The Silk Road was an ancient network of trade routes that connected China with the rest of Eurasia, facilitating the exchange of goods, ideas, and culture for centuries. Today, a new version of the Silk Road is emerging, thanks to the China-Europe Railway Express (CRE), a network of international multimodal container rail services that connects cities in China with cities in Europe. The CRE is part of China’s Belt and Road Initiative (BRI), a global development strategy that aims to enhance connectivity and cooperation among countries along the ancient Silk Road and beyond. In this article, we will explore the history, benefits, routes, impact, challenges, and opportunities of the CRE, and how it can help your business grow.
Historical background of the Silk Road
The Silk Road was not a single road, but a complex web of routes that spanned over 10,000 kilometers, linking China with India, Persia, Arabia, Africa, and Europe. The name “Silk Road” was coined by a German geographer in the 19th century, referring to the silk that was one of the most valuable commodities traded along the routes. However, the Silk Road also carried other goods, such as spices, porcelain, tea, paper, and gunpowder, as well as cultural, religious, and scientific influences. The Silk Road reached its peak during the Tang Dynasty (618-907 CE) and the Mongol Empire (1206-1368 CE), when trade and diplomacy flourished between the East and the West. The Silk Road declined in the 15th and 16th centuries, due to the rise of maritime trade, political instability, and epidemics.
The revival of the Silk Road through the China-Europe Railway Express
The idea of reviving the Silk Road through rail transport was first proposed by China in 2011, when the first train departed from Chongqing in southwestern China to Duisburg in Germany, covering a distance of over 11,000 kilometers in 16 days. Since then, the CRE has expanded rapidly, reaching over 180 cities in 23 countries in Europe, and over 50,000 train trips have been made as of January 2022, transporting 4.55 million TEU of cargo worth US$240 billion, according to China’s state railway operator. The CRE is faster, cheaper, and more reliable than sea freight, which can take up to 45 days and is subject to port congestion, weather conditions, and piracy risks. The CRE is also more environmentally friendly than air freight, which emits more greenhouse gases and consumes more energy. The CRE is a key component of the BRI, which was officially launched by President Xi Jinping in 2013, and aims to promote economic integration, infrastructure development, and people-to-people exchanges among countries along the ancient Silk Road and beyond.
Benefits of the China-Europe Railway Express
The CRE offers many benefits for both China and Europe, as well as the countries and regions along the routes. Some of the benefits include:
- Enhancing trade and investment: The CRE facilitates the flow of goods and capital between China and Europe, creating new markets and opportunities for businesses and consumers. The CRE also helps diversify the sources and destinations of trade, reducing the dependence on a single market or route. The CRE supports the development of e-commerce, cross-border logistics, and industrial parks, creating more jobs and income for local communities.
- Improving connectivity and infrastructure: The CRE improves the connectivity and infrastructure of the countries and regions along the routes, by upgrading the railways, roads, ports, airports, and telecommunications networks. The CRE also helps bridge the gap between the developed and developing countries, by providing access to modern transportation and communication technologies. The CRE fosters regional cooperation and integration, by harmonizing the standards, regulations, and policies of the countries and regions involved.
- Promoting cultural and people-to-people exchanges: The CRE promotes cultural and people-to-people exchanges between China and Europe, as well as the countries and regions along the routes, by facilitating the movement of tourists, students, scholars, artists, and professionals. The CRE also enhances mutual understanding and trust, by fostering dialogue and collaboration on various fields, such as education, science, health, sports, and media.
Routes and destinations of the China-Europe Railway Express
The CRE operates along three major corridors: the eastern, central, and western routes.
- The eastern route primarily serves Chinese exports from coastal regions, notably Yiwu in eastern Zhejiang province, which is known as the world’s largest wholesale market for small commodities. It exits China through Manzhouli in Inner Mongolia, traverses Russia, and enters Europe via Belarus and Poland. The eastern route covers over 40 cities in 15 countries, such as Moscow, Warsaw, Hamburg, and London.
- The central route is dedicated to goods produced in central China and the southern coastal provinces like Guangdong, a manufacturing hub. It exits China through Alashankou in Xinjiang, passes through Kazakhstan, and enters Europe via Russia. The central route covers over 30 cities in 12 countries, such as Nur-Sultan, Moscow, Berlin, and Paris.
- The western route is mainly used for imports from Europe to China, especially high-value-added products such as machinery, equipment, and automobiles. It exits Europe through Duisburg in Germany, passes through Poland, Belarus, and Russia, and enters China through Khorgos in Xinjiang. The western route covers over 20 cities in 10 countries, such as Duisburg, Warsaw, Moscow, and Urumqi.
Trade and economic impact of the China-Europe Railway Express
The CRE has had a significant trade and economic impact on both China and Europe, as well as the countries and regions along the routes. Some of the impact include:
- Boosting trade volume and value: The CRE has increased the trade volume and value between China and Europe, as well as the countries and regions along the routes, by providing a faster, cheaper, and more reliable mode of transportation. According to a study by the World Bank, the CRE could increase the trade volume between China and Europe by 6% and the trade value by 3.1% by 2030, compared to the baseline scenario without the CRE. The CRE could also increase the trade volume and value of the countries and regions along the routes by 2.8% and 1.5%, respectively, by 2030.
- Stimulating economic growth and development: The CRE has stimulated economic growth and development in both China and Europe, as well as the countries and regions along the routes, by creating new markets and opportunities, enhancing productivity and competitiveness, and attracting investment and innovation. According to the same study by the World Bank, the CRE could increase the GDP of China and Europe by 0.3% and 0.2%, respectively, by 2030, compared to the baseline scenario without the CRE. The CRE could also increase the GDP of the countries and regions along the routes by 0.1% by 2030.
- Reducing poverty and inequality: The CRE has reduced poverty and inequality in both China and Europe, as well as the countries and regions along the routes, by creating more jobs and income, improving access to goods and services, and promoting social inclusion and cohesion. According to the same study by the World Bank, the CRE could reduce the poverty headcount ratio of China and Europe by 0.2% and 0.1%, respectively, by 2030, compared to the baseline scenario without the CRE. The CRE could also reduce the poverty headcount ratio of the countries and regions along the routes by 0.1% by 2030.
Challenges and future prospects of the China-Europe Railway Express
The CRE faces many challenges and uncertainties in its future development, such as:
- Geopolitical risks and tensions: The CRE operates in a complex and dynamic geopolitical environment, where conflicts and disputes among countries and regions could disrupt the smooth operation and security of the rail services. For example, the recent Russian invasion of Ukraine has caused additional strain to the global supply chain and threatened the stability of the eastern and central routes of the CRE. The CRE also faces competition and criticism from some countries and regions that perceive it as a threat to their interests and influence.
- Technical and operational issues: The CRE faces many technical and operational issues, such as the lack of standardization and interoperability of the railways, the differences in customs clearance and inspection procedures, the shortage of containers and locomotives, and the imbalance of trade flows. These issues could affect the efficiency, reliability, and profitability of the rail services. The CRE also needs to cope with the increasing demand and expectations of the customers, who require more frequent, flexible, and customized services.
- Environmental and social concerns: The CRE faces many environmental and social concerns, such as the impact of the rail construction and operation on the natural resources and ecosystems, the emission of greenhouse gases and pollutants, and the displacement and resettlement of the local communities. The CRE also needs to address the issues of transparency, accountability, and sustainability, and ensure that the benefits and costs of the rail services are shared fairly and equitably among all the stakeholders.
Despite these challenges, the CRE also has many opportunities and potentials for further growth and improvement, such as:
- Expanding the network and coverage: The CRE could expand its network and coverage, by adding new routes and destinations, connecting with other modes of transportation, and reaching out to more countries and regions, especially in Africa, Oceania, and Latin America. The CRE could also explore new markets and sectors, such as agriculture, tourism, and e-commerce.
- Enhancing the quality and innovation of the services: The CRE could enhance the quality and innovation of the services, by adopting new technologies, such as digitalization, automation, and smart logistics, to improve the efficiency, reliability, and security of the rail operations. The CRE could also develop new products and solutions, such as cold chain, express, and green services, to meet the diverse and changing needs of the customers. The CRE could also foster more collaboration and exchange among the rail operators, service providers, and research institutions, to share best practices and experiences, and to create new value and opportunities.
- Strengthening the cooperation and governance of the CRE: The CRE could strengthen the cooperation and governance of the CRE, by establishing and improving the mechanisms and platforms for dialogue, consultation, and coordination among the countries and regions involved. The CRE could also enhance the alignment and integration of the policies, standards, and regulations of the countries and regions, and promote the mutual recognition and facilitation of the customs clearance and inspection procedures. The CRE could also address the environmental and social concerns of the CRE, by adopting and implementing the principles and guidelines of green and sustainable development, and ensuring the participation and consultation of the local communities and stakeholders.
Case studies of successful businesses utilizing the China-Europe Railway Express
The CRE has enabled many businesses to succeed and grow, by providing them with a fast, reliable, and cost-effective mode of transportation. Here are some examples of successful businesses utilizing the CRE:
- Huawei: Huawei is a leading global provider of information and communication technology (ICT) solutions, with operations in over 170 countries and regions. Huawei has been using the CRE since 2014, to transport its products, such as smartphones, tablets, laptops, and routers, from China to Europe. The CRE has helped Huawei reduce its transportation time by 50%, its transportation cost by 30%, and its carbon footprint by 80%, compared to air freight. The CRE has also helped Huawei improve its customer satisfaction and loyalty, by delivering its products faster and more securely.
- Decathlon: Decathlon is a French sporting goods retailer, with over 1,600 stores in 69 countries and regions. Decathlon has been using the CRE since 2016, to transport its products, such as clothing, footwear, and equipment, from China to Europe. The CRE has helped Decathlon reduce its transportation time by 40%, its transportation cost by 20%, and its inventory cost by 15%, compared to sea freight. The CRE has also helped Decathlon enhance its flexibility and responsiveness, by adjusting its supply chain according to the market demand and seasonality.
- BMW: BMW is a German automobile manufacturer, with over 30 production and assembly facilities in 15 countries and regions. BMW has been using the CRE since 2018, to transport its products, such as cars, engines, and spare parts, from Europe to China. The CRE has helped BMW reduce its transportation time by 60%, its transportation cost by 50%, and its logistics risk by 70%, compared to sea freight. The CRE has also helped BMW increase its market share and competitiveness, by meeting the growing demand and expectations of the Chinese customers.
