For example, China is rolling out its “One Belt, One Road” (OBOR) policy, intra-Asia and cross-border trade is on the upswing, slow steaming is now a common practice and air fuel costs are fluctuating. Plus, since the very first freight trains were introduced on rail connections between China and Europe four years ago, they have been in high demand. Places like Chengdu and Lodz, Suzhou and Warsaw and many other parts of China and Europe are now directly linked by train.
21st Century Silk Road
China’s OBOR policy is expected to generate around €59 billion in new investments in 2015 and a possible 0.25 percent increase in China’s GDP. President Xi pledged to make a bold upgrade to these intercontinental connections late last year. Over the next few years, €37 billion will be invested in what’s being called the “New Silk Road.”
The aim is to revive intercontinental land routes as well as maritime links between North Asia and Europe
The aim is to revive intercontinental land routes as well as maritime links between North Asia and Europe, some of them with traditions dating back centuries, and thus reducing transportation bottlenecks within Asia and beyond. The plan includes upgrading a rail connection to Istanbul via Central Asia and Iran, in addition to the existing link through Russia. These tracks should help to further integrate China’s Western provinces, which are constantly gaining importance as manufacturing centers, into world trade routes. They’ll also offer a viable alternative to other modes of transportation from the Eastern shores of the country. Another focus of this Silk Road project is the development of ports along the Southern seaway.
“One Belt” begins in Xi’an in Northwest China before stretching west through Urumqi to Central Asia. From there it goes to northern Iran before swinging west through Iraq, Syria, and Turkey. From Istanbul it crosses the Bosporus Strait and heads northwest through Europe, including Germany and the Netherlands. The route then heads south to Venice, Italy. “One Road” – the Maritime Silk Road – begins in Quanzhou in China’s Fujian province and heads south to the Malacca Strait. From Kuala Lumpur it heads to India and crosses the rest of the Indian Ocean to Nairobi, Kenya. From there the route heads north around the Horn of Africa and moves through the Red Sea into the Mediterranean before it meets the land-based Silk Road in Venice.
Rail and the multimodal mix
Rail adds to the multimodal mix – an alternative that can save considerable time and money. For example, from Chengdu in Sichuan province, goods need to be trucked some 2,000 kilometers to the closest port where they’ll spend roughly a month at sea before reaching Europe. Compare that to trucking the goods a mere 20 to 50 kilometers to the closest railway station, followed by about two weeks on the tracks to Europe. DHL RAILAIR is a great example of the multimodal advantage. Cargo travels first by rail to Urumqi and then by air to Europe. And in Africa, we offer DHL SEAIR, which allows shippers to opt for sea freight to Dubai, followed by air. Between Shanghai and Japan, we have started to include ferry and rail services on Japanese territory. The mix-and-match combinations also offer more agility and flexibility in the supply chain, catering to product seasonality and giving customers an option to balance cost versus transit time.
Even if time and money isn’t your prime motivation, multimodal options usually offer a more favorable ecological footprint than the traditional modes, with rail being the cleanest option. For example, DHL’s scheduled block train service from Suzhou to Warsaw can reduce carbon dioxide emissions by up to 90 percent in comparison to air freight.
China’s domestic improvements
Chinese decision-makers are not only focused on cross-border connections. A massive infrastructure extension is also underway along the Yangtze River, a 6,400 kilometer waterway crossing the country from the glaciers of the Tibetan plateau to the East China Sea close to Shanghai. So far the opportunities to profit from this major thoroughfare have been patchy as they depend on water levels. Now the State Council has made part of the river bank area a special economic zone and major improvements are being made to the logistics, especially in Chongqing, Wuhan and Shanghai, with container ports and a rail and road network as a backbone.
Of course, some of these multimodal offerings are no plain sailing. Take the example of the rail bridge from China to Europe: The regions we are crossing suffer from freezing cold in the winter – temperatures below -40°C are not uncommon. These are harsh on equipment like computers or mobile phones. Our specially developed temperature controlled container incorporates a diesel aggregate for heating or cooling.
To put it in the right perspective, multimodal transportation is still a comparatively minor part of our China business. But it’s only been four years since the first container made the trip by rail. Now we are filling several trains every week. There’s interest from almost every segment of industry, including both multinational and Chinese corporations. I’m convinced we will see multimodal rise to new peaks in the near future.