Despite the ongoing global economic crisis being aggravated by the second wave of COVID-19 pandemic, this year has brought outstanding results for the KHORGOS \u201cdry port\u201d on the border between Kazakhstan and China, which links China with Central Asia, Russia and Europe. On October 6, 2020 when after less than five years of its opening, the 10.000th train crossed the border. Records this year are being broken in terms of freight volume. According to official statistics, 3,243 trains have carried over 4.7 million tonnes of freight across the border in Khorgos from January through September. This is a 32 % more than during the same period in 2019. This goes to prove BRI is not a concept anymore but a functional reality from the east of Asia to the west of Europe and the territories in between. CPEC will be an enormous force-multiplier north to south, connecting China and Central Asia to Middle East and North Africa through Pakistan.
\nFreight rail traffic is an alternative to faster but much more expensive air shipping, sea shipping is cheaper but takes much longer. It takes five to nine days to airlift cargo from a Chinese terminal to a European terminal. A one-way train trip takes from 15 to18 days, while to deliver cargo by sea takes from 37 to 50 days. Rail transport is good for high-value products, shipping by sea \u201cfreezes\u201d these assets for a longer time, adding additional expenses for clients. In economic terms a two week period from production to market is more economic than around 45-50 days.
\nIn terms of environmental considerations this is a favourable alternative because trains produce much less carbon emissions relative to trucks and aircraft. According to Fujitsu and Siemens, their \u201cgreen trains,\u201d which run between China and Germany, emit 95% less carbon monoxide, non-methane hydrocarbons and nitrogen oxides into the atmosphere than aircraft do.
\nBecause production plants in the north west provinces help reduce transportation compared with the coastal areas and bring jobs and development to the underdeveloped areas. For some time, China has been relocating manufacturing facilities northwest, to be nearer Europe. Similarly the Southwest (Sinkiang Province) is being developed on a fast-track basis. Twelve years ago, on October 6, 2008, the first demonstration container train ran from China to Hamburg. It was a 17-day trip from Xiangtan, Hunan Province. At the time, many people questioned the logic of this approach. But the advantages are clear today. Routes over 11,000 km long now directly link about 100 Chinese and European cities.
\nRail traffic from China to Europe received a strong impetus in 2011 when the customs union of Russia, Kazakhstan and Belarus was created. The elimination of customs clearance procedures on the borders of these states drastically reduced documentation and logistics expenses and, thus, expedited freight transport services from China to Europe. According to China Railway, the number of China-Europe freight trains increased considerably in August 2020. An impressive record was set, with 1,247 trains per month or 62% more than in 2019, and August was the sixth straight month with double digit train volume growth year to year. In the first eight months of 2020, 7,601 freight trains, or 44% more than over the same period in 2019, were made via this route.
\nWestbound transcontinental trains leave for destinations in Europe almost every hour and eastbound trains to China depart every two hours. Rail shipping volumes in August 2020 jumped by 66 % over the same period in 2019, reaching 113,000 TEUs. Extrapolating, container volume will probably top one million TEUs this year. Today, of all freight volume on this route, about two-thirds move west and only one-third goes east. This situation is unlikely to change in the near future. A rapid increase in Chinese consumption volumes could become the most positive change in this respect. Increased consumerism would create additional demand for high-quality European goods.
\nTo promote shipments to Europe, most landlocked Chinese provinces have subsidized domestic rail freight rates. However, many factors indicate that China is becoming aware of the fact that this situation cannot last long. A sustainable development of commercial ties with Europe need to depend on market mechanisms; the subsidies need to stop. Chinese media reports state that these subsides are being gradually reduced. Subsidies for European-bound railway traffic was as high as 50 % in 2018. However, subsidies were reduced to 40 % last year and are about 30 % this year. The authorities expect that all subsidies will end by 2022. According to logistics analysts, rail traffic volumes need to reach about 1.5 million TEUs to feasibly end government support.
\nGiven this impressive increase in China-Europe freight rail traffic, it\u2019s only natural to study its future prospects. It is important to understand the route\u2019s bottlenecks and other factors that might hamper further traffic increase. Most logistics analysts agree that there are two main challenges in the mid-term. First, how to balance China-Europe and Europe-China cargo volumes. Second, how to boost the limited capacity of the Belarusian-Polish border crossing.<\/p>\n
To Be Continued<\/p>\n","protected":false},"excerpt":{"rendered":"
Despite the ongoing global economic crisis being aggravated by the second wave of COVID-19 pandemic, this year has brought outstanding results for the KHORGOS \u201cdry port\u201d on the border between Kazakhstan and China, which links China with Central Asia, Russia and Europe. On October 6, 2020 when after less than five years of its opening, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-158744","post","type-post","status-publish","format-standard","category-article"],"yoast_head":"\n