Steady growth on the New Silk Road while prices remain stable

Also this year, traffic on the New Silk Road rises despite all the challenges facing the global supply chain. In the first half of this year, 7,323 trains moved between China and Europe, according to Customs China. In the year 2020 as a whole, the authoriy recorded a number of 12,406 trains between the continents.

“The growth is more than the operators themselves expected”, said the Kazakh-Russian-Belarusian company UTLC ERA, which transports 90 per cent of all transit freight between China and Europe. Based on its own figures, the operator expects a 20 per cent increase of traffic this year, compared to last year. We expect to transport over 670.000 TEUs with our services this year. Last year, this was 546,900 TEUs. “We are two years ahead of our forecasts”, said CEO Alexej Grom.

Number of trains between Europe and China. Source: China Customs. Graphic: RailFreight.cn

Attractive rates of rail

The reasons for growth are complex. Ocean shipping was subject to several disruptions in the first half of the year, and the transport costs increased massively. In the meantime, rail transport costs remained fairly stable, and maybe more importantly, trains remained running. This has resulted in a shift ro rail from ocean shipping, at least for the time being.

This trend was already evident last year. Although other modalities reported losses and decline, the New Silk Road surged in traffic. “Already in 2020, UTLC ERA recorded a growth of 64 per cent compared to 2019, from 333,000 to 547,000 TEUs”, the company states. “These are goods worth 31.5 billion dollars, representing 5.5 per cent of the value of trade between Europe and China in total. Five years ago, in 2016, the company was still moving 100,983 TEUs.

“The past year and a half has not only led to an unpredictable increase in Eurasian transports by rail. This form of transport has become a real alternative to road and water transport for many companies trading between Europe and China. This is certainly due to the stable prices, which we do not intend to increase now either, but also due to the improved speed and reliability”, says Grom.

Broad gauge network

UTLC ERA, a cooperation between the railways of Russia, Kazakhstan and Belarus, is responsible for transit on the broad gauge network between China and Europe. Reportedly, it covers this network, which translates into a 5,430 kilometer route, in 5.5 days nowadays.

According to Grom, the capacity of this route is constantly improving. “At the beginning of June, for example, a new transhipment terminal – Dostyk TransTerminal – was opened on the Chinese-Kazakh border. The targeted shipping capacity is 700,000 TEU. UTLC ERA is already doing test runs with container train shipments through the new terminal.

Kaliningrad

“It is nice that the terminals at the borders are being expanded. This does not only concern the terminals on the Chinese border. We also note rapid development in Belarus and in the Kaliningrad area,” emphasises the UTLC ERA chief.

Indeed, the route via Kaliningrad has proven to be an effective complement to the overland routes between China and Europe. From the ports of the Russian enclave, many possibilities arise for multimodal links to various European ports. In total, the volume of Eurasian traffic via this route increased by 320 per cent in 2020 compared to 2019, and it has plenty of capacity to grow even further. According to UTLC ERA, there is capacity to fourfold these volumes.

New routes and hubs

Apart from new capacities, new routes are constantly developed. In 2020 alone, UTLC ERA operated 64 new routes, including 24 eastbound and 40 westbound. Moreover, 23 new departure and arriving points for freight traffic have been added to the map, 18 of which are in Europe, the operator says.

The main Chinese hubs are Xi’an with 36 per,cent, Chengdu with 22 per cent and Chongqing with 20 per cent. The Chinese provinces of Changzhou, Hefei, Yiwu and Wuhan also handle a lot of traffic.

Top 3 goods on the train

Based on their 2020 data, UTLC ERA is also able to share which goods are mostly transported on the train. For westbound traffic, this is electronics (85,135 TEUs), mechanical engineering products (80,556 TEUs) and automotive parts (57,796 TEUs). These three product groups make up 40 per cent of the transported goods, according to the company.

Interestingly, about three years ago their share was still 80 per cent. Low-priced product groups have joined the train since then, such as plastic parts (28,838 TEUs, wood (14,859 TEUs), textiles (12,825 TEUs), optical goods (10,704 TEU)s and rubber and rubber products (7509 TEUs).

Author: Majorie van Leijen

Majorie van Leijen is editor of RailFreight.com, online magazine for rail freight professionals.

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