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