Last year, we took a look at The One Belt, One Road Initiative, also known as the Silk Road initiative, was officially launched by the Chinese government in 2013. The economic plan is designed to link China with Central and South Asia, the Middle East and Europe by road as well as by sea.
The new initiative was aimed at improving road and rail infrastructure for a number of China’s trading partners, especially Europe, to provide a potential economic gain for all parties as well as improving China’s already vast delivery network.
“The magnitude of this initiative is hard to imagine until one witnesses the train roll into London after traveling 18 days from China, loaded with items such as laptops, smartphones, apparel and food items. Indeed, London is among the latest European connections within the plan.
Currently, there are 39 lines that connect twelve European cities with sixteen Chinese cities and plans for an additional twenty European routes are to already in the works.”
With over a year having gone by, just how well is the new initiative fairing? According the Journal of Commerce, it has been progressing quite well indeed.
“Logistics providers are steadily adding new China-Europe rail services as the overland network continues its evolution from a simple point-to-point option to a more reliable end-to-end solution that allows shippers to focus on better planning cycles and lower inventory. This week Damco, Davies Turner, and Kerry Logistics all announced new, weekly rail solutions connecting China and the European Union (EU), citing customer demand and the opening of a new route in Central Asia that made new markets more accessible,” says Greg Knowler, the JOC’s Senior Europe Editor.
There’s a Lot to be Excited About
According to third-party logistics providers that service the area, rail line transport has gained a lot of great feedback as being both popular and reliable. Compared to the status three years ago, where the rail line was little more than a novelty. While it cut down on ocean transport times and was less expensive than air freight, it still left something to be desired as a main choice for freight transportation.
Much like the roadways, connecting Chinese cities to Kyrgyzstan, Tajikistan, and Kazakhstan, there were a number of infrastructure improvements that needed to be made to make rail more reliable and efficient for freight transportation. Part of the issue was that rail gauges (the width of the actual track itself) vary from country to country which could cause some lengthy delays. Other improvements include better data collection and accessibility; Improved container visibility; and less processing and hassle with customs and documentation requirements.
Many of these improvements have, in fact, been made, and the popularity of rail for freight transportation has escalated as a result. According to China Railway Corporation, there were about 6,300 trains that traveled both east and westbound from 2011 to 2017. Almost half of that figure, 3,200 was in 2017 alone. China’s plan is to have 50,000 trains per year making the trip between the two continents and carrying a payload of 2 million TEUs of freight by as early as 2021.
The Drawback of the Rail Lines
Of course, there is always an opposing reaction, and it seems as though the Europe-China rail may become a victim of its own success. While rail can haul significantly more goods per trip than a truck or plane, there will be a capacity crunch, especially during peak seasons.
Congestion will also be a concern as rail volume continues to grow, especially at key points where many of the lines converge. This is most noticeable in Kazakhstan and even more so at the Belarus-Poland border where the Chinese rail meets European services.
Underlying issues within the European Union rail structure could also pose some problems for the proposed growth in popularity. Simply put, road freight dominates in popularity for Europe because it’s simply more cost effective to ship over-the-road than it is to load freight onto a train.
“The biggest challenge regarding attracting more shippers to use rail freight is cost reduction,” says Pierre Liguori, director of supply chain consultancy Tokema International. “It cannot be achieved only with additional volumes, more competition, and less bureaucracy. As infrastructure costs are paid by train slot, the length of trains and the related number of coaches is critical to decreasing operating costs. Here again, harmonization would be welcome. The average train length in Spain is 450 meters (1,476 feet) compared with 740 meters in France and between 1,500 and 2,000 meters in the United States.”
Picking the Right Option
While the China to Europe rail line might be gaining in popularity, it is by no means the only way to ship. We’ve put together a break down of different shipping options including, sea, air, road, rail, and intermodal. Each has their own advantages and their own weaknesses and costs associated with each that need to be considered when deciding which option is the best for your company.
Prioritizing your needs and comparing costs are important when planning your shipment. To learn more about how you can manage your freight online just click here.