Every now and then, those in the business of moving goods from China to Europe are given cause for excitement when new developments in landbridge links emerge, promising large cuts in transit times and costs.
The big development last year was the signing of an agreement by the German, Chinese and Russian state railways to make scheduled and reliable rail freight services between major Chinese and European commercial cities a reality. More recently, the issue emerged again with China’s announcement of plans to build 12 new highways crossing from its western Xinjiang province into Central Asia.
The overland shipping of cargo from Asia to Europe is certainly not a new thing. It was done via the ancient Silk Road, and in modern times is still done through infrastructure such as the Trans-Siberian Railway (TSR).
But overland options have never managed to take more than a very small percentage of cargo moving between the two continents.
The big problem has been an inability to achieve the level of coordination required for shipments to cross many national borders without excessive delay. China’s badly administered and highly unreliable rail freight network, together with infrastructure and equipment shortfalls are a case in point.
However, in the last couple of years, the opening up of the logistics sector to foreign participation, significant infrastructure investments and more political and security motivations for building transport connections with central Asia, suggest improvement is on the way.
There is certainly no lack of encouragement from neighboring countries.
Kazakhstan in particular has shown its willingness to invest heavily to help route China-Europe cargo through its landlocked borders by rail. One of the country’s largest freight forwarders and a key partner of Kazakhstan Railways, Soyuztranslink (STL), now offers rail freight services from Shanghai and Beijing to several points in Kazakhstan and on to all main trading commercial centers in central Asia and eastern Europe.
Until these improvements translate into substantial reform of China’s railways administration, though, the prospect of very large volumes of cargo traveling to Europe by rail will not materialize.
A more realistic chance lies with the trucking sector. The 12 new highways to be constructed in northwest Xinjiang this year will link to roads in Russia, Kazakhstan, Kyrgyzstan and Pakistan. They will plug into the UN’s Asian Highway network, consisting of 141,000 kilometers of arteries criss-crossing 32 Asian countries.
Pilot caravans of cargo from China to Europe have already been successfully tested by the Geneva-based International Road Transport Union (IRTU) and have demonstrated the method’s sound economic and environmental sense. A container bound for Hamburg from Urumuqi that is moved via the port of Shanghai, needs to travel some 24,000 km, while the overland route through Moscow is only 6,750 km.
Until now the largest obstacle facing forwarders in the launch of major overland commercial services by road have been customs delays and other problems at the numerous border crossings en route.
Join the club
A significant step to solving these would be if China were to join the relevant UN conventions regulating international road transport. This would, in theory, mean that a truck could travel all the way from China to Europe without the contents being inspected along the way.
China is expected to ratify the UN conventions this year and there is little reason to think why this will not happen.
Beijing realizes the competitive benefits for the country’s export sector inherent in making overland transport to Europe a reality. In addition, the move could herald a boon for the underdeveloped western provinces, with goods produced there destined for the US or Europe currently needing to be shipped thousands of kilometers in the wrong direction before being loaded onto ships.
Perhaps most important, sturdier transport and trade links with Commonwealth of Independent States countries would help alleviate some of China’s energy and raw materials needs, something that remains a major government priority and key to the country’s continuing development and security needs.