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The Booming China-Europe Rail Network Is Taking The Next Step
Throughout the 2000s, various different China-Europe rail routes were being beta tested in starts in stops, but it wasn’t until 2012 that the logistics crew at HP worked out the bugs and began offering regular weekly service between Chongqing to Duisburg, Germany.
A year later, Chinese President Xi Jinping would announce a new policy called One Belt, One Road (later changed to the Belt and Road) that would shake up the geopolitical and geo-economic layout of Eurasia and re-establish China’s place in it. The plan called for pumping the New Silk Road — the long-emerging network of trade routes, logistics hubs, and economic zones stretching between China and Europe — with hundreds of billions of dollars worth of momentum. This new policy proved to be a boon for trans-Eurasian rail transport, as these new rail lines would become its vanguard, establishing physical links between many of the key countries and a platform of cooperation from which to drive closer diplomatic and economic ties.
An international train at Khorgos Gateway, an emerging transshipment hub on the China-Kazakhstan border. It is places like this that are going to potentially benefit most from Beijing’s efforts to consolidate the emerging pan-Eurasia rail network. Image: Khorgos Gateway.
The Belt and Road soon became a major talking point of China’s central government and state-run media, and related infrastructure was posited as new drivers of growth as well as being what the bosses in Beijing wanted. Soon, cities from all over China began starting up China-Europe rail lines; each trying to position themselves as hubs on the emerging Silk Road Economic Belt. What started out as two regular routes emerging from booming high-tech zones in Chongqing and Chengdu rapidly grew into a 39 route network linking together dozens of cities in China and Europe.
In China, provinces and large cities still maintain relatively large amounts of authority to develop their own infrastructure and make investments, and most of these new trans-Eurasian trains were developed and subsidized by local municipalities without direct oversight from the central government.
A common Chinese calamity soon ensued: a feeding frenzy of development which resulted in a sector which became, as put by China’s National Development and Reform Commission (NDRC), “plagued with high costs, disorderly competition and a supply-demand imbalance.”
Basically, the divided nature of the trans-Eurasian rail routes were reducing the potential of the network as a whole. Cities were setting themselves up as competitors as they vied for cargo and “Silk Road” status, and it was becoming clear that a better organizational structure was needed.
China Railway Express-branded shipping containers. Image: Wade Shepard.
Throughout the past year it has been rumored along the stations of the Silk Road Economic Belt that China’s central government was going to step in and take more control over the emerging network of trans-Eurasian trains. The first big move towards this was creating the China Railway Express brand, which was put on display to the world back in June through distributing thousands of new shipping containers bearing its new logo. Now, more reforms are on the way:
It was formally announced last week by the NDRC that this melee of trans-Eurasian trains will be streamlined down to just three routes as part of a new five-year plan to improve the European service of China Railway Express and the China-Europe rail network as a whole.
“I think it is necessary because to me it doesn’t make any sense that these cities are competing with each other. I think that doesn’t work because it’s counterproductive,” said Ronald Kleijwegt of HP, who led the team that revived trans-Eurasian rail with the first regular China-Europe route in 2012. “So I think having this managed more centrally from the government, where these cities need to see the overall benefit for companies like us but also for their own country and their own city.”
So rather than individual cities in China making rail transport arrangements with individual cities in Europe, the Silk Road rail system will move towards becoming a true multi-tiered network with major transshipment hubs that are linked into by secondary and tertiary hubs. So block trains that are currently traveling virtually intact all the way from, say, Xiamen to Lodz, Poland, 9,826 kilometers away, will eventually be routed into to a transshipment hub like Chengdu or Khorgos on the China/ Kazakhstan border instead, where they could be broken down and have their containers shipped to a multitude of different locations throughout Eurasia.
“If you have them all [China-Europe trains] routed into, for instance, Khorgos, from Khorgos you can then rebuild trains to other destinations directly into Europe or even into the Middle East. It is the same way eastbound. If you have trains coming in with containers from France, from Spain, from Germany, from Poland, to Khorgos you can re-consolidate and then onward you can ship these containers further back to Guangzhou, Zhengzhou, and what have you,” Kleijwegt explained.
While it generally takes under 15 days for these trains to traverse the expanse between China and Europe, the services that are being offered by most cities besides Chengdu and Chongqing are only weekly or bi-weekly. So this means if you want to ship a container to Europe on Monday and the train doesn’t depart until Saturday night your cargo is going to be idle. A consolidated network can mean far better services to and from Europe by funneling more cargo into larger transshipment hubs who can then have the volumes necessary for virtually around the clock departures.
The additional value of consolidating the trans-Eurasian rail network, beyond efficiency and cost-effectiveness, is the fact that it better enables key points along the various routes to leverage their positions as transshipment hubs to support broader development initiatives – like entirely new cities. The Khorgos Gateway dry port on the Kazakhstan/ China border is within a giant special economic zone, there are multiple free industrial zones surrounding the major rail depot at Malaszewicze on the Poland/ Belarus border, and Baku is currently building a logistics economy that is within the belly of a large-scale manufacturing area. The idea behind these nascent Silk Road hubs is to become places where products are not merely shipped through but can also be assembled or manufactured en-route and put right onto trains, as the economic layout of the interior of Eurasia undergoes a monumental economic transition.
Basically, what this means is that the China-Europe rail network is maturing. There is now enough cargo volume to make large-scale intermodal transshipment hubs in the west of China, Central Asia, and Eastern Europe a viable reality, as the New Silk Road starts to show glimmers of the efficient, interconnected, and versatile trade network it is meant to become.
I'm the author of Ghost Cities of China. I'm currently traveling the New Silk Road doing research for a new book. Follow by RSS.
http://www.forbes.com/sites/wadeshe...twork-is-taking-the-next-step/2/#542123bb396f
Throughout the 2000s, various different China-Europe rail routes were being beta tested in starts in stops, but it wasn’t until 2012 that the logistics crew at HP worked out the bugs and began offering regular weekly service between Chongqing to Duisburg, Germany.
A year later, Chinese President Xi Jinping would announce a new policy called One Belt, One Road (later changed to the Belt and Road) that would shake up the geopolitical and geo-economic layout of Eurasia and re-establish China’s place in it. The plan called for pumping the New Silk Road — the long-emerging network of trade routes, logistics hubs, and economic zones stretching between China and Europe — with hundreds of billions of dollars worth of momentum. This new policy proved to be a boon for trans-Eurasian rail transport, as these new rail lines would become its vanguard, establishing physical links between many of the key countries and a platform of cooperation from which to drive closer diplomatic and economic ties.
An international train at Khorgos Gateway, an emerging transshipment hub on the China-Kazakhstan border. It is places like this that are going to potentially benefit most from Beijing’s efforts to consolidate the emerging pan-Eurasia rail network. Image: Khorgos Gateway.
The Belt and Road soon became a major talking point of China’s central government and state-run media, and related infrastructure was posited as new drivers of growth as well as being what the bosses in Beijing wanted. Soon, cities from all over China began starting up China-Europe rail lines; each trying to position themselves as hubs on the emerging Silk Road Economic Belt. What started out as two regular routes emerging from booming high-tech zones in Chongqing and Chengdu rapidly grew into a 39 route network linking together dozens of cities in China and Europe.
In China, provinces and large cities still maintain relatively large amounts of authority to develop their own infrastructure and make investments, and most of these new trans-Eurasian trains were developed and subsidized by local municipalities without direct oversight from the central government.
A common Chinese calamity soon ensued: a feeding frenzy of development which resulted in a sector which became, as put by China’s National Development and Reform Commission (NDRC), “plagued with high costs, disorderly competition and a supply-demand imbalance.”
Basically, the divided nature of the trans-Eurasian rail routes were reducing the potential of the network as a whole. Cities were setting themselves up as competitors as they vied for cargo and “Silk Road” status, and it was becoming clear that a better organizational structure was needed.
China Railway Express-branded shipping containers. Image: Wade Shepard.
Throughout the past year it has been rumored along the stations of the Silk Road Economic Belt that China’s central government was going to step in and take more control over the emerging network of trans-Eurasian trains. The first big move towards this was creating the China Railway Express brand, which was put on display to the world back in June through distributing thousands of new shipping containers bearing its new logo. Now, more reforms are on the way:
It was formally announced last week by the NDRC that this melee of trans-Eurasian trains will be streamlined down to just three routes as part of a new five-year plan to improve the European service of China Railway Express and the China-Europe rail network as a whole.
“I think it is necessary because to me it doesn’t make any sense that these cities are competing with each other. I think that doesn’t work because it’s counterproductive,” said Ronald Kleijwegt of HP, who led the team that revived trans-Eurasian rail with the first regular China-Europe route in 2012. “So I think having this managed more centrally from the government, where these cities need to see the overall benefit for companies like us but also for their own country and their own city.”
So rather than individual cities in China making rail transport arrangements with individual cities in Europe, the Silk Road rail system will move towards becoming a true multi-tiered network with major transshipment hubs that are linked into by secondary and tertiary hubs. So block trains that are currently traveling virtually intact all the way from, say, Xiamen to Lodz, Poland, 9,826 kilometers away, will eventually be routed into to a transshipment hub like Chengdu or Khorgos on the China/ Kazakhstan border instead, where they could be broken down and have their containers shipped to a multitude of different locations throughout Eurasia.
“If you have them all [China-Europe trains] routed into, for instance, Khorgos, from Khorgos you can then rebuild trains to other destinations directly into Europe or even into the Middle East. It is the same way eastbound. If you have trains coming in with containers from France, from Spain, from Germany, from Poland, to Khorgos you can re-consolidate and then onward you can ship these containers further back to Guangzhou, Zhengzhou, and what have you,” Kleijwegt explained.
While it generally takes under 15 days for these trains to traverse the expanse between China and Europe, the services that are being offered by most cities besides Chengdu and Chongqing are only weekly or bi-weekly. So this means if you want to ship a container to Europe on Monday and the train doesn’t depart until Saturday night your cargo is going to be idle. A consolidated network can mean far better services to and from Europe by funneling more cargo into larger transshipment hubs who can then have the volumes necessary for virtually around the clock departures.
The additional value of consolidating the trans-Eurasian rail network, beyond efficiency and cost-effectiveness, is the fact that it better enables key points along the various routes to leverage their positions as transshipment hubs to support broader development initiatives – like entirely new cities. The Khorgos Gateway dry port on the Kazakhstan/ China border is within a giant special economic zone, there are multiple free industrial zones surrounding the major rail depot at Malaszewicze on the Poland/ Belarus border, and Baku is currently building a logistics economy that is within the belly of a large-scale manufacturing area. The idea behind these nascent Silk Road hubs is to become places where products are not merely shipped through but can also be assembled or manufactured en-route and put right onto trains, as the economic layout of the interior of Eurasia undergoes a monumental economic transition.
Basically, what this means is that the China-Europe rail network is maturing. There is now enough cargo volume to make large-scale intermodal transshipment hubs in the west of China, Central Asia, and Eastern Europe a viable reality, as the New Silk Road starts to show glimmers of the efficient, interconnected, and versatile trade network it is meant to become.
I'm the author of Ghost Cities of China. I'm currently traveling the New Silk Road doing research for a new book. Follow by RSS.
http://www.forbes.com/sites/wadeshe...twork-is-taking-the-next-step/2/#542123bb396f
