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one belt one road

RZD expands China-Europe rail freight services with new routes

RZD have begun a new container service, with a new connection between China and Germany.

Connecting Yantai and Duisburg, the service initially will operate on a limited schedule, but RZD chief executive Vyacheslav Valentik expects it to become regular by the start of Q4.

“Our cooperation with Yantai station is developing rapidly – just a month ago we launched a service to Moscow, and today we present a transit route to Germany,” he said.

“There is no doubting its successful development… Shandong ranks third in the GDP ranking of provinces in China. It is an industrial region with a high level of production and consumption, which gives us a good chance to work out the issue of reverse loading of transit trains.”

The inaugural service arrived in the German city, after a 19-day transit, on 14 August, carrying auto parts, electrical components and household products.

The carrier said the service was available to a “wide range” of shippers, with further new routes due this month: “The service will be launched on the new route from Jinan City, Shandong Province to Budapest,” it said.

“Now, RZD Logistics has container trains from various cities of the Shandong province to Moscow, St. Petersburg, Perm, Minsk and Duisburg.”

The operator has undergone a rash of expansion in recent months, last month launching a service to ship boxes from Korea to Europe via the Trans-Siberian Railway.

The decision to run the new link followed a trial in June from South Korea’s container hub of Pusan to the Polish rail terminal at Brzeg Dolny.

“Rail delivery is faster than deepsea transport and we offer our clients in the republic of Korea the chance to assess the economical efficiency of the service,” said Mr Valentik. “And the more cargo transported by Trans-Siberian land bridge, the more affordable the service is.”

Also last month, RZD and subsidiary Far East Land Bridge rolled out a container route between Moscow and Yantai.

Sales director at RZD Olga Stepanova said: “We try to find solutions that will meet the needs of our customers. At Yantai it is convenient to consolidate cargo from all over Shandong province, one of the most industrialised in China.

“It is also successfully connected to the sea terminal, with which we also plan to group and ship to Russia and Europe from other countries in the Asia-Pacific region.”

Source: The Loadstar

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China-Europe rail service exports grow by 106%

China’s Belt and Road initiative (BRI) may have faced recent strong criticism from the EU, but that has not dented the growth in its exports to Europe.

Chinese officials have claimed a 106% increase in the value of cargo travelling by rail from China to Europe, equating to some $33bn.

Xiao Weiming, from the office of the leading group for promoting the BRI, told Xinhua that 14,691 trips have been made by China-Europe freight trains since 2011.

Operator United Transport And Logistics Company Eurasian Rail Alliance (UTLC ERA) recorded a 54% (62,622 teu) upturn in volumes between China and Europe.

While the bulk is exports from China (35,536 teu, up 69%), imports from Europe have been closing the gap, recording a 44% increase to more than 27,000 teu in Q1.

The Russian-Kazakh-Belarussian-owned UTLC ERA has furthered its links between the two regions, having announced cooperation agreements with two European partners.

President of UTLC ERA Alexey Grom said: “I am perfectly confident the agreements signed with our partners will contribute to the active growth of the transit transportation market, enabling UTLC ERA to strengthen its leading positions in cargo shipments on Europe-China-Europe routes.”

During this month’s TransRussia exposition the operator entered an agreement with Slovakia’s public rail company, ZSSK Cargo, to facilitate IT collaboration on container shipments from China, to include route scheduling and an analysis of potential customer bases between Slovakia and China.

“This is the first time we have fixed in writing the intention to build a direct transit transportation technology process,” said Mr Grom. “We will be solely responsible for the 1520 gauge, whereas ZSSK Cargo will be in charge of the 1435 gauge.

“That is how we will be able to offer our customers the end product – a comprehensive shipping service solution.

UTLC ERA has also announced a deal to assist Lithuanian Railways with its postal container traffic from China to Lithuania, providing containers loaded with postal items at Dostyk and Altynkol stations, operated by Kazakhstan Railways.

Lithuanian Railways would then take over handling at Kena near Belarus, delivering packages to the warehouses of Lietuvos Pastas, Lithuania’s public postal service.

Despite the BRI’s growth, a report from EU high representative for foreign affairs and security Federica Mogherini slammed China’s handling of the trillion-dollar project, describing Beijing as both a partner and a strategic competitor.

Those words may have little impact on the BRI’s momentum, with the project now boasting the involvement of more than 120 countries. Its development was enshrined in the Chinese Communist Party’s constitution in 2017, but cracks have begun to show.

According to the Asian Development Bank, a $26trn investment shortfall between now and 2030 looks likely, while at home the Chinese have expressed concerns over a litany of faults.

Source: The Loadstar

 

one belt one road

Traffic rising on the Silk Road

Rail freight traffic from Europe to Chongqing in China exceeded traffic in westbound direction in 2018. The number of trains travelling from Europe to the southwestern Chinese city reached 728, out of a total of 1,442 freight trains in both directions. This is the first time that eastbound traffic was more than westbound movement.

Westbound traffic between China and Europe has traditionally accounted for the majority of the volumes on the New Silk Road. The return of empty containers to China has been a dilemma for operators, as it is a costly procedure, pressing the optimal use of Chinese funding tools. Creating a balance between east- and westbound traffic has been one of the main aims of operators active on the New Silk Road.

117 per cent growth

The number of trains traveling back to Chongqing surpassed the number of outbound trains for the first time in 2018, said Yuxinou (Chongqing) Logistics Co in a Xinhua report. In general, traffic between the Chinese city and Europe witnessed a surge last year: the volumes increased by 117 per cent, according to the Chinese media source.

Although recent figures have not yet been announced by other provinces, the imbalance between east- and westbound traffic is witnessed in many other Chinese provinces. For example, trains between Tilrburg in the Netherlands and Chengdu in China accounted for 235 in 2017, of which 102 trains were in the eastward direction.  Only half were fully loaded, explained Jialu Zhang, representing CIPI in Tilburg.

Imbalance

“The imbalanced volumes of import to and export from China has created challenges for the further development of the round-trip rail services. Therefore, promoting and stimulating the export trade from the Netherlands to China by rail has become one of the essential task for both GVT and its Chinese partner”, Zhang explained earlier.

Following an equal trend in deep sea freight transport, eastbound traffic requires more incentive and thus, market prices along this route are lower than in the other direction. While eastbound freight rates are subsidised by about fifty per cent, in the direction of Europe this accounts for 25 per cent,” explained the Group of European TransEurasia Operators and Forwarders (GETO) in earlier comments.

End of subsidies

Once the balance of export and import is there, train services should be able to operate without subisidies, is the general understanding. Although not confirmed, many have suggested that the Chinese subsidies will be phased out starting from 2020. “Most railway managers and operators are likely to push the downward trend of actual costs, an indispensable trend to safeguard the train offers for the long term in especially the eastern direction”, GETO explained.

Moreover, an increase in eastbound traffic serves the rail freight industry in that rolling stock is used more efficiently. As almost twice as many trains depart in western direction, rolling stock often gets stuck in Europe, resulting in storage costs or the return of empty equipment by rail. “In rail freight, the return of empties can cost approximately fifty per cent of the rate.With increasing volumes in eastern direction, the situation is improving. The increase in eastbound traffic supports the return of locomotives, rolling stock as well as container equipment and thus, the cost of rail freight is decreasing by each percentage we increase eastbound traffic,” noted GETO.

Chongqing as a pioneer

Chongqing was the point of departure of the first train connection on the New Silk Road. In April 2015, the first regular cargo train departed from the southwestern city in the direction of Duisburg, Germany. It did so crossing the Chongqing-Xinjiang-Europe international line, which was established in 2011. What used to be a weekly service, had now become a service running three times a week. Since the start of this service, the number of trains going back and forth have quadrupled.

Currently, trains originating from Chongqing reach over thirty European countries, and the goods brought back are transferred to other Chinese cities and destinations in Southeast Asia. In November last year, the first train on the new railway link between Mannheim and Chongqing arrived. Chongqing was also connected to the UK with a new service from C.H. Robinson, linking eight cities in China and eight cities in Europe, with the most western destination being Barking in the UK.

New routes

New and extended connections to and from Chongqing are also planned for 2019. This month, a new connection from Chongqing to Minsk, Belarus has commenced. The first train departed on 4 January and will also stop in the Russian city of Vorsino. It runs three times a week in one direction. The block train from Chongqing to the Polish border city of Malaszewicze will run every day, and to the Polish capital of Warsaw every Sunday, according to Smile Logistics.

Source: Railfreight.com

china uk

First rail freight service to China has departed from the UK

The first rail freight service from the UK to China departed on its 17 day, 7500 mile journey on April 10th.

British goods including soft drinks, vitamins and baby products are in the 30 containers carried by the train, which will be a regular service.The DP World locomotive left its terminal in Stanford-le-Hope, Essex, for Zhejiang province, eastern China. It will pass through France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan. It is cheaper to send goods by train than by air and faster than by sea, according to its operators.

The first rail freight service in the opposite direction, from China to the UK, arrived three months ago, the link to the news article we wrote is here. The new service is linked to Chinas One Belt One Road initiative, something we discussed in our news post here.

International trade minister Greg Hands said: ‘This new rail link with China is another boost for global Britain, following the ancient Silk Road trade route to carry British products around the world.‘It shows the huge global demand for quality UK goods and is a great step for DP World’s £1.5 billion London Gateway port as it also welcomes its first regular container ships from Asia.’

The train finally arrived in China on the 29th April (2 days later than the predicted 27th) and was greeted by traders and shipping company officials when it arrived at Yiwu West station.

one belt one road

China’s One Belt One Road Initiative – how will it affect global trade?

Since 2013 China have been advertising the One Belt One Road initiative, a scheme to join a network of roads, ports, railways and other links from East China through Southeast and South Central Asia to Europe.

This belt of land based links is paired with the Maritime Silk Road, which stretches from Australia to Zanzibar. The initiative involves developing six economic “corridors”: 1. a China-Mongolia-Russia corridor; 2. a new Eurasian “Land Bridge”; 3. a corridor from China to Central Asia and Western Asia; 4. a China-Indochina peninsula corridor; 5. a China-Pakistan economic corridor; and 6. a Bangladesh-China-India-Myanmar economic corridor.

Back in 2011, US President Barack Obama launched the Trans-Pacific Partnership (TPP) trading bloc across the Pacific region. The TPP is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (until January 23, 2017) and Vietnam.

Now that Obama successor Donald Trump has carried out his pledge to withdraw from the TPP, the expectations are that Chinese-backed strategies like the OBOR will gain momentum. China experts say that this is a positive development, but there is scepticism over whether Beijing will follow through with the large amount of funding needed, whether big debt-financed projects bankrolled by China will benefit the recipient countries, and whether those projects will actually make sense in the long run.

China experts and economists say that the initiative makes sense and that it will accelerate as the U.S. turns more insular under Trump. “It is unfortunate that many U.S. diplomats and members of the previous administration worked for nearly a decade to push toward the TPP and now it is torn apart,” says Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong. The U.S. is turning its back on the rest of the world at a time when the world needs an open and engaged America, he says. “It is very likely and understandable that China … will try to fill those gaps with this initiative, and that is very logical — it’s something the U.S. will later deeply regret,” Kuijs says.

One of the main factors driving the OBOR effort is the slowdown in China’s own economy. With this in mind the policies are seeing a drive to create new markets for Chinese goods, political influence in the region, and security for the country’s natural resources supply chain. The initiative is part of the larger plan to shift Chinese goods to markets and to create jobs for Chinese companies. The infrastructure also means that products can get from China to Europe in days rather than weeks – a significant reduction in cost and time.

It seems that moving forward without relying on trade from the US and other larger countries, and also Great Britain post Brexit, China is moving to become even more of a global trade super power. Realising that there has been a shift in the global trade agreements in recent years means that China is reacting proactively to an ever changing market. Forecasts show that the OBOR project may take half a century or more, but ultimately is more than likely to succeed.