japan and the US, a Mr Saikhanbileg said.


This E-W rail line is a much higher investment risk according to my due diligence research on Mongolia rail options dating back to 2006.

Investors need to carefully reexamine these projects with updated due diligence.  Mongolia needs a real heavy haul big train design to make their expectations a reality.  That means trashing most of their prior rail designs.

It also means a fresh due diligence review of the feasibility options. In particular, it is a bad idea to depend upon a due diligence feasibility report that is prepared by the builders.  They are not exactly Independant.

South Africa Consumer Confidence Index Slumps to 14-Year Low

From Bloomberg, Jul 2, 2015

Consumer confidence in South Africa dropped to the lowest level in 14 years in the three months through June. The consumer confidence index slumped to minus 15 in the second quarter from minus four in the first three months of the year according to FirstRand Ltd.’s First National Bank unit.

The sub-index sentiment on the economy’s outlook hit the lowest level since the 1992-93 recession.

Will investors continue to support aggressive mining and rail projects in such a statistical environment?

What is the Strategic Plan B for infrastructure when confidence drops?

“Business as Usual” is now a bit riskier.

Who will step up and lead the change?

Is the current maket demand driven Transnet Rail set of commercial assumptions still valid?  If not, how do leaders change to meet the new competitive reality? Who has such an experience to help adapt to the new railway commercial market changes?

To read the entire article, go to

Botswana – South Africa heavy-haul rail project almost ready | reports IRJ

This railway news report is focused on the expected physical construction of new railway. That is the SUPPLY side story.

The rest of the technical story will be found in the depth of the awaited economic feasibility study.

Is the shifting global market DEMAND going forward going to require the added transport supply? Reports from Independant market analysts like Goldman Sachs suggest a much lower market demand for coal.

Can this new Botswana project compete in a slowing growth market and still pay off the railway future debt?

On the supply side, the report says: The new railway line would ultimately be part of a new 560km heavy-haul railway linking Botswana and South Africa’s Waterberg coalfield with Lothair, near Ermelo, where it would meet the planned 146km Swazilink line. This would create a new route via Swaziland for coal traffic and general freight to both Richard’s Bay and Maputo in Mozambique.

The expected market demand is for about 100 million annual coal tons?

Is that a realistic market forecast based on current economic due diligence? Let’s see what the promised feasibility report says when it is released.

Competition for met coal sales to China in the summer of 2015

Reuters data

China’s imports of coking coal fell 24.2% to 14.7 million tonnes in the first four months of the 2015 from the same period last year.

Australia has about a 50% share of China’s imports Yet, shipments dropped 26.2 percent in the first four months as China’s steel production has fallen.

China’s imports from Mongolia increased by 9% to 4.5 million tonnes. It could have been higher if only Mongolia had a working export railway by now.

The next two largest coke coal suppliers are Canada and Russia. This year their shipments to China fell 14% and 39% respectively.

My technical observations.


The Mongolia customs price in northern China is about $46 a tonne as of April 2015. To that has to be added the rail cost to reach eastern Chinese steel producing markets. That adds a lot to the price given Mongolia’s poor rail infrastructure. It has zero heavy haul rail capability.

The quoted price from competing sources are $105 to $106 from Australia ~ $110 from Canada, ~ $93 from Russia mines Price to Japan Third quarter contracts for delivery from Australia to Japan were settled at $93 a tonne for premium hard coking coal, according to two people familiar with the negotiations says Reuters.

Back in 2012, the price was $330 a tonne.

The contract price tends to influence the spot price.

However, sellers need to price to a more reasonable long term contract rate to survive periodic economic down cycles.

Economics of a MODERN rail box car (wagon)

From multiple recent news sources.

The railroad box car is threatened with economic extinction.  At least in North America.

No longer the most used piece of shipper equipment. Far from it, Here are a few marketing metrics.

Only THREE PERCENT of North American rail traffic moves in the older technology boxcars.

Shippers paid a noticeable approximate $6 billion in rail freight rates to move their products. That is ~8% of North American industry’s total railway revenue, (according to AllTranstek LLC).

Today, a modern engineered boxcar model would be built at a size of about 60 feet lengthwith an axle load rating of about 33 metric tons per axle when loaded to a maximum weight of 286,000 pounds. Today, that new boxcar can cost between $125,000 and $135,000 if bought in North America.

The older boxcars rent out at between $450 and $700 a month based on their original purchase price on ongoing maintenance costs. But the new boxcars will have a rate closer to $1,000 according to a report by Richard Kloster, senior vice president of AllTranstek.

The shrinking boxcar rail fleet. // WSJ report

News in the 21 June 2015 Wall Street Journal .

“Why Railroads Can’t Keep Enough Boxcars in Service” by  BOB TITA

He writes about the  shrinking supply of boxcars—once the ubiquitous symbols of U.S. railroads and a rolling bellwether for the economy. Fewer boxcars are causing a freight-hauling crunch for the industries that continue to use them. The number of boxcars in service in North America fell by 41% in the past decade to just under 125,000 last year as 101,600 cars were scrapped and only about 13,800 replacement were added. That downsizing accelerated a decades long shift…

Unanswere questions include these. Who needs them? Why?

Why not simply shift from boxcar to intermodal container?

The market is complicated.

I pointed out the pattern of this shrinking fleet in March.

Delayed Swazi Rail project — discussion held in Africa

Part of the rest of story not covered in the speeches.

Requires a bit more due diligence to attract private investor real interest.

The basic news report found here:     From a 19/06/2015 report by Nomthandazo Nkambule

SO far, Swaziland has injected only E100 to E150 million in the multibillion proposed rail link spearheaded by Swaziland Railway and Transnet Freight Rail (TFR).

Speaking in an interview after the opening session of the first Southern African Railways Association (SARA) 2015 board meeting, Swaziland Railway CEO Stephenson Ngubane said this amount, amongst other things included environmental impact assessment.

The proposed line that would start from Lothair in South Africa and run to Sidvokodvo. Ngubane said the project has seen a pre-feasibility and a feasibility study so far. No solid funding yet. They are still looking for calculated project financials that might demonstrate ability to pay expenses and capital debt from projected freight revenues.

The Minister of Public Works and Transport Lindiwe Dlamini also spoke. Dlamini concludes that “Railways are the engines of economic growth, they enabled industrialisation in the past and they are even more relevant today.”

However, there is a logical mistake in that assumption. The mistake is that most industrialization railways were built to compete against horse and wagon and waterways. Swazi railways competes against trucks. That is a huge difference! Competition matters.

To beat the truck, the proposed new railway will have to employee big train technology. Will it?

Mongolian Coal plan to Suppy the two Koreas may be a “boutique” market at best

Some news reports with grand headlines look more like political posturing than great commercial breakthroughs. What is the full story behind a press release?

This is the latest headline grabber, “Mongolian Coal Firm Signs Four-Nation Deal Including North Korea”.

The story was picked up by multiple news agencies, including Bloomberg as reported by Michael Kohn

investors may require additional Independant due diligence about the rest of the story.

Here are a few professional observations based on my six years coverage of Mongolia’s railway exporting problems. The essential theme is that “distance matters”.

Getting to the Pacific Ports via the round about Russian connecting eastern Trans SIBERIAN rail route is physically possible. But at the distance involved, it may be a bad logistics route when costs per ton-km are calculated.

Plus, there may be too many SIBERIAN coal mine origins along the long route path to compete with these remote Mongolian origins. In the long run, Mongolian origins at best will likely be a marginal provider. If the route is too long. Is there enough volume to “show the flag”. Yes. Long term profit sustainable? Not unless the rail freight rate is priced as almost a donation.

Why would RUSSIA RZD “donate” scarce track access paths for !omgolian origin shippers that compete for export sales with a siberian mines? Geo-Resource politics might be a complex reason. Who can say?

From a publicity stand point, yes it appears that arranging the circuitous route can be “hailed as a major achievement” as stated to the news media by Batbaatar Bandan, the company’s chief executive officer. “For Mongolia to have four-country cooperation, I think it is historic,” he said at the signing of a memorandum of understanding. Note: this is a MOU. That is not a contract commitment.

The company would sell the coal to Mongol Sammok Logistics Co., a new joint venture between South Korea’s Sammok Shipping Co. It is also an arm of the Mongolian government says one source.


The coal has to moved more than 4,000 kilometers (2,500 miles) by train to the North Korean port in the city of Rason, via Russia. And then it has to rely on friendly rates and reliable train operation between the North and South Korean governments in order to cross North Korea into South Korea Sounds a bit risky.

Yes, they will likely move a trial load. But that proves little about long term reliable and sustainable route profitability. The shipper, Sharyn Gol, claims to reporters that it is “in a position to export several hundred thousand tons of coal per year.” From a due diligence view, that is a rail volume “niche market”.

Some claim a possible annual volume at some unknown future time of perhaps 300,000 metric tons of exports a year. But there is no pricing agreement yet.

Investors should probably check for “the rest of the story”. ———

The alternative is to take up the Chinese offer to use the China rail network via the Mongolian southern proposed rail gateways to reach the CHINESE Pacific ports and then use ocean barge or ocean ship to reach the Korean markets. That commercial offer was made almost a year ago by China and as of this point in the summer of 2015 appears “dead in the water”. There were limits I believe as to which rail inland gateways could be used, but all of the southern routes out of Mongolia are far shorter to reach the Pacific ports versus going through RUSSIA.

And distance does matter as a logistics cost. The Mongolians have collectively as a nation been wrestling with this rail access issue for almost a decade.

Technically wrong images often tease readers of marketing publications

BEAUTIFUL PICTURES send the wrong message as to what will be delivered.  The writers could change that and send a really powerful “this is possible message” if they focused on the engineering specifications.

Better news reporting can make a difference.  I urge them to improve on an otherwise good publication.

The April 2015 issue of CBTL-WATCH AFRICA is a very well laid out and professionally scoped marketing tool for the ocean carrier. It presents colorful to look at and generally well written subject themes for the various geographic sections of its Africa maritime business.

The authors put the best face forward in describing the announced railway modernization projects in this one April issue. The photo cover of the marketing document is beautiful.

Unfortunately, almost none of the modern railway operation pictured in that cover — or later in a page dedicated to Zambia –DRC modernized service — will occur under the current African rail plans.

A due diligence investigative report would quickly note that the image of the massive and highly efficient doublestacked container trains in the photos CANNOT OPERATE on the currently proposed rail lines in the story. In fact, from an engineering and economics technical view, NOT A SINGLE AFRICAN PROPOSED FREIGHT RAILWAY WILL BE ABLE TO OFFER DOUBLESTACK CONTAINER FREIGHT SERVICE using their current proposed engineering guidelines.


Because the tracks and infrastructure bridges of these new railways WITH DOUBLESTACK CAPABILITIES would have to support 1) 33 to 35 metric ton axle loads, 2) trains lengths of about 2,500 to 3,400 meters, and 3) vertical clearances above the top of the rail head in the 6.1 to 6.2 meter range (if a diesel electric locomotive operation) and in the range of 6.8+meters if an electrified line.

Neither the reporters on these stories or the ministers doing the technical planning are focused on these fundamental yet missing design standards.

The result is sort of like announcing a new international airport plan, but the runways and terminal ramps will not accommodate modern B-777 or A380 aircraft. In aviation, that would get you fired.

I am hoping that a future issue of this otherwise great news magazine will correct these mistakes. Please, at least do not tease the audience with a picture image that technically will not happen. Unless someone changes the engineering design.

If the authors can use this technical rail intelligence in future issues, perhaps they can influence modernization changes to the plans. Such engineering change would truly benefit their African customers. Because doublestack trains are about 35% to 45% more efficient than the current African rail plans will allow.

Commercial rail freight service NOT possible with almost all of current African rail plans

Commercial rail freight service NOT possible with almost all of current African rail plans

TRUCK KILLER RAIL TECHNOLOGY conintues to elude Eruope-Asia planners - Jim Blaze