The New Silk Road

Tales of the original Silk Road have always fascinated me, and I have been following the developments in the New Silk Road over the past 10 years. I have always dreamed of travelling the Trans-Siberian Railway and the line down to Beijing and when this new route opened up, my thoughts moved in that direction. I had the pleasure and privilege of visiting Mainland China in 1979, just four years after the end of the Cultural Revolution and have longed to go back! I realise that now, the main centres are very different to when I was there – no private vehicles, no motorways, no international hotels and basically no foreign food but I believe that once off the beaten track, things have not changed so much – who knows? - Ed

The 19th of March 2021 marked a significant landmark in Eurasian rail transportation. Ten years ago, on the 19th of March 2011, the first train of the China-Europe express departed and started a new era for rail freight. Since then, things have changed, and the service has experienced growth, with many more developments already being on the way.

Ten years ago, the first China-Europe freight train left Chongqing in Southeast China, with its final destination being Duisburg in Germany. On its way to Europe, it crossed Kazakhstan, Russia, Belarus and finally Poland. In the beginning, it wasn’t branded as the China-Europe Express but as the Yu-Xin-Ou train or Chongqing-Xinjiang-Europe International Railway, which later developed to the most emblematic Eurasian connection.

Initial course

Many companies had experimented with direct services from China to Europe before 2011. For instance, back in 2008, Foxconn dispatched its first train connecting Shenzhen with Europe and later in 2009, DB Schenker started operating a weekly itinerary between Shanghai and Duisburg.

Hewlett Packard should get the credits for the first thoughts of connecting Chongqing with Europe using Kazakhstan, Russia, Belarus and Poland as transit countries. These initial plans occurred because the hardware company moved its production sites to the Chinese inland and was looking for new opportunities to transport its products westwards.

The proposal was well received by Chongqing’s regional government, which saw an opportunity to acquire a central role in trade and supply chains. Simultaneously, the formation of the Eurasian Economic Union between Kazakhstan, Russia and Belarus in 2011 facilitated the practical implementation of such plans. Consequently, during the same year, the first trial trips started, and a regular weekly service began the year after, mainly transporting HP’s products. Understandably, the first China-Europe Express train was a block train with a single shipper.

Further development

Later, in 2015, the China Railway Express started taking a more central place in Eurasian transport. During that year, the Chinese government launched the ‘Vision and action to promote the construction of the Silk Road Economic Belt and the Maritime Silk Road in the 21st Century’ programme. The specific plan provided the service with a more active role and its own land-based logistics channel on the New Silk Road initiative.

The following year, the China-Europe Express acquired its customised development programme under the name ‘CRE construction and development plan (2016-2020)’. This plan identified the service’s development goals in a five-year timeframe. The service was gradually transforming into a vital component of China’s Belt and Road Initiative.

Starting from 17 yearly trains in 2011, the service skyrocketed to 6,363 trains in 2018. Moreover, during 2017, the train connected 59 Chinese cities to 49 European cities from 15 different countries. By March 2019, these numbers had become even more impressive since the train made around 14,000 trips during this year connecting 60 Chinese cities to 50 European ones.

The Chinese National Rail Network. The New Silk Road leaves through the top left corner

China-Europe Express and the pandemic

Despite the initial fears of a total collapse due to the

The first direct train from China arriving in England on the 18th January 2017 Unloading the first containers from China in the UK

worldwide virus spread, the China-Europe express managed to keep its numbers high during 2020. With more than 12,000 trains, according to the Chinese Railways, the service kept Eurasian supply chains running seamlessly, while at the same time other modes of transport were facing problems.

The route paved ten years ago has now acquired more participants, taking the logistical and operational game to the next level. We see more European hubs like Liege and Amsterdam entering the club of EU destinations. Additionally, the transit countries along the route are continuously flourishing, with new options popping up. Countries like Azerbaijan, Georgia, Turkey, Iran, and Uzbekistan are entering the competition dynamically. Furthermore, in terms of border crossings on the European side, Ukraine was a leading player during 2020 since it successfully joined the EU alternative entry points group.

Nevertheless, the service also faced some hurdles, with the container shortage being among the most important. Even after the pandemic’s first wave, the export/import balance between Europe and China was disrupted. Specifically, in November, China was sending approximately ten full trains to Europe per week. On the other side, eastbound trains did not exceed the number of two each week. As a result, China ended up suffering from a severe shortage of containers, while at the same time, European ports were piling them up. The issue of imbalances and container shortages constitutes one of the most critical things that need to be addressed by the rail sector in 2021.

What more is there to come?

One of the most awaited advances on the ChinaEurope Express service is the lifting of the ban on dangerous goods transportation. Many operators of the line, like DB Cargo Eurasia, have expressed their hopes for such a development. However, China itself is now considering revising its transport rules. Much lobbying is also taking place in this direction. For example, Li Shufu, chairman of the Geely Holding Group and a deputy to the Chinese National People’s Congress, brought up the topic in two separate congress sessions this year, pressing for a policy reform that everyone in the industry has been waiting for.

On top of that, Jet Young, Chief Representative in China at LLC Max Container, mentioned that the China-EU Investment Agreement is undoubtedly an essential piece of good news for the next stage of China-EU economic and trade cooperation. Both China and the EU will be able to enter each other’s broader market. The increase in China-EU bilateral trade will undoubtedly bring new sources of goods to China-EU Express. But how to effectively develop the European market and European partners’ participation will become more and more critical. The China-Europe express trains must both go global and bring in more trade.

“In the next stage, relevant companies from both sides should conduct more in-depth cooperation on the overseas market development and product design of the China-Europe express trains. In fact, the number of European logistics companies using China-Europe Express trains is constantly increasing. With these foreign partners’ participation, the China-Europe Railway Express can become a community of interests and a community of destiny between China and Europe”, he underlined.

Further markets to Open Up

China Global Television Network (CGTN) has published an article headlined “Modern railway routes to soon revive Great Silk Road”. Written by former Prime Minister of Kyrgyzstan, Professor of the Belt and Road School of Beijing Normal University, and member of Nizami Ganjavi International Center Djoomart Otorbaev, the article reads: “In my two previous pieces on this topic, I described the vast prospects for international trade that are opening along the east-west and north-south rail routes of the new Great Silk Road. The activation of these transport routes is related to the Chinese economy's rapid development and active development of international trade.”

“The transport corridors for the Central Asian countries have long and effectively worked in the northern direction. We have a common transport system with our neighbors in the north, which is a Soviet legacy. However, until recently, Central Asia did not have the opportunity to use its transit potential. And it is natural that immediately after gaining their independence, the countries of the region began to explore the possibilities of getting out of the "stagnant" situation in which history and geography have placed the area.”

A breakthrough from Central Asia's transport isolation was the launch of the highly efficient "eastern" Eurasian railway bridge ten years ago, connecting China and Europe through the territory of Kazakhstan and Russia. Last year alone, freight traffic through border crossings between China and Kazakhstan exceeded 20 million tons. On average, 30 trains pass through border stations every day.

Several "southern" railway routes are currently being actively developed. They will connect Central Asia to Indian Ocean ports via China, Afghanistan, Iran, and Pakistan.

Heading South

I am now focusing on new rail routes from Central Asia that run southwestward through Iran and the Caspian Sea to the South Caucasus and further to the Black and Mediterranean Seas, Turkey, and Europe. Two new routes from Central Asia to the western seaports have recently started operating, connecting Azerbaijan and Georgia with access to the Black Sea and Iran and Turkey, the Mediterranean, and Black Seas, and beyond to Europe.

Back in the late 1990s, the Turkmen and Iranian sections of the railways connected, which allowed Central Asian countries to enter the Iranian port of Bandar Abbas. Additionally, in 2014 a modern Kazakhstan-Turkmenistan-Iran rail link has been completed and commissioned. Known as the North-South Transnational corridor, the 677km long railway line connects Kazakhstan and Turkmenistan with Iran and the Persian Gulf. The project is estimated to cost $620 million, which Kazakhstan, Turkmenistan, and Iran are jointly funding. Adequate access to the Iranian railway infrastructure made it possible to connect it with the Turkish railway network, with further access to the Mediterranean and Black Seas.

Simultaneously, the Central Asian countries are working on the development of the South Caucasian transport corridor. A completely new railway, BakuTbilisi-Kars (BTK), was officially opened in October 2017. Its total length of the road is 826 km, and the line will carry one million passengers and more than 15 million tons of cargo annually.

Since the launch of this railway, its volume of freight transportation has constantly been growing. This line has already transported 21,260 twentyfoot equivalent unit (TEU) containers. In 2020, this figure reached 10,779 TEU. The project is part of a broader plan to connect Central Asia's railways with the South Caucasus and Europe via Turkey. After a ferry crossing the Caspian Sea, railways from Central Asia connect to the BTK. It also becomes possible to deliver goods between China and Europe along this route. As this route is shorter than the "northern" ones, the experts estimate that the delivery time between China to Europe could be reduced to 12-15 days.

Considering the prospects for such transportation, Turkey is showing great interest in exploring such a route. A necessary Marmaray railway tunnel under the Bosphorus Strait in Istanbul has already been built and is operating. It provides a direct link between the Asian part of the country and the pan-European rail network.

The first freight train, which went from China's Xi'an to Europe's Prague via the BTK line and Istanbul's Marmaray Tunnel, arrived in Prague on November 6, 2019. Traveling at an average speed of 40 kph, the China Railway Express reached Central Europe from Western China in 18 days.

During January-October 2020, the number of containers shipped from China via this corridor amounted to 2,343 TEU, 35 percent more than in 2019. However, almost all the cargo was moving in one direction - from China to Europe. But on December 4, 2020, the first freight train in reverse mode left Istanbul for China via this railroad. The route's total distance is 8,693 km, and the train has travelled it in just 12 days.

The main problem with this route is the cost of transportation. Today it costs about $1,200 to transport one container across the Caspian Sea. For this money, one can transport a container from Vladivostok to Moscow. However, logistics companies are confident that with an increase in the volume of goods transported, the cost of ferry transportation across the Caspian Sea will also decrease.

Thus, modern railway routes will soon run through Central Asia, connecting east and west, north and south. The region will become the Eurasian continent's logistics heart, located in the centre of a rapidly developing area. The Eurasian railway revolution, which will actively contribute to this landlocked region's rapid development, is taking place before our eyes. The economic revival of the new Great Silk Road is just around the corner.”