China and Germany have established new freight rail link -
important implication for business, commerce, economic development and trade between China, Kazakhstan, Central Asia and Europe
Existing rail link between China and Europe
There are two existing freight rail links between China and Europe. One is between Chengdu 成都 in Sichuan Province 四川省 and Lodz in Poland. Another is between Chongqing 重庆 and Duisburg in Germany. Both were established in recent years. The 9,826 km Chengdu - Lodz link was established in April 2013. Each trip takes 14 days, which is only one third of the time taken by sea. Freight cost is estimated to be reduced by 75%. The freight service was increased from once a week to three times a week within a short period after launching, indicating huge demand for the service. The 10,800 km (6,750 miles) Chongqing - Duisburg route was established in July 2011. Each trip takes 13 days. The annual freight volume handled via this link in 2012 was 2 million metric tons. The estimated future peak volume is 15 million metric tons.
New rail link between China and Europe
In addition to the two existing rail links between China and Europe mentioned above, a new freight rail link is established between Zhengzhou 郑州 in Henan Province 河南省, China and Hamburg, Germany in July 2013. The 10,214 km rail link starting from Zhengzhou passes through Xinjiang (China), Kazakhstan, Russia, Belarus, Poland before arriving in Germany. It takes 18 days for each trip and has cut the freight time by half in comparison with freight by sea. There are two services per week to start with. The freight path requires two transfer of containers by crane to overcome different rail gauges, one at China Kazakhstan border and the other at Belarus Poland border.
While the two existing rail links serve mainly the western and southern regions of China, the new rail link serves the northern central region of China. Zhengzhou 郑州, capital of Henan Province 河南省, with a population of 8 million, is located at the junction of the major north south high speed rail trunk (Beijing 北京 - Shenzhen 深圳 / later Hong Kong 香港) and a major east west high speed rail link (Lianyungang 连云港 - Xian 西安/ Baoji 宝鸡). It is an important political, economic, technological, educational and logistics centre of the region. Hamburg, 2nd largest city in Germany, with a population of 5 million (metropolitan Hamburg), is the 2nd largest port in Europe after Rotterdam.
China is one of the major trading partners of Germany. The value of bilateral trade between the two countries was US$190 billion in 2012, with China exporting mainly consumer goods and Germany exporting mainly high tech products, construction equipment, cars & parts, medical equipment, etc. The Zhengzhou - Hamburg rail link will be used to deliver freight services between Zhengzhou and Almaty (Kazakhstan), Moscow (Russia) and Klaipeda Port (Lithuania) later this year.
Implication for business
The opening of the second freight rail link between China and Europe this year means that there is another alternative route for bilateral trade between China and Europe. This should have a significant beneficial effect on business and trade between the two regions. Benefits include:
- Lower freight cost for goods traded between China and Europe, particularly Germany.
- Shorter freight time for goods traded between China and Europe, particularly Germany.
- Potentially higher volume of trade because final cost of goods for users and consumers in both regions will be lower.
- Trading of new type of goods is possible for those types which were too expensive to be sent by air and/or not good to be sent by sea because of long freight time.
- Further boost to economy of countries along the route of the new rail link.
The significance of this alternative shorter route for movement of goods between East Asia and Europe, and potentially extending to the East coast of North America over the Atlantic, cannot be underestimated.
Fabian Chan
Source: Reuters, Germany-north.com, wantchinatimes.com - 2.8.2013
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