Opinion | Despite Ukrainian conflict, China Railway Express stays on track
By Augustus K. Yeung
Introduction
The Russian-Ukrainian conflict is intensifying. 260 million Ukrainian refugees have fled to neighboring countries, leading people all over the world feeling concerned. Are those besieged people starving?
We have heard that the Red Cross Society of China is sending its second batch of humanitarian aid to Ukraine, but have the supply lines been blocked? Liz Alderman and Jenny Gross of The New York Times reported that supply lines were snarled again under sanctions.
Fortunately, Ji Siqi, a Chinese explainer, is able to answer some of our consequential questions.
"The China-Europe Railway Express, or China Railway Express (CRE), is a key element in President Xi Jinping's Belt and Road Initiative. The network has served as a critical pipeline for Chinese exports to Europe, especially during the pandemic. But with Russia's invasion of Ukraine, it is facing the most serious challenge in its history," writes Ji Siqi. ("Can link stay on track in the wake of Ukraine invasion?" South China Morning Post. Monday, March 7, 2022)
What is the history of CRE?
Providing an alternative to container shipping, the CRE transports a variety of Chinese goods – ranging from clothing and household appliances to car parts – containers to European consumers by rail.
It does not travel along a single route, but a network of railways that span over the two continents –departing from China, passing through Central Asia and finally arriving in western Europe – mirroring the ancient Silk Road.
The first train departed in 2011, from Chongqing in southwestern China to the German city of Duisburg.
The demand for freight was significantly boosted after Xi officially launched the Belt and Road Initiative in 2013 amid calls to deepen economic cooperation between China and Europe.
The coronavirus pandemic, which has snarled port operations globally, caused massive shipping delays and sent sea freight cost soaring, has also driven many exporters and importers to explore trains as a transport option.
In 2021, a record 15,183 train trips were made along the Eurasia route – compared to only 17 a decade ago – transporting 1,46 million twenty-foot equivalent unit (TEU) containers, according to China's state railway operators. As of January, more than 50,000 train trips have brought 4.55 million TEU of cargo worth US$240 billion to 180 cities in 23 countries in Europe, figures from the China State Railway Group Company showed.
What routes does CRE cover?
The eastern central and Western corridors are the CRE's three major routes.
The eastern route is designated for exports from the coastal areas, such as Yiwu – a city dubbed China's manufacturing showroom in eastern Zhejiang province.
It exits China through Manzhouli in the Inner Mongolia autonomous region and passes through Russia before entering Europe through Belarus and Poland.
The central route carries goods made in central China, as well as southern coastal provinces such as the manufacturing powerhouse, Guangdong.
It enters Mongolia through Erenhot – another border city in Inner Mongolia – and then passes through Russia before entering eastern and western Europe.
The Western route is mainly for exports from western China, and it goes into Kazakhstan via Alashankou or Khorgos in the Xinjiang Uygur autonomous region and then further into Europe.
Most of the routes run through Russia, Belarus and Poland, while a small number of trains also pass through Ukraine and en route to Hungary.
How has CRE been affected by the Ukraine invasion?
As the war continues, concerns over further shipment and supply chain disruptions along the route are growing.
Trains passing through Ukraine have been suspended or diverted, while the main route, which does not pass through Ukraine, has been so far operating normally.
But the sanctions on Russia – a country all the main routes must pass through – have further complicated the situation.
Both the European Union and the United States have included Russian Railways – the country's state-owned railway company – on their sanctions list.
Even though the European Union sanctions so far had been financial – focusing on the transactions of financial assets – which means rail operations were not included, the growing uncertainty had led many European customers to cancel their bookings and switch to sea freight, industry insiders said.
And the joint decision by the US and its Western allies to exclude selected Russian banks from the Swift financial messaging system has also raised questions over freight settlements for the Russian section of the route, although the actual impact remains to be seen.
What are the challenges ahead for CRE?
Passing through dozens of countries is an asset during peacetime, but amid rising geopolitical tensions, the CRE seems fragile compared to air and ocean freight.
Efficiency is another key weakness as the CRE is used predominantly for westbound Chinese exports, with empty trains often returning to the mainland.
It has heavily relied on government subsidies for operation and rapid expansion since it started, as its own profitability level remains low.
Congestion also remains a critical problem for all the routes due to strict border check procedures.
The issue has been amplified since the coronavirus pandemic began as more disease-prevention measures are being carried out.
Conclusion
Just as pressure eases from pandemic, war creates new problems, write Liz Alderman and Jenny Gross. ("Supply lines are snarled again under sanctions". The New York Times. Saturday-Sunday, March 12-13, 2022).
"Russian ships barred from docking in Britain. Cargo containers piling up at European ports. Airfreight rerouted around Ukraine and Russia…Russia's invasion of Ukraine and global sanctions against Moscow are rippling through logistics and supply chains, creating bottlenecks in the transport of goods and commodities, and threatening fresh economic pain for countries and business near the conflict zone," The Times reported.
Fortunately, China was insightful enough to have built this railway network that stretches from China to Europe for President Xi Jinping's Belt and Road Project. Although it is losing money, the CRE is sending supplies to the countries near the war zones.
I seem to be hearing, "From China with love."
The author is a freelance writer; formerly Adjunct Lecturer, taught MBA Philosophy of Management, and International Strategy, and online columnist of 3-D Corner (HKU SPACE), University of Hong Kong.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Augustus K. Yeung:
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