The China to Europe Railway – Yiwu to London

Since the fifteenth century, trade between Europe and Asia has primarily taken place via sea with emergency goods being shipped by air cargo. This has made maritime shipment dominant route for commercial trade but this could change in a few years. This is with the introduction of a new era that has dawned in the region with the unveiling of the new railway system connecting China and Europe.

Against all political and historical background, a new railway system running from China to Europe rapidly emerged hence ending the inexistence of regular direct freight between the two regions. Supporters of the rail service observe that this direct freight links about 35 cities in China to 34 more in Europe as it passes via Moscow.

They also note that it is not just cheaper than air, but it is also faster compared to sea. The 12,000km journey from Yiwu, Eastern China to Western Europe takes about 2 weeks which is 25days faster compared to the maritime freight. In terms of cost, it is just a fraction of the total air cargo cost.

The availability of this direct route is an ideal choice for merchants wishing to move goods between the regions. Many traders have taken advantage of the opportunity as revealed by the official figures from China that show that since 2011, cumulative shipment has been growing and exceeding expectations every year.

In fact, the railway express has been termed as an artery of the international trade. In 2017, its cargo share increased by 144 percent during the first half compared to the previous year and projections for the next 10 years have revealed that the value of the share of cargo for the railway service will remain on the rising trend.

While China has been the primary engineer behind the construction of the railway route and others across the world, other countries and regions like France have been eager to take part. In the meantime, China has continued with its Belt and Road Initiative (BRI), whose focus is to connect the rest of the world with Beijing via construction of new infrastructure, development of commercial agreements, and association with foreign authorities across regional policies.

The arrival of the train from Yiwu to London proved beneficial to all countries that were against the BRI hence compelling them to embrace the idea of creating new trade routes for Euro-Asia region. As a result, celebrations have been in order for trains arriving in Finland, France and Latvia just to name a few.

Critics of the new railway service observe that while it has great potential, it is yet to capture trade in the region since shipment via sea remains dominant. This is because since it was unveiled, the new railway service has managed to capture the imagination of many in regards to the trade it can capture.

However, it is yet to actually bring in high volumes in weight or value despite the increased growth since the first train left Yiwu for London. In fact, 2016-2017 reports reveal that trade by sea carried about 94% by weight and 64% by value. Trade by air was second with the transport service carrying twice the weight by train in 2016 which was valued at 13 times the value of cargo by train.

Additional challenges to the growth of the rail service include uncertainty in the international trade market regarding the Chinese subsidies. There is likely to be a severe trade imbalance between the two regions which would translate to low demand for eastbound services. Further, this would translate to increased costs for repositioning of empty containers which is an inconvenience to the industry.

Moreover, with increased developments in the air transport industry in Asia as well as in the railway system in the European union, the competition for trade could stiffen in the next few years.

However, the fact remains that the rail service has potential and the growth could increase tremendously with centralization of information on cargo volumes, the rates, frequency of the services and other data crucial to traders.

Currently, there is little data available to the public regarding the services that could be attributed to the newness of the route and services to the region.

Happy Halloween our dear readers: We have a horror story for you. The Death Railway