By Tamer Hafez

Cairo’s main cargo railway station in Shubra is a train cemetery, packed with dilapidated cars and stripped locomotives. Or that’s what it looks like to Abdel Sattar el Hefnawy, a 59-year-old platform manager who has worked there since he was a teenager. The station’s internal communications system hasn’t worked for almost a year-and-a-half, so conductors have to use their cell phones to call ahead to Hefnawy and the other guys manning the platforms. “Sometimes, trains have to wait for hours because all the platforms are busy,” he says. Lacking a modern, coordination system, he says, “We’re constantly fearing a big accident.” 

Indeed, Egypt’s notoriously unreliable, dangerous railway system has not motivated Egyptian businesses to rely on trains to ship goods—even though rail is a far cheaper and more efficient means of moving cargo, particular given the congested and unsafe state of the nation’s roads. Nonetheless, rail freight has shrunk to almost zero in recent years. In 2009, trains moved around 5 percent of Egypt’s freight; by 2015, less than 1 percent was transported by railway.

The government’s Sustainable Development Strategy: Egypt Vision 2030 calls for increasing that number to 20 to 25 percent over the next 14 years. In June, parliament rubber stamped an ambitious plan to overhaul the railway system that includes LE 110 million to develop freight. At a press event touting the proposal in July, Minister of Transportation Galal Said said that improving Egypt’s railway network, it would take some of the burden off its crowded highways.

In particular, heavy, bulky goods such as minerals, petroleum and imported wheat are much more efficiently moved by rail. “One train can carry the same size load as a whole fleet of trucks,” says Hany Mekky, head of United Grains (UniGreen), a grain storage firm. Rail freight is also more cost effective, partly because it uses less fuel, which also makes it a more sustainable form of cargo transport. “A common assessment is that five liters of diesel can transport one ton of goods 550 kilometers by river, 333 kilometers by rail and 100 kilometers by truck,” a former transportation ministry aide told Business Monthly in May.

Observers remain skeptical, however. Grand plans to overhaul Egypt’s aging train network have been bandied about for at least a decade—particularly after a tragic train accident in 2002 on the Cairo-Aswan route killed 361 people in one of the deadliest incidents in the history of the railroads. A steady drumbeat of crashes since then has kept the sorry state of the national railway system in the public eye. International agencies have poured millions of dollars into modernizing Egypt’s trains over the last decade, with little in the way of tangible improvements.  

Everyone agrees they are badly needed. Egypt’s railroad, parts of which opened in 1854, is one of the oldest in the world. By 1900, the network reached from Alexandria to Aswan, and east to the Red Sea. Before the Suez Canal opened in 1856, the railway was a crucial and lucrative link for moving goods between the Mediterranean and the Red Seas. Today there are 9,600 kilometers of track, with the main line running 1,000 kilometers along Egypt’s spine, the Nile valley. Just 20 of the country’s approximately 700 platforms are full-service points where trains can load and unload cargo.

In 2013, the transport ministry reported that there were around 550 railway accidents annually. The vast majority of them were minor, but the cost is not. “If there is any unexpected stoppage on the tracks, the shipment is delayed by at least eight hours,” explains Mekky, adding that these delays often forced freight trains to    backtrack or detour or unload their cargo onto trucks. Egypt’s roads are far more dangerous, statistically speaking—but one road crash, or even six, doesn’t risk tying up  the nation’s entire national highway infrastructure. In the long run, trains are only efficient when they’re running on a relatively reliable system. 

Moreover, the hardware is woefully out of date. “The majority of cars and locomotives are not equipped to carry cargo to begin with, and those that can are not equipped with modern safety equipment”—such as GPS systems that see ahead to spot other trains and warn of track problems—”and are not up to spec,” says Mekky. The cargo platforms that do exist are also badly in need of upgrades and are often too small for efficient loading and unloading.  Egypt currently has 173 locomotives that can pull 12,000 freight cars ranging from flatbeds and box cars to tanks and other sealed container cars for liquids and hazardous materials, according to the Ministry of Transport. However, a spokeswoman for the Egyptian National Railways, a public agency that operates under the Ministry of Transport, said she was unable to give specifics on how many freight locomotives and cars were currently in service.

Those trains that do carry freight often can’t get to where companies need them to go. Mekky, who needs to move imported grain to and from the firm’s storage facilities in Egypt’s cities, says his firm simply can’t use rail. “The tracks don’t extend from inside the Alexandria Port to where my silos are in Alexandria and Cairo,” he says. Industrial areas and even government facilities were developed as standalone clusters, with little thought given to how goods would reach them. Nor do the government’s proposed new “planned cities” outside the Delta and Nile Valley lie anywhere near the railroad. 

The system is also drooping under too many layers of inflexible bureaucracy, with government mandates that have little consideration for market realities. ENR, charged with running the railroad, has no real power to address strategic problems. Meanwhile, the transportation ministry owns another seven state-owned companies specializing in railway       support services such as maintenance, cleaning and IT products (reservation systems, e-ticketing, etc.) ENR is required to contract exclusively with these public sector companies, which therefore have little incentive to run efficiently. Egypt’s SEMAF Railway Factory, which manufactures freight- and passenger-train cars, is selling the agency 115 new cars this year to the tune of LE 1 billion.

While the ENR is supposed to support itself with train revenues, the government caps the price of train tickets as well as all state-related cargo services. Nor can the agency shut down unprofitable lines like the little-used Safaga-Toshka route. As a result, the national railroad is currently $26 billion in debt, according to Ministry of Transport figures.

In 2009, the World Bank agreed to loan Egypt $600 million over the next few years to finance its National Railways Restructuring Project. Other funding has flowed in over the last decade from the Arab Fund for Economic and Social Development, Kuwait’s Fund for Economic Development and the African Development Bank, along with the governments of Austria, Italy, France and the United States. The World Bank project, having postponed its original completion date from September 2015 to January 2019, is supposed to outfit key lines with new tracks and signaling systems, among other improvements. However, a status report published by the Bank in September acknowledged delays in implementation and showed little or no improvement in punctuality or safety, while passenger- and freight-train traffic is at all-time low. 

Some equipment has been replaced in recent years, but in many cases, the spotty nature of the upgrades has rendered them useless. “For example, the latest models of trains will automatically brake if they get too close to the train in front or if there’s a problem on the route,” explains Rashad Abdel Latif, who served as a deputy head of the ENR from 2011 to 2013. However, since the track sensors remained outdated, the modern trains didn’t work properly, forcing conductors to switch off the entire system and operate manually. 

Moreover, railroad operators aren’t properly trained to use new equipment, says Gamal el Seidy, the secretary general of the Rail Workers Union. New drivers are trained by the old ones, who often “can’t cope with newer models bought by ENR,” says Seidy. Mechanics, too, must patchwork together their own solutions to cope with a dearth of spare parts, says Hossam Fouda, a former transport ministry aide who worked in railways. They often had to scavenge parts from old cars and locomotives that were no longer in service in order to fix trains, he says. “Makeshift solutions are a fact of life in these stations.” 

The government’s most recent plans to overhaul Egypt’s railways are focussed largely on expanding the network and upgrading the trains. Vision 2030 calls for building new dedicated cargo lines between 6 October City and Dekheila Port, south of Alexandria, and connecting industry-heavy Helwan and Ain Sokhna. A new, mixed-use track is to connect Assuit and the manufacturing city of Robiky, east of Cairo. The cost of these expansions is to be offset by the closure of unprofitable routes, though the transportation ministry doesn’t specify which ones. According to Abdel Latif, route closure is a tricky proposition. The ENR has been trying to shut down money-losing routes for years, he says, but some of them serve remote communities that are virtually inaccessible by road. 

In terms of equipment, the plan entails new emergency braking systems and upgrades for crossings and sensors. For the rolling stock, the proposal wants to import 100 brand new locomotives and refurbish some 400 existing cars and 11 locomotives. Two new state-of-the-art maintenance centers are to be built on the outskirts of Cairo. 

Mahmoud Samy, who was ENR’s chairman from 2005 to 2009, says that the plan’s heavy focus on buying new equipment and expanding routes is unlikely to spur real reform in a railway system whose fundamental set-up doesn’t work. “There are a lot of things that need fixing in the existing network and infrastructure before the government starts with its latest development plan,” he says. 

For now, it is not clear where the money for these railway improvements will come from. Officials have said they would look to private investors, but this may be a hard sell. “I really don’t see any investor putting money into such a project,” says Abdel Latif Abdel Moneim, a board member of the international transportation and logistics division of the Alexandria Chamber of Commerce. That’s because railroad projects usually require huge upfront costs and take years to yield profits. The last and only time a business got involved in Egypt’s railroad was in 1900, when the privately owned Arab Railway Co. built the line between Luxor and Aswan. But with few passengers and little cargo moving on the route, it lost money, and the firm folded a few years later.

Today, many of the world’s railways are at least partly run by the private sector. One hybrid model, widely used in Europe, is for governments to contract with private companies to manage railroads. In the 19th-century United States, firms built the national train system, which by 1920 had become the dominant means of intercity travel. Railroad ridership slowly declined in the following years, however, and by the mid-20th century, Congress had to step in to save America’s railway network, as one company after another went belly up. The new National Railroad Passenger Corp., better known as AmTrak, was founded in 1971 on a public-private partnership model—a for-profit company that receives public funding. Amtrak has been operating in the red ever since. On the other hand, Japan’s railway, privatized in the late 1980s and run by more than 100 companies, is highly efficient and requires almost no public subsidies.

For Egypt, what’s necessary to save the railway isn’t new technology or tracks but a whole new set-up, says Adla Ragab, a logistics and transportation professor at Ain Shams University. “The ENR and the government must find the right model to make a profit for themselves and the private investor while ensuring that train transport remains a public service,” says Ragab. “Otherwise, come 2030, we will end up with same problems we have today.”

© Business Monthly 2016