China-Europe train services changing structure of international logistics sector

By Wang Jiamei Source:Global Times Published: 2017/9/10 19:53:39

Rising rail freight volume between China and Europe is posing competition not only for maritime shippers but also for the air cargo sector, pointing to the potential of a regional multimodal freight system.

Demand for rail freight services between China and Europe has been growing sharply since the first train departed in March 2011, thanks in large part to the Belt and Road initiative (B&R), which aims to boost trade along the ancient Silk Road.

The number of China-Europe freight trains reached 5,000 as of last week, with 52 routes established so far between 32 Chinese cities and 32 cities in 12 European countries, State broadcaster China Central Television reported on Thursday.

While trains have helped make logistics faster and cheaper for many clients, they have also put great pressure on the air freight market. The major categories of goods carried by China-Europe trains are raw materials, household appliances, auto parts, food and clothing. Most bulk commodities are still being carried by ships.

But trains are carrying more electronics products these days, cutting into a big segment of air carriers' cargo business and posing competition to regional air freight.

Rail and air transport systems each have their pros and cons. Trains are slower, but they cost a lot less than planes, and that matters to many shippers. As for planes, their cargo areas are more secure and cargo is less likely to be damaged, but bad weather can cause delays, unlike trains.

In this sense, rail and air transport can be complementary despite their competition. Take China, for example. Even though the country has one of the world's biggest rail networks, its aviation market still holds great potential. "China's plane fleet is expected to grow at a pace well above the world average, and almost 20 percent of global new airplane demand will be from airlines based in China," Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, was quoted by media reports as saying last week.

While air cargo services between China and Europe may be affected by railways, ultimately it is market forces that will cause change and prompt the aviation industry to improve its services. With trade and investment among B&R countries and regions expected to expand substantially, a regional multimodal transport network is essential to support cargo flows, and that requires coordination and cooperation from all market participants.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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