China-Europe Rail Transport zhang zhao general manager land transport dept sinotrans
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China-Europe Rail Transport
zhang zhao general manager
land transport dept
sinotrans
review and prospect
Expanding trade scale Between China and EU
• Every day, over US$1.5 billion worth of trade is being conducted
• In Jan and Feb of 2015, the Investment from China to EU reached US$3.36 billion, increasing by 1050%, while investment from French and German to China increased by 366.7% and 59%
• In 1975 the trade between China and EU only US$2.45 billion.
• In 2014 the trade volume is US$615.14 billion, 19%
of China’s global trade volume. 2004 2012 2013 2014
Import 48 184.14 195.72 244.25
Export 127 372 370.27 370.88
0
100
200
300
400
500
600
700
Trill
ion
USD
Trade of China and EU in 2004-2014
Top 10 EU countries trading with China
COUNTRY TRADE VOLUME EXPORT IMPORT
Germany※ 177.75 72.71 105.04
UK 80.87 57.14 23.73
Holland 74.28 64.93 9.35
France 55.80 28.71 27.09
Italy 48.05 28.76 19.29
Spain 27.71 21.50 6.21
Belgium 27.28 17.22 10.06
Poland 17.19 14.26 2.93
Sweden 13.96 7.17 6.79
Czech 10.98 7.99 2.99
※The trade of Germany with China makes 28.9% of total EU trade with China.
Cargo Transport Options for China-EU trade
• 95% of trade in goods are transported by deep sea.
• Only 5% of products are transported by rail route
•High reliability The rail corridor is much safer than marine route either through the Suez Canal or Cape of Good Hope. Also there is low risks of congestion, attack, and weather influence on transport in rail route.
•High energy efficiency •Fast delivery
The average transit time for current China-Europe block train is 12-16 days, 1/3 of deep
sea transport time.
Comparative Advantages of China-Europe Rail Transport
Deep sea option: 45 days, $5500/40’ Rail option: 12 days, $8500/40’ Air option: 7 days
Take cargo from Chengdu to Poland for example
Comparative Advantages of China-Europe Rail Transport
In 2014, 308 China-Europe block trains were successfully operated, with cargo
volume 26070FEU which increased 285% compared with previous year.
Blow are the available lines of block train from China to EU countries: Line Starting City Frequency
Destination station
Arrival country
east line Suzhou 1 train/month Warsaw Poland
middle line Zhengzhou Not fixed Hamburg Germany
west line Chongqing 3 trains/week
1 train/ week (back load) Duisburg Germany
west line Zhengzhou 2 trains/week
1 train/ week (back load) Hamburg Germany
west line Chengdu 1train/week Lodz Poland
west line Wuhan 1train/week Lodz Poland
west line Yiwu Not fixed Madrid Spain
west line Changsha Not fixed Duisburg Germany
Performance of “China-Europe freight trains”
ZHENGZHOU-HAMBURG
Total distance: 10214KM Total running time: 15 days
WUHAN- LODZ
• Total distance: 10863KM • Total running time: 15 days
CHENGDU- LODZ
•Total distance: 10045KM •Total running time: 12-15 days
CHONGQING-DUISBURG
• Total distance: 10769KM Main Cargoes: laptop (40%)
• Total running time: 16-18 days
Suzhou-Wasaw
• Total distance: 11200KM
• Total running time: 13-14 days
Current Problems in “China-Europe freight trains”
Lack of back load The market of China-Europe rail corridor is still in cultivating. While demand on China to Europe block train capacity keep increasing, the back load were rarely arranged successful (back load volume less than 10% of ).
One- way freight costs still high Most of freight offers from China-Europe block trains are given with local government subsidies (which are estimated to be stopped within 2-4 years). Freight cost-saving requires more negotiation with countries involved.
Cargo detention time need to be shortened.
So far for middle line (via Mongolia-Russia) the average cargo detention time is up to 30% of total transport time. And 60% of detentions are caused by document problems and Customs inspections.
Focus on the back load market exploring , especially on market of auto import, equipments and machines, chemical products and agricultural products.
Inland core cities along the rail line should speed the opening up and optimize the advantaged industry function to attract investment and trade from Europe.
Block train schedule and network shall be perfected to attract more cargoes and then lower down the one-way costs.
Standard document and unified coordination mechanism should be established for whole-course transportation to improve efficiency of customs clearance and reloading to shorten cargo detention time.
Solution Suggestions
Prospect of China-Europe Rail Transport The China’s OBOR Plan will boost China-Europe rail Corridor
ONE BELT
SILK ROAD ECONOMIC
BELT
21st Century
Maritime Silk Road
ONE ROAD
What is OBOR?
OBOR is an investment and trade promotion scheme intended to deepen economic connections between China and the rest of the world.
OB:
Northeast & Northwest China—Russia—Europe (Baltic Sea)
Northwest China -- Central and Western Asia -- Persian Gulf
and Mediterranean
Southwest China -- Indo-China Peninsula --Indian Ocean
OR:
China -- Malacca Strait --Indian Ocean
China -- South China Sea -- South Pacific
Where?
WHERE?
The Framework
Building new Eurasian Land Bridge
Economic Corridors:
China-Mongolia-Russia
China-Central Asia-West Asia
China-Indochina Peninsula
Chinese Key economic industrial parks (cooperation platforms)
LAND Building smooth, secure and efficient transport routes connecting major sea ports
Economic Corridors:
China-Pakistan
Bangladesh-China-India-Myanmar
SEA
OBOR Boosts China-European trade According to the belt and road initiative plan, unimpeded trade on the SILK ROAD ECONOMIC BELT will be a major task. The contents include: • Customs cooperation such as "single-window" in border ports, information exchange between countries and improvement on customs clearance capability. •Cooperation in the fields of inspection online checking, quarantine and certification. •Lowering non-tariff barriers, improving the transparency of technical trade measures, etc. •Improving the division of labor and distribution of industrial chains in China to enhance overall competitiveness of regional industries. The unimpeded trade will offer a sound environment for investment and trade , which surely will positively influence China-European trade in future.
OBOR Boosts China-European Rail Transport
The new silk road economic belt initiative will speed up part of industries shifting from coastal and eastern cities to middle and western regions of China, especially the labor-intensive industry and resource-based industry.
The development of middle and western regions will promote
the fast growth of China-European rail transport.
OBOR Boosts China-European Rail Transport
The OBOR plan requires to set up coordination mechanisms in terms of railway transport for the China-Europe corridor, to cultivate the brand of "China-Europe freight trains“. According to China Railway’s plan, New lines and destinations will be added into map. About 12 new lines will be added and more destinations in Europe (including Leipzig, Nuremberg, Stuttgart, Munich of German, Brussels, Vienna, Budapest, Prague, Amsterdam etc) will be available in near future. And the block train will be arranged with fixed schedule. The train frequency will be 1 train per day. The transport time will be shortened to be around 12 days. Also, Overseas network will be implemented for providing door-to-door service.
AIIB Offers Fund for China-Europe Corridor Construction
Introduction of Asian Infrastructure Investment Bank
• Members: 57 countries/regions, except for US and Japan)
• Authorized capital 100 Billion USD. China offers 50 Billion USD
• Investment focus on Asian infrastructure areas:
Oil and gas pipelines
Port
Railway
Road
Electric power
Communication
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