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Madrid the latest city to join China’s growing rail network
Greg Knowler, Senior Asia Editor | Nov 27, 2014 2:57AM EST
HONG KONG — A train pulling 82 wagons loaded with containers is somewhere between the Chinese manufacturing hub of Yiwu and the Spanish city of Madrid, 6,200 miles down the track.
It will take the block train 21 days to reach the Spanish capital as it inaugurates the world’s longest rail journey and crosses through China, the huge Central Asian state of Kazakhstan, Russia, Belarus, Poland, Germany and France.
The train departed from Yiwu near the port of Ningbo last week and the Madrid route is the latest to be opened as part of China’s “New Silk Way” initiative launched by Beijing and Kazakhstan, and seeks to expand overland trade links with Central Asian economies and those of Europe. China has invested $40 billion in rail and logistics infrastructure to spur development of the rail projects and reduce dependence on air and ocean transport.
Rail freight to Europe is a 10th of the cost of air freight and is 30 days faster than sending goods by sea, so it is gaining momentum with shippers and freight forwarders attracted by the transit times. Major cities in Europe can be reached in as little as 14 days.
Kazakhstan is part of a customs union agreement with Russia and the European Union, and once the block trains — where the entire train is booked by one customer — are cleared at the Kazakhstan border, which takes just hours, there are no further inspections, or delays, required until destination.
So far this year, rail services have been opened between several Chinese manufacturing hubs and European cities such as Hamburg, Duisburg, Rotterdam, Lotz, and now Madrid. An uninterrupted rail link has been created between Kazakhstan and Liangyungang on the coast near Shanghai that the Central Asian nation uses as its de facto seaport.
Kazakhstan state railway’s logistics arm KTZ Express has developed a freight and logistics center at the port of Lianyungang. The 21-hectare facility will have an annual throughput of 500,000 TEUs and is intended to provide direct access to Central Asia for shippers from Japan, Korea and Southeast Asia via Kazakhstan.
Earlier this year, electronics maker HP started a block train service between Chongqing in Central China to Duisburg, a journey of 6,800 miles. There are now three trains a week on that route carrying up to 50 containers per train.
In response to the demand, UPS launched a rail service from China to Europe earlier this year that follows two routes: From Chengdu to Lotz in Poland and from Zhengzhu to Hamburg, with transit times of 16-24 days door-to-door.
“The service will be 50 percent faster than ocean freight and 70 percent cheaper than air freight,” said Michael Gu, UPS Asia-Pacific director of ocean freight.
Gu estimates that the forwarding market opportunity in the China-Europe rail route was $16.5 billion as shippers looked at how they could balance the higher cost of rail freight against cutting down the 45-day ocean transit times to Europe.
KTZ Express is also planning to launch new block train services from four cities in China to Europe via Kazakhstan. Scheduled for launch during the next 12 months, the company is currently in discussions with municipal government officials and freight forwarders in Shenzhen, Guangzhou, Wuhan and Xi’an. A good 50 percent of the containers are expected to be reefers.
But the growing demand for dedicated block train services goes both ways. From Europe to Asia there is demand for products as diverse as fruit to automotive parts., and DB Schenker expects to have one train service per week hauling freight eastward from Hamburg to the Chinese city of Zhengzhou by next year. The 10,214-kilometer route through Poland, Belarus, Russia and Kazakhstan takes 17 days.
The German forwarder has been running a weekly train service from China to Germany to serve the automotive and electronics industries, but in September launched its first service in the opposite direction, departing from DUSS Terminal Hamburg-Billwerder.
Greg Knowler, Senior Asia Editor | Nov 27, 2014 2:57AM EST
HONG KONG — A train pulling 82 wagons loaded with containers is somewhere between the Chinese manufacturing hub of Yiwu and the Spanish city of Madrid, 6,200 miles down the track.
It will take the block train 21 days to reach the Spanish capital as it inaugurates the world’s longest rail journey and crosses through China, the huge Central Asian state of Kazakhstan, Russia, Belarus, Poland, Germany and France.
The train departed from Yiwu near the port of Ningbo last week and the Madrid route is the latest to be opened as part of China’s “New Silk Way” initiative launched by Beijing and Kazakhstan, and seeks to expand overland trade links with Central Asian economies and those of Europe. China has invested $40 billion in rail and logistics infrastructure to spur development of the rail projects and reduce dependence on air and ocean transport.
Rail freight to Europe is a 10th of the cost of air freight and is 30 days faster than sending goods by sea, so it is gaining momentum with shippers and freight forwarders attracted by the transit times. Major cities in Europe can be reached in as little as 14 days.
Kazakhstan is part of a customs union agreement with Russia and the European Union, and once the block trains — where the entire train is booked by one customer — are cleared at the Kazakhstan border, which takes just hours, there are no further inspections, or delays, required until destination.
So far this year, rail services have been opened between several Chinese manufacturing hubs and European cities such as Hamburg, Duisburg, Rotterdam, Lotz, and now Madrid. An uninterrupted rail link has been created between Kazakhstan and Liangyungang on the coast near Shanghai that the Central Asian nation uses as its de facto seaport.
Kazakhstan state railway’s logistics arm KTZ Express has developed a freight and logistics center at the port of Lianyungang. The 21-hectare facility will have an annual throughput of 500,000 TEUs and is intended to provide direct access to Central Asia for shippers from Japan, Korea and Southeast Asia via Kazakhstan.
Earlier this year, electronics maker HP started a block train service between Chongqing in Central China to Duisburg, a journey of 6,800 miles. There are now three trains a week on that route carrying up to 50 containers per train.
In response to the demand, UPS launched a rail service from China to Europe earlier this year that follows two routes: From Chengdu to Lotz in Poland and from Zhengzhu to Hamburg, with transit times of 16-24 days door-to-door.
“The service will be 50 percent faster than ocean freight and 70 percent cheaper than air freight,” said Michael Gu, UPS Asia-Pacific director of ocean freight.
Gu estimates that the forwarding market opportunity in the China-Europe rail route was $16.5 billion as shippers looked at how they could balance the higher cost of rail freight against cutting down the 45-day ocean transit times to Europe.
KTZ Express is also planning to launch new block train services from four cities in China to Europe via Kazakhstan. Scheduled for launch during the next 12 months, the company is currently in discussions with municipal government officials and freight forwarders in Shenzhen, Guangzhou, Wuhan and Xi’an. A good 50 percent of the containers are expected to be reefers.
But the growing demand for dedicated block train services goes both ways. From Europe to Asia there is demand for products as diverse as fruit to automotive parts., and DB Schenker expects to have one train service per week hauling freight eastward from Hamburg to the Chinese city of Zhengzhou by next year. The 10,214-kilometer route through Poland, Belarus, Russia and Kazakhstan takes 17 days.
The German forwarder has been running a weekly train service from China to Germany to serve the automotive and electronics industries, but in September launched its first service in the opposite direction, departing from DUSS Terminal Hamburg-Billwerder.
