Volumes of freight travelling between China and Europe by
rail are rising quickly. Between 2013 and 2016 cargo traffic quintupled
in weight. In the first half of this year the value of goods travelling
by train rose by 144% compared with the same period in 2016. Western
firms have been keen to embrace rail freight because it helps them to
lower costs, says Ronald Kleijwegt, an expert on the industry.
In the case of high-tech electronics, for example, which consumers like to receive quickly, making them on China’s coast and air-freighting them to Europe is extremely pricey.
How worried should shipping firms and airlines be? Kazakhstan’s national rail company, KTZ, says it will have capacity for 1.7m containers to pass through the country between Europe and China each year by 2020; that is a tenth of the volume currently carried by sea and air between the two. In the longer term, a full modernisation of the existing main three rail routes from China to Europe could produce 3m containers a year in capacity.
But there are reasons to doubt that will happen. For one thing, China plans to stop handing out government subsidies for additional rail-freight capacity from 2020, which will slow the network’s expansion. Sea freight has little to fear in the near term, says Soren Skou, chief executive of Maersk, the world’s biggest container-shipping line. Trains may take away some future growth from ships, he concedes, but not their existing business.
Air cargo is more vulnerable. Last year, 180,000 tonnes of cargo traveled on trains to western Europe from China (the remainder was destined for Russia and eastern Europe). That is a small fraction of the 52m tonnes that came by sea, but a big chunk of the 700,000 tonnes that came by air.
Much of that air cargo could switch to rail in future, says Mr Kleijwegt, with one important proviso—that Russia would need to lift the retaliatory sanctions it placed in 2014 on imports of Western food, which stop most foodstuffs from traveling by land between Europe and China. That is unlikely for the time being. But it was only a decade ago that people thought the idea of freight trains between Europe and China was a joke, says Mr Kleijwegt—and no one laughs at that any more.
Read more: 700 China-Europe freight trains to depart Xinjiang in 2017[1]- Chinadaily.com.cn
In the case of high-tech electronics, for example, which consumers like to receive quickly, making them on China’s coast and air-freighting them to Europe is extremely pricey.
How worried should shipping firms and airlines be? Kazakhstan’s national rail company, KTZ, says it will have capacity for 1.7m containers to pass through the country between Europe and China each year by 2020; that is a tenth of the volume currently carried by sea and air between the two. In the longer term, a full modernisation of the existing main three rail routes from China to Europe could produce 3m containers a year in capacity.
But there are reasons to doubt that will happen. For one thing, China plans to stop handing out government subsidies for additional rail-freight capacity from 2020, which will slow the network’s expansion. Sea freight has little to fear in the near term, says Soren Skou, chief executive of Maersk, the world’s biggest container-shipping line. Trains may take away some future growth from ships, he concedes, but not their existing business.
Air cargo is more vulnerable. Last year, 180,000 tonnes of cargo traveled on trains to western Europe from China (the remainder was destined for Russia and eastern Europe). That is a small fraction of the 52m tonnes that came by sea, but a big chunk of the 700,000 tonnes that came by air.
Much of that air cargo could switch to rail in future, says Mr Kleijwegt, with one important proviso—that Russia would need to lift the retaliatory sanctions it placed in 2014 on imports of Western food, which stop most foodstuffs from traveling by land between Europe and China. That is unlikely for the time being. But it was only a decade ago that people thought the idea of freight trains between Europe and China was a joke, says Mr Kleijwegt—and no one laughs at that any more.
Read more: 700 China-Europe freight trains to depart Xinjiang in 2017[1]- Chinadaily.com.cn
