New record set for rail transport on China-Europe route

A China-Europe freight train leaves Jinhao Logistics Park in Bayannur, north China’s Inner Mongolia Autonomous Region, Jan. 12, 2022. /CFP

A China-Europe freight train leaves Jinhao Logistics Park in Bayannur, north China’s Inner Mongolia Autonomous Region, Jan. 12, 2022. /CFP

Editor’s note: Djoomart Otorbaev is the former Prime Minister of the Kyrgyz Republic, a distinguished professor at the Belt and Road School of Beijing Normal University, and a member of the Nizami Ganjavi International Center. The article reflects the views of the author and not necessarily those of CGTN.

The Eurasian Railway Revolution has continued to 2021. Last year, the China-Europe Railway Bridge set new records by providing stable, reliable and highly efficient logistics services as a backbone of global supply chains , said Wang Wenbin, spokesperson for the Chinese Ministry of Foreign Affairs. Speaking at a regular press conference in Beijing on Dec. 30, he said the China-Europe express train system has opened the door to mutual stimulation of supply and demand with added benefits.

According to the Chinese Railways statement released on Jan. 4, the number of China-Europe freight trains in 2021 rose 22 percent year-on-year to 15,000. During the reporting period, freight trains carried a total of 1.46 million TEUs (20-foot container equivalent units), up 29% from a year ago. And what is fundamentally important is that the transport of goods from the western provinces of China to Europe has grown even faster. In 2021, 570,000 TEU containers were shipped from there, up 57.5% from a year earlier.

Today, railways connect 89 cities in China to 23 countries and 175 cities in Europe.

Thus, it is easy to see that in the face of the disruptions caused by the pandemic, China-Europe freight trains have become the anchors of global supply chain stability. Yet what happened at a time when the cost of international sea and air transport skyrocketed?

According to London-based Drewry Shipping, as of January 6, the average cost of shipping a standard 40ft sea container between China and Europe on eight major routes was $9,408, five times higher than before. the onset of the pandemic in early 2020.

By comparison, transporting a similar container from China to Paris by rail costs around $8,000, according to Xavier Wanderpepen, director of China-Europe freight trains for SNCF. At the same time, transport on the return trip has fallen to around $2,000 due to subsidies from the Chinese authorities aimed at encouraging European companies to use the train to export to China.

This is probably the reason why the volume of traffic from Europe to China increased enormously last year. For example, according to China Railways, in the first ten months of last year, inbound traffic to China rose to 81% of outbound traffic.

China-Europe Railway’s first Volvo special car train arrives in Belgium on June 30, 2017. /CFP

China-Europe Railway’s first Volvo special car train arrives in Belgium on June 30, 2017. /CFP

Since the trains deliver containers between Europe and China in less than 20 days and the journey by sea takes up to 70 days, they become attractive even for transporting cheap goods.

Another major trend in the Chinese government’s support for international rail transport has emerged recently. The country will improve the railway infrastructure both within the country and abroad. The China Development Bank said it will support the construction of domestic port stations with bonded warehouses and international projects with multimodal transport functions. The Bank will also provide financing to accelerate the development of new technologies and the upgrading of equipment, which will help reduce transport costs and improve efficiency. Last year, China invested in the construction of several foreign railway stations, for example in Kaliningrad in Russia.

But the reverse process also takes place. Well-known international logistics companies have invested in China, given the significant increase in rail traffic.

Many pundits have started discussing the possible removal of subsidies from China’s central and regional authorities given the significant increase in traffic. According to media reports, attendees of the European Silk Road Summit in Amsterdam actively discussed the topic. Since the authorities have reduced subsidies before, it is possible that they will continue to do so or even eliminate them this year.

“The intensity of market demand for trains is already far greater than the intensity of subsidies. 000 dollars. The subsidy is only a few thousand dollars,” said Kang Shuchun, director of the China Federation of Logistics and Supply.

According to Jackie Yan, Founder and CEO of New Silk Road Intermodal, authorities originally planned to replace the subsidies by the end of 2022. But due to COVID-19, they extended the deadline by one year. At its peak, subsidies were $3,000 to $5,000 per container, but now, according to media reports, they have dropped to $1,000. It is not difficult to see that even with the removal of subsidies, relatively high value-added goods will still be profitable to deliver by rail. At the same time, goods with low added value will generally be delivered by sea.

The ten-year test result of the Eurasian Railway Bridge connecting China and Europe has confirmed the high cost-effectiveness and great promise. In addition to Europe, the first beneficiaries of this new trade route are the western regions of China and the countries of Central Asia, which have suffered for centuries from landlocked situations. They have become natural land bridges between global centers of economic power, and the future promises even better prospects. The revival of the New Silk Road is not far away.

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