Recently, several incentives have been developed to promote rail-sea transportation in China. This includes reductions in rates and subsidies for goods transported by rail to eastern ports. Will this move cargo away from the new Silk Road and towards ocean freight? Our Chinese sister publication Railfreight.cn interviewed five rail freight forwarders in China to get their views on the rail-sea subsidy situation.

To begin with, let’ stake a look at the subsidies currently in place, according to the industry.

• There are discounts of up to 50 per cent for goods that enter the Russian Far Eastern ports and continue their journey by rail in China.
• Ningbo Port currently offers a maximum subsidy of 135 yuan (17.8 euros) per TEU for goods transported by rail to the port. The specific subsidy varies depending on the distance of domestic rail transportation.
• Since 15 April, export goods from China’s western regions that are declared at the Wuwei Bonded Logistics Center receive a 30 per cent discount on the rail costs to eastern ports.
• Some domestic ports also implement a policy of “same port, same price,” allowing inland shippers to enjoy the same shipping price as those in portal cities, with no additional charge for inland rail transportation (such as from Ganzhou Port to Xiamen Port).

Giving up on rail?

Will these intermodal policies move shippers away from the New Silk Road and towards ocean freight? Andrew Jiang, the general manager of Air Sea Group, agrees that “intermodal transportation will be a trend, and subsidies are becoming increasingly attractive, especially in the areas of Hunan, Jiangxi, Anhui, and Jiangsu.
“For the export of products to Europe, ocean freight is currently cheap enough, so shippers who choose sea transport will inevitably give up on the New Silk Road.”

Not everybody would agree on this. Frank Shao told railfreight.cn that the current intermodal subsidy was declining year by year, and the key reason for its popularity wasn’t the subsidy but high demand. “Road transportation is too expensive, inland waterway transportation is limited by the season, and intermodal transportation by rail and sea provides stable services, which can meet the urgent needs of the market.”

Bria Liu, founder of TopRail, also said that “subsidies will not increase, and they will not harm the rail freight market because they are benchmarked against road plus sea transport.” If subsidies will not harm the rail freight market, could they open up a new market in the meantime?

A new market?

Frank Shao said that intermodal transportation was mainly aimed at areas such as North/South America and Southeast Asia that are difficult for rail transportation to reach. With the support of intermodal transportation policies, inland markets could be explored, such as those within China, through cultivating shippers’ habits of transporting goods by rail to ports.

Andrew Jiang also believes that promoting intermodal transportation could serve as Southeast Asia’s new way to Europe. “If the subsidy can be applied to goods transported through these routes, it will attract shippers from Southeast Asia as well. Currently, goods are shipped by sea to Europe, but they could use the China Europe Express to serve the European market in the future.”

However, how long will this take? “Market cultivation requires time and the support of preferential policies. Collaboration among shippers, policymakers, and other stakeholders is essential for promoting multimodal transportation”, Jiang said.