‘The idea of the New Silk Road should be rebuilt’
Could Europe become the leading player in Eurasian intermodal transport? And why is it crucial for this to happen? According to David Aloia from Hupac, the New Silk Road faces substantial logistical problems that could lead to its collapse without a shift of the status quo.
David Aloia was among the speakers of the European Silk Road Summit 2021 in Amsterdam. He shared his views on the future of intermodal transport on the New Silk Road and the powerplay between Europe and China that should be restructured.
A New Silk Road review
Aloia explained that to make New Silk Road connections more viable, the industry needs to dive into its history. The first train between China and Europe commenced ten years ago. Still, unfortunately, said Aloia, Eurasian trains seem to face the same challenges as they faced a decade ago without much change. Specifically, the documentation and the first/last mile processes are the only improved things. Other things like restricted goods regulations, capacity shortages, price instability or flow imbalances have remained the same.
What does this mean? Despite ten years of cooperation China and Europe have not found a shared path to follow and help each other resolve potential issues and bottlenecks. But why is this the case? It seems that the route of problems is the power balance between the two players. With Europe unable so far to stand against Chinese policies, it has proven almost impossible.
Big hubs instead of multiple destinations
Another problem that the New Silk Road faces is the number and spread of hubs in Europe. In China, for instance, the main hubs receiving and sending China-Europe trains are 16, with six of them handling the bulk of volumes and the remaining eleven spreading the traffic between them.
In Europe, the active hubs on the New Silk Road are 30. Double compared to China and with a theoretically better distribution of traffic and volumes. Yet, this is not a benefit, even if it sounds like that. In contrast, it is a disadvantage since the multiple hubs hinter healthy competition and do not allow synergies to develop. “It is a disaster,” said Aloia, who firmly believes that the New Silk Road in Europe should focus on a limited number of entry/exit/distribution hubs.
Schedule and imbalances
Finally, another focal point that would make a difference in improving the New Silk Road and its services is the scheduling of trains and the balancing of eastbound and westbound flows. Aloia explained that even today, there are trains coming from China to Europe unannounced since there are so many services that cannot be adequately scheduled.
On top of that, the imbalance of flows can make Eurasian rail transport unviable if continued like that. Currently, the percentage of westbound volumes is at 71 per cent, while eastbound volumes account for 39 per cent of China-Europe transport. There is a big difference that keeps growing, especially if we keep in mind that the percentage of eastbound-westbound volumes back in 2019 was 57 and 43 per cent, respectively.
Europe should take the lead or face disaster
These problems will keep existing and threaten to “make the New Silk Road a victim of its own success” if the power balance between Europe and China does not change. According to Aloia, it’s in the hands of Europe to stand against China’s omnipotence and draw a policy that will be beneficial for European companies. It is time for Europe to take the lead and stop relying on China so much while optimising its assets.
“In Europe, we have the knowledge, the skills, the background and information. We have a good network with many competitors and infrastructure, which could have better performance, but we are on a good track. We have to be smart in a more dynamic way and acquire a more dynamic role against China. This is the only way for the New Silk Road to remain viable. If this does not happen, the New Silk Road as we know it will end up in a disaster,” concluded Aloia.