China-Europe rail prospers as alternative to sea, air cargo

In ancient times, the Silk Road blazed by imperial envoy Zhang Qian 2000 years ago carried caravans of Chinese silk, Indian spices and Persian brocade between the Middle Kingdom and Europe.

Today, a new land route pieced together by railways in six countries takes a matter of days to transport made-in-China products, from laptops to Airbus parts, and made-in-Europe baby formula and wines between Europe and Asia.

Starting from Zhengzhou, a logistics center and transport hub in central China's Henan Province, the 10,214-kilometer Zhengzhou-Europe International Shuttle Train crosses the border at the Alataw Pass in Xinjiang before passing through Kazakhstan, Russia, Belarus and Poland on its way to Germany's Hamburg.

The containers have to be transferred by crane first to the Russian-style broad gauge line at the Kazakhstan-China border before being transferred back to the standard gauge at the Poland-Belarus border.

NEW "SILK ROAD" PROSPERING

The 15-day journey following the Eurasian land bridge, also dubbed the "new Silk Road," offers an alternative to slower and riskier sea freight and much costlier air cargo.

The new intercontinental rail route can save about 20 days compared with maritime transport and costs 80 percent less than air shipment, according to the Zhengzhou International Inland Port Development Co. Ltd., which runs the train service with partner rail companies in each country.

The freight train normally consists of 51 containers filled with vehicle parts, cables, machinery, shoes, and clothing en route to Hamburg, some of which are discharged at Warsaw, Poland, and some that are headed to Antwerp, Belgium or Rotterdam in the Netherlands.

Zhengzhou INLEDCO Lighting Co. Ltd., which once transported its export LED lighting products by air to Europe, now uses the Zhengzhou-Europe railway. General manager Liu Qinghua told Xinhua that this helps cut the company's overall costs by half.

Demand for the rail cargo service has exploded since its maiden journey in July last year, according to the Zhengzhou International Inland Port.

From July 18 to the end of 2013, the rails carried 9,461 tonnes of cargo, valued at about 307 million yuan (about 49 million U.S. dollars), in 14 trains. In the first six months of this year, the figures more than doubled, with cargo worth 884 million yuan transported in 20 trains.

Zhao Wenming, general manager of the Zhengzhou inland port company, expects cargo volume and value to skyrocket this year, as the train has begun to operate twice a week regularly since May this year, compared to the original frequency of once weekly or less.

The growing demand has also been reflected in the train's length, which increased from the original 41 containers to the current 51.

In July, the shuttle train started to provide return service on a stable basis twice a month from Hamburg to Zhengzhou, carrying sophisticated materials, advanced machinery, baby formula, wine and even finished vehicles.

The booming business comes at a time when many manufacturing companies are moving to inland China from coastal areas, creating growing need for logistics and transportation services for the transport hub.

The train has also evolved from a regional service to a national one. According to the rail freight service operator, more than 70 percent of cargo comes from outside Henan Province, mainly the coastal Pearl River Delta, Yangtze River Delta and the Bohai River Economic Rim.

Tai'an Bowins Garment Company in coastal Shandong Province used to transport garments by road to a port in Qingdao and then ship them overseas. Company manager Zhao Xingwen told Xinhua that most of his products now go to Europe through the train in Zhengzhou, saving at least 15 days and helping avoid loss of orders due to unstable maritime transport.

Due to its secure and low-cost service, companies from neighboring countries are also jumping on the bandwagon. In April this year, the first batches of electronics made in the Republic of Korea were transported through the railway to Europe.

According to Zhao of the inland port company, companies in Japan, Hong Kong and a few Southeast Asian countries have also started using the shuttle train, and more firms are approaching the rail company for future cooperation.

RECIPES FOR SUCCESS

China still heavily relies on sea freight in its trade with Europe. Land transport allows traders to avoid passing through the pirate-plagued Gulf of Aden and the Strait of Malacca.

Over the past three years, several mainland cities, including southwestern Chongqing and Chengdu, Wuhan in central China, and northeastern Shenyang have launched rail freight services to Europe. But the Zhengzhou service is by far the most successful and does far bigger business.

Speaking at a meeting earlier this year, Xue Yunwei, vice mayor of Zhengzhou, attributed the success of the shuttle train partly to the complete transport system in the city, which is a hub in central China for railways, airlines and highways.

The ability to provide so-called "multimodal transport service" is seen by Zhao as the key to success.

Through its partner companies specializing in highway, maritime and air transport, the inland port company picks up cargo from factories before transporting it to Zhengzhou and Europe. Zhao said they are able to use the most cost-effective means of transport at all stages.

In addition to the China Railway Corporation, the company has or will soon sign partnership agreements with DHL, COSCO, DAMCO, Schenker, UPS, China Post, and China Shipping among other leading logistics companies.

The government also plays a big role in ensuring the effective and efficient operation of the rail cargo service, which involves cross-border customs, product inspection and quarantines.

Vice Mayor Xue said the government handles all the problems so that the company can focus on how to provide the best service.

Zhengzhou municipal authorities have organized several meetings, such as one in November of last year when senior customs officials from the nine countries along the rail route gathered in the city to solve problems affecting the railway's operation.

Railway cargo between China and Europe holds enormous potential, said Guo Yuhua, vice director of the China Railway Corporation's transportation bureau.

Among the 110 million tonnes of goods exported to 13 major European countries in 2012, about 78 million were suitable for railway transportation. However, only 1.5 percent of trade volume was achieved via the railway, according to research by the CRC.

Trade volume between China and Europe is currently 566 billion U.S. dollars and is expected to reach one trillion U.S. dollars in 2020.