Rail freight accommodates Europe in China's Belt and Road Initiative
 Because "Belt and Road", China's global transport infrastructure scheme, is supposed to impact the world in a big way, Beijing is determined to maintain a high level of excitement about the project.
Enthusiasm is essential to such campaigns, and this is no less true of Belt and Road. It is not enough to be interested - one must be "excited".
To add colour and international flavour Belt and Road is based on Marco Polo's Old Silk Road, that ran between 800-900 AD, when it was little more than a packhorse trail from China to Europe, carrying hugely expensive spices and silks that thrilled in the still barbarous lands of medieval Europe. Even humble Chinese noodles fetched astronomical prices back then.
And while there are African and South Sea dimensions to today's Belt and Road scheme, these are mere side shows to what is essentially an Asia-Europe project.
Some US$40 billion worth of investment has been discussed as part of a sweeping range of programmes in the Belt and Road plan that includes maritime and intermodal routes across China, south east Asia, Russia, central Asia, the Middle East, Africa and Europe.
The terms "belt and road" are little mysterious, and perhaps deliberately so. Counter intuitively, the "road" is commonly thought to be the everyday sea route over which China has established an air base and a naval station on the disputed Spratly Islands lying between the Philippines and Vietnam athwart the main Asia-Europe trade lane despite a ruling by the Permanent Court of Arbitration in Hague declaring that China's occupation is illegal.
While this may yet provoke major physical conflict, there has been little so far except some early ramming incidents between Vietnamese patrol boats and Chinese warships and denials of access to Filipino fishing boats.
The physical action from the Belt and Road is more on the "belt", that is, the overland route, marked by the rising number of rail freight services to Europe from China.
The first was a link to Russia's century-old 9,289-kilometre Trans-Siberian Railway linking Moscow to Vladivostok in the Far East. Over the years this was expanded into Mongolia, China and North Korea.
The traditional northern rail freight route for the most part followed the Trans-Siberian Railway on the Russian soil to the Zabaikalsk-Manzhouli border crossing point.
In China, several transit options are possible: to Beijing or to the seaport of Tianjin.
Then there is the new southern route, called the New Silk Road, which branches off the Trans-Siberian to the South in Yekaterinburg and then runs through Kazakhstan up to the Chinese border. At the border crossing Dostyk-Alashankou, Chinese Railways takes over the freight transport to the final destination of Chongqing.
The first container train from China had been delivered to Germany back in 1973, following the traditional Trans-Siberian route. In 2008, a regular container service was introduced between the two countries, but was closed shortly after global economic downturn.
In 2010, the Muscovite freight train started servicing the route to Moscow, paving the way for a new regular service to China, and in November 2010, a scheduled freight train from Wackersdorf-Oberpfalz delivered containers of a large German car manufacturer in Shenyang, followed by a freight service from Leipzig-Wahren.
Trans Eurasia Logistics, a joint venture of the Deutsche Bahn AG and the Russian Railways (RZD), was founded in 2008 and acts as a coordinator for the freight rail transport between Europe, Russia and China, ensuring both available routes are sustainably developed and extended along the transit corridor.
Long-distance rail across the Eurasian landmass, though only one part of this vision, is important to the government's hopes. It is also a service that has already gained prominence and use in the automotive sector, with rising interest in moving both car parts and vehicles by rail.
The first blockage was economics. Northern China, Inner and Outer Mongolia, with access to the Trans-Siberian were impoverished areas of subsistence farmers and coal miners.
But China's drive to spread the wealth, then unequally concentrated in the coastal regions to the north and west proved successful. In the fact of competition in the making of cheap consumables by Indochina, Indonesia, Bangladesh, the Chinese countered by opening inland factories where labour was cheaper and the cost living lower. As cell phones and laptops became ubiquitous worldwide, these too joined the ranks of cheap consumables, no longer disserving of pricey air freight, and people of north west China could produce them and made increasing use of rail freight to Europe economically viable.
This spawned new rail routes from Chongqing and Chengdu to Duisburg in Germany and Lodz in Poland. And with this trade, came the more affluent people of northern China who bought European cars, which are commonplace in China.
Volumes still are small compared to the massive throughput of the sea route and tend to be part of niche flows, but there is great potential for expansion across these and other routes.
While automotive trials have been taking place in connecting China and Europe by rail for at least a decade, over the past two years a number of new rail links have been established between automotive production and assembly plants in Europe and China.
French logistics provider Gefco, in partnership with its majority shareholder Russian Railways, has been offering a number of services across the Trans-Siberian Railway, as well as to western China and across central Asia.
Another example is UTi Worldwide (recently acquired by Denmark's DSV), which has partnered with China's Beijing Changjiu Logistics to offer an "Iron Silk Road" service between Harbin and Hamburg.
Other examples include the Trans-Eurasia Logistics link between Chongqing and Duisburg, Germany, and the Chengdu-Europe Express Rail link to Lodz, Poland.
Chengdu has long been committed to cultivating electronics and attracting Dell, Lenovo, Foxconn, Huawei, Siemens and ZTE to set up shop there. Chengdu has built complete industrial systems in integrated circuits, smart terminals, internet communications, photoelectronic displays and software and service outsourcing.
The city is a base for leading global giants including Intel, Texas Instruments, AMD, Taiwan-based MediaTek and Chinese Spreadtrum Communications.
Chongqing on the other hand focused on the automotive and has been authorised as the first inland port for the importation of finished vehicles. These factors make the railway solution for car importation to inland China to European carmakers.
One of the first companies to get involved in automotive rail transport between Europe and China was German operator DB Schenker.
The introduction of car wagons for CBU [completely built unit] transport will further maximise load factors and optimise costs. The extension of the rail network in both China and Europe will also enable easier access to the rail connections.
While the rail is more expensive than sea freight, it is faster and safer. At least rail freight avoids vicissitudes of maritime cargo handling. The typical cargo ship emerging from the Suez Canal from Asia doesn't put into a Mediterranean port as one might expect, but instead goes straight through to Gibraltar.
It then circumnavigates Spain and Portugal goes up the coast of France before turning into one of the most congested waterways in the world - the English Channel. Then it docks at one or two of the Northern Range ports, where it dumps masses of containers after another mega ship has just done the same and before another mega ship dumps its load on top of yours.
For a shipper of laptops and cellphones who does not want to get lost in the shuffle, there is something comforting about having one's cargo on a train holding 400 containers rather than on a ship with 4,000 to 5,000 of them.
The latest advocate of Sino-EU rail freight at the proponents what they call the Middle Corridor, which leaves to China and crosses the border into Kazakhstan at dry port where a portion of the freight is diverted to Port Kuryk on the Caspian Sea. Here cargo is loaded on a ship to cross the sea to Azerbaijan's capital of Baku, and from there it is to go by rail to the Georgian Black Sea Port of Anaklia and thence wherever it wants to go, though other Black Sea ports in Turkey, Romania and the Ukraine are suggested.
While that sums up the state of play on the overland aspects of the Belt and Road scheme, it still must be recalled that rail routes do not represent the smallest fraction of the volume carried over sea lanes where even the passage of even three 20,000-TEU ships would dwarf the volume carried by rail in a year.
Yet rail is still of value to niche markets carrying costly electronics, auto parts and whole cars, faster and more on-time reliable than sea freight and far less expensive than air cargo.
But government programmes, especially if politically inspired, are always wasteful. State enterprises tend to punish officials for shortfalls rather than overruns if only because shortfalls are more easily spotted and hard to conceal with the reverse being true of cost overruns.
Thus one can see government officials deciding it would be safer to back the most recent "Middle Corridor" scheme, despite its five costly intermodal transfers than not back it. Showing conspicuous support advances the spirit of Belt and Road, the attainment of which - the spirit, not the reality - is of paramount importance to the leadership, whose glow of approval all bureaucrats are so anxious to bask.
Such massive programmes are like shotgun blasts, where the scatter shot is spread over a wider and wider pattern the farther it gets from the muzzle. But if the aim is well-taken and the range is short enough to keep the core blast on target the main thrust of the overland route may well prove profitable despite the wastage of a few shots that failed to hit anything useful. And in the end the Asia-Europe trade may well be thankful for what is being done to date to create a Eurasian Landbridge. |
