New Silk Road Network’s partner RailGate Europe is a unique organization that tells the success story of friends from Europe coming together to challenge convention by offering containerized rail freight services between Europe and China. Leveraging one of the widest networks of partners for moving LCL and FCL rail freight shipments, they have coined themselves as the 1st Non-Train Operating Common Carrier (NTOCC) and continue to push boundaries.
Our team had the pleasure of talking with Tadas Abramavičius, Co-founder of RailGate Europe and Co-Owner of Baltic Consol Line, Julija Sciglaite, CEO of RailGate Poland, Frank Müller, CEO of RailGate Germany, and Simona Banelytė, Head of Marketing. We learn about how the four founding companies initially came together, their focus on integrating technology into their internal and external operations, and the current turmoil in the rail freight industry. While a recovery to the high demands witnessed in rail freight last year may not be possible in the short term, we are delighted to learn that service reliability and volumes are on the rise, signalizing a bright future.
In conversation with Tadas, Julija, Frank and Simona…
NSRN: The formation and founding of RailGate Europe, dating back to 2018, is quite a unique story. While RailGate Europe has its own entity registered in Germany and Poland, it is able to provide service to a much wider geographical region through its four founding members: Nordicon, Austromar, Baltic Consol Line (BCLine) and NVO Consolidation. These four companies are well known in their markets as powerful consolidators, and together you form a strong network across Europe. Can you tell us a bit about how the RailGate Europe network converged originally? What was the motivation for the founding parties involved?
Tadas: I can tell the story from the start, and honestly it feels like everything just happened yesterday. Going through the dates, it’s surprising to realise that the idea already hatched in 2015. One day back then, I was flying to a meeting with our sea freight partners in Europe. On my schedule was meeting Nordicon in Helsinki and Austromar in the Czech Republic. While brainstorming how we can all come together, we looked at the possibility of forming a leading neutral European sea freight consolidator, since we were all players in that field. The funny thing was, instead of a sea freight consolidator, the biggest neutral rail freight consolidator in Europe was created.
We had known each other for a long time already, so the trust was there. The feeling that we should create something together was there, but we wanted to do something that was not yet on the market. At the end of 2015, we all met in Vilnius. Back then, rail freight was at its earlier stages and BCLine had already done a few shipments. If I remember correctly, we had bookings every week, which was quite good for the beginning. The idea of becoming a neutral rail consolidator in Europe started to become more vivid, and in 2016, we had made the decision to form “RailGate Europe”. Nordicon then brought along NVO Consolidation, and they stepped in as our 4th founding member.
From there on, we slowly pushed things forward. It was not until 2018 that the first “RailGate Europe” entity in Poland was born. Poland was and still is a key hub, and it was where we would be consolidating all shipments. From there, we would distribute all shipments into the Baltic states, Scandinavia, Central and Western Europe. Organically, we started building direct consolidation boxes not only into Poland but into other countries in Central Europe. I think Austromar was the first one to launch direct boxes into the Czech Republic. Then Nordicon launched direct boxes into Finland, and Baltic Consol Line followed suit into Vilnius. Then the big growth of RailGate started and we went into more places. With Frank joining us from Germany, we hope to replicate our success there too.
NSRN: What were some of the challenges you experienced in the first years when RailGate Europe was born? Was it easy for all 4 companies to work together?
Tadas: I would say the biggest challenge we faced was “Who is getting how much space in each container? Whose shipments are the priority shipments? And are we prioritizing each and every partner’s shipment equally?” For example, is RailGate Poland getting priority on loading shipments instead of Nordicon, Austromar, Baltic Consol Line, or NVO Consolidation? This is what I would say was the No.1 challenge.
The next big challenge came when Austromar launched direct boxes into the Czech Republic and then Nordicon launched them into Finland. Everyone thought that this would affect the business in Poland, which was at the same time suffering from too many containers to handle and the service was deteriorating. These were the discussions we had to have, and it was hard not being in the comfort zone. But now we know that these were the right decisions to make. If we didn’t go directly into these other markets, we would not be the size we are now.
Julija: Of course, I agree with Tadas. We went through this together, and as he said, it was a little hard for us back then. Everyone decided to create direct consol boxes - to Finland, the Czech Republic and the Baltics, which turned out really good for us. Since then, our volumes have grown pretty fast.
NSRN: One of the key aspects that RailGate Europe emphasizes on is its “neutral” approach to all partners, and neutrality is vital when it comes to being a consolidator. How do you ensure this impartiality is maintained?
Julija: Well, our office is not that big yet. We have large rooms but it’s still very easy to control what is going on. We do have direct importers who contact us, but what we usually do is simply tell them we do not offer our services to direct importers. Some of them understand this, others can be a bit difficult. In the rare case where we know which forwarder’s customer it is, because they are constantly booking us through that forwarder, we inform the forwarder about this so they can step in, or simply put them in copy. This is how we have handled it.
Frank: What we never should forget is that we are working with freight forwarders only and therefore we need to make sure that we are keeping the business. If a direct client is coming to us, asking for just one or two shipments, they might very likely still be shipping other volumes with one of the bigger freight forwarders who are working together with us. This then might lead to us later on losing the whole business from that freight forwarder, which makes no sense. Therefore, we are concentrating on the freight forwarders business, and that is also what I have been doing for the last 15 years. I always say this is 99% of what we do because there is 1% routing business. For example, our client/partner in China may ask us to deliver or pick up a shipment if they do not have a partner here in Germany. We then check the incoterms and ask for the freight forwarder the consignee is working with if deliveries need to be made. Then we try to work out a way with the freight forwarder there.
Tadas: You really need to look into our history because each manager in RailGate, the person managing each country has a history of working in a neutral service provider. This is how they know how to respect the relationship which we are building with our freight forwarding customers. We have the management with such an alias, and we try to distill the same values in each and every new team member.
NSRN: With each founding company operating in their own markets, and RailGate Poland and Germany as individual entities, does that sometimes create confusion with customers? And how does this impact the development of the RailGate Europe umbrella brand?
Frank: I would say it can be quite a hassle sometimes. There have also been internal discussions about establishing a brand completely. Currently, we count 15 offices in total from all our founding companies. RailGate itself is mainly known in Poland and Germany, since we have our own offices. In the Baltics, this is also well received. In other countries however, we still need to push for the name RailGate to become well established. Simona is taking care of branding and marketing, so we will see some developments there. There are plans for geographical expansion, Turkey, Georgia, Azerbaijan are the countries of interest to us. Basically, all countries where rail freight is important or will be important in the next years are on our radar.
Tadas: Even the United States (laughs)!
Frank: Yes (laughs)! A lot of rail freight is available, so why not?
Tadas: Joking aside, we look into the rail freight volumes and where they are flowing, and then try to make the right decision of where to expand geographically. As Frank mentioned, we are closely monitoring the Southern Corridor and the possibilities in Turkey. As soon as the timing is right, we will step in.
Julija: And just to add, for Poland, as we always introduce ourselves to the client as RailGate and mention all our shareholders, we have not really faced any confusion. Most important for our clients is, they know who is responsible for the Polish market and who to talk to.
NSRN: As we have pleasure of speaking with the heads of both the Polish and German quarters today, we are quite keen on learning your story too!
- Julija, you previously worked with one of the founding companies “Baltic Consol Line” in Riga before being appointed to charter RailGate Europe’s first own office in Warsaw in 2018. Can you give us some insights into the early days of establishing the brand? What are some of your most memorable moments since then as you slowly built up the team in Poland to what it is today?
Julija: Almost 4 years ago, the guys created this new project and decided to start from Poland for strategic reasons as Tadas mentioned. At that time, I was working in the Riga office of BCLine, and I was also searching for some new challenges in life. Tadas trusted me and offered me the opportunity to open a new office in Poland.
For me, this was something completely new. I knew rail freight a little bit, from my few bookings back at BCLine, so I thought - why not? To be honest, if I had known what was waiting for me, maybe I would not have done it (laughs). But I am very happy now and everything is good. Of course, it was very hard for me at the beginning. I didn’t have any friends or any business connections here. Poland was a completely new country and I had to learn everything about rail as well. No one knew what RailGate was because there was no “RailGate” yet. Imagine me calling customers in English, because I did not know Polish then, “Hello, this is Julija from RailGate.” People had no idea.
I arrived in Poland in 2018, but the official setup only started at the beginning of 2019. I was working from home for 6 to 7 months, and I am not the kind of person who likes to work from home. It was really hard, but I trusted this project and this product. I saw the potential and I tried my best to call the customers and to meet with them. Somehow, they trusted us, and we started booking by booking.
If I am to list three most memorable moments, I think the first would have to be when I finally rented an office. It was very small, but I am still so proud because I worked for it. Another memorable moment was when the first employee joined the company, and I was finally not alone! Then came the 3rd person, and the 4th… … today we are 6 people and we have also moved into a larger office. The last thing I would like to mention is the launch of our consolidation service. We started sending consol boxes to Poland from China without the help of our shareholders, we could fill the boxes all with Polish cargo. That was when I thought we were going to make it, and things were going to go really well.
I came from Baltic Consol Line, a company which is well established, and everything was running. Here everything started from scratch. The first steps were made by me, and then my colleagues joined the team and helped me a lot, without them, we would not be where we are now today. And now when I think about it – the team in Poland is the best thing that happened to me here. RailGate Poland really feels like my baby, and I am happy to have had the opportunity to participate in this journey with all the wonderful people that are in this project.
- Frank, in May 2021 you joined the team to start the German office from scratch. It was and continues to be a very chaotic time for the whole industry, which means both opportunities and challenges of course for a newcomer. How has your journey been so far?
Frank: I started almost exactly 1 year ago, the 1st of May last year, but the whole story started maybe a little earlier because the contact to Tadas was already made about 10 years ago. At that time, BCLine became an agent of my former employer. Afterwards, we once met in person at a Sushi shop in Riga. Since then we have stayed in contact, even when BCLine later on was not our agent anymore. We then thought, why not to start something together, and so came RailGate Germany. Luckily, knock on wood, it has been a success story so far. Within a short period of time, we started our first direct trains between China and Germany. We started our first consol boxes on a weekly basis. Now, we have started our own export containers, which is running excellently. We have increased our base of clients, who are following our developments and booking with us. Also, we are very thankful for the cooperation with NSRN, because some of the partners at the NSRN are nowadays our clients and our service providers. That is the meaning of a network, to support each other in both directions.
Currently, we are offering almost a weekly consol box from Hamburg and Xi'an. From here we are covering all of Germany, but also satellite states. From Xi'an, we are covering all of China. We do this in both directions. With the Ukraine-Russian crisis, the volumes have gone down a bit, but now it is increasing again. We will see how the near future will be.
NSRN: The ease and speed of quotations can be quite essential in today’s world when gaining new business. How do you integrate technology into RailGate Europe’s services? What innovations do you offer to your clients?
Tadas: Well, that’s a good and very common question nowadays. Before integrating new technology into our operations, we must educate our people and build up the right technological mindset of theirs. We are for sure going the hard way, which is trailblazing the technological solutions in our industry and getting our team members involved in creating technological solutions that we use. Why is it hard? First of all, people from classic businesses, who are moving the freight need to learn about the technology business and new possibilities that technology will bring us – guess what, learning was always not easy. Then we, people from classic business, are learning to speak with engineers who are building the solutions for us – again you need new communication skills because speaking with engineers is not for everybody. Finally, when we have people who understand classic business problems, like quoting speed, and have a technological mindset, we are able to design tools that improve the speed of quoting.
We have tools that allow us to do SPOT quotes almost instantly while not leaving the E-mail environment. We even have prototypes of software robots that are able to identify specific information in the e-mail body in order to grab the Request for Quote from the e-mail and fill it into our SPOT Quoting tool to speed up the process of personalized SPOT quoting process. Of course, we are working on classic solutions like Freight Rate Management in our ERP system, which will be integrated either with specific customers through API's or data from it will be transferred to Self Service portals, which we plan to launch to our smaller customers this year. So, all in all, these are the things we for sure trailblaze in the SPOT Quoting process. Simultaneously, we are working on setting up some classic solutions like a Freight Rate Management System, which allows us to transfer rates to our customers through API’s or display our rates in the customers’ portals. There are many more things that are on the way to be launched, but we don’t want to disclose them yet :) Let us trailblaze first and then we will let you know what worked and what did not work :)
Simona: From my side, we are trying to communicate more about our digital tools. In the near future, our customers and potential customers should see what they can get while working with us and how is it beneficial for them. Digitalizing is not only a benefit for our customers, we do it so that we can do our jobs faster.
NSRN: The Covid-19 pandemic has heavily impacted logistics and many say it will never be the same as before. For rail freight in particular, we have seen it boom under heavy demand, and also struggle with congestion and delays. The effects continue today with lockdowns in certain Chinese cities and the Ukraine – Russia crisis. How are these factors impacting RailGate Europe’s operations and workflows?
Frank: I started the office here in Germany during the Corona times. Therefore, it was a good start and I can’t complain. Due to the issues everyone had in the maritime business, we acquired many clients. People trusted us despite the fact that we were not known in the German market. You know it yourself, if someone is trusting you to book a full train with 50 containers, it is not an easy feat. I am very thankful for the clients who have trusted us and continue to trust us.
Coming back to the Ukraine-Russia Crisis, this was for sure a heavy impact. From one day to the next, I would say about 50 to 70% of all our business was cancelled, within less than one week. That was a big shock for us. Luckily, I must say it was only for the first month, but since the last two weeks, it’s starting again, finally more and more clients are coming back.
Initially, everybody was jumping on the Southern route, but from what we know, the first trains that departed 3-4 weeks ago, none have arrived yet. Our colleagues in Norway recently booked their first containers that might arrive soon in Northern Europe, but nobody has experience and the transit times are almost just as long as the maritime route, sometimes even longer. On the other hand, the rail freight rates on the Southern Route are approximately double the ocean freight, so it doesn’t necessarily make sense for everyone. Our guys in Scandinavia started a rail – sea business, that could work out quite well for them.
Personally, coming from a management position back to somebody who has to do everything from A to Z was definitely a challenge in the beginning. To open our own company in Germany was not easy, but we did it and we did it well. I am always looking forward and not backwards. Honestly, in the beginning I thought rail freight would be much easier than ocean freight. With ocean freight you can load almost anything, but on rail freight there are certain types of cargo not allowed. But this was not the case. Also, we are still not able to travel to China to build contacts and meet new service providers. Therefore we really just had to have faith and also pay the higher price. Now this is working somehow, and I guess we have the Corona pandemic to thank as this trust was accepted on both sides.
I am really looking forward to travelling again, hopefully soon to China to meet the guys face to face, have some nice conversations, and show them that RailGate Europe is a good company.
Julija: It was like a roller coaster when the Corona pandemic started. At the beginning, of course, it was very quiet. We were a really young company, and everyone was concerned what would happen. There was no cargo, nothing, and then bam! The demand for rail cargo skyrocketed. We were busy at work, handling the cargos, and trying to keep up with all of the new restrictions. At first, it was good for us, booking-wise and business-wise. Then the congestions started because of the overflow of cargo. It was very hard to calm down our customers, which were freight forwarders, and I can’t imagine how hard it was for them to calm down their clients. With this congestion, of course, some people started booking sea freight again. So for us, it meant lower volumes. Then the Ukraine - Russia crisis started, and of course, people were scared. No one knew what would happen, things were hard both at work and in daily life. Here in Poland, I tried to be calm and calm down our guys because stress is not the solution. We may be a young company, but we have a strong backup. We had strong business before, and we can still survive. As Frank mentioned, in the recent weeks demand is coming back. I must say as the service is really good now, punctual and no congestions, many importers are returning, and it is also saving them costs.
NSRN: We noticed that RailGate Europe is also delving into air cargo imports, is this a frontier you plan on exploring in the future or is it more of a temporary solution for the time being?
Julija: Air freight was one of the solutions we looked at when the volumes were down on rail. We did not want to sit around and do anything. We have the experience there, so it was nothing new, and we offered it as a backup service. I have to say that as rail comes back, most of the customers are focusing on the rail again, but if we do get the request to offer air freight, we can do it.
Frank: When I started at RailGate Europe, I asked “What are we exactly?” Everybody knows the term NVOCC from the maritime business, but there was no such term for our business. Therefore, we named ourselves as an NTOCC. The 1st Non-Train Operating Common Carrier in the world. Especially for Julija and I, we are concentrating fully on rail freight business. Not only between China and Europe, but we have also discussed Turkey internally.
Of course, due to the impact of the war, we received a lot of requests from clients on how to handle their existing business, so air freight came into the picture. But in the end, our target is to focus 100% on rail freight, together with first and last mile service.
NSRN: As one of RailGate Europe’s followers on LinkedIn, we can’t help but notice the fun and lively style. Can we say that this also reflects the RailGate Europe corporate culture?
Simona: I joined RailGate Europe not so long ago and I am located in Vilnius. So I know the RailGate people in Poland and Germany from far away. But from our communication and limited meetings, I can feel that they are quite youthful and modern. They also try to be more digitalized. I can relate to that, which is why I’m trying to visualize and communicate, that we are youthful, and we are modern.
NSRN: Most recently, Ms. Chiara Polzin joined the team in Hamburg as Sales Manager. With her expertise on board, what kind of developments do you have in mind for the near future?
Frank: Honestly, we just started over a year ago and even though it was a fast-paced year, we still have to grow. We first managed to establish a brand here in Germany, but it was also hard for Chiara to start during a time of war and people were hesitant to book with us. She is a competent young lady whom I have known for a few years already, and she is on her way to finding trust in the rail product, just as I did when I started. We are still a start-up, but one step after the other, we will move steadily forward.
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