The China-Europe Railway Express is traversing Russia and since the start of the Ukraine war, the amount of cargo transported between China and Europe has been falling. For now, Russia is practically unavoidable when using the intercontinental railway network known as the China-Europe Railway Express. An alternative to avoid Russia could be the Caspian Sea route. “Clients hope to explore a Caspian Sea route,” said Bria Liu, Managing Director of Shanghai-based Toprail International Logistics, referring to what’s known as the Middle Corridor, or the Trans-Caspian International Transport Route. It runs from China to Kazakhstan, across the Caspian Sea, and through Azerbaijan and Georgia before splitting into two lines – one through Turkey and the other one across the Black Sea – then arriving in Europe. “To be honest, that route makes no economic sense for now,” Liu said. “But from the perspective of political significance, if any government would like to invest in it, I would love to help explore,” she added, referring to the feasibility of making the Middle Corridor a viable route for intercontinental transport that doesn’t go through Russia.
As part of the “New Silk Road” that has been cultivated over the past decade via the Belt and Road Initiative – Beijing’s plan to link economies into a China-centered trading network – the China-Europe Railway Express network progressed rapidly, running from China through Russia and then into Ukraine or Belarus en route to Europe. But when Russia invaded Ukraine in February 2022, everything changed. Many European traders, out of fear of sanctions or of being perceived as friendly with Russia, started scrambling for ways to avoid the country – either by going back to the sea or exploring alternative land corridors. Based on official figures reported by China Railway, the cargo volume transported via the China-Europe Railway Express increased by 23% in the first eight months of 2023, compared with a year earlier.
But in reality, industry insiders say most of the Chinese goods are simply not making their journey beyond Russia, effectively turning the China-Europe Railway Express into the “China-Russia Railway Express”. “There was already a decline in cargo trains bound for Europe in 2022, and the decrease has been continuing this year,” said Milosz Witkowski, Director Rail Freight with the Polish Forwarding Company. In Malaszewicze, a major boarding point between Poland and Belarus that 90% of Europe-bound trains pass through, the cargo volume has been halved since the war started, while the eastbound flow of goods has decreased even more,” Witkowski said.
In June, the European Union imposed a new ban on transporting certain European goods through Russia and Belarus to any other third country, further deterring European exporters from using the rail. According to the Eurasian Rail Alliance Index provided by UTLC – operator of the broad-gauge railway in Russia, Kazakhstan and Belarus – the total cargo volume transported between the EU and China via that region from January to August, year-on-year, decreased by 48.95% to 149,360 TEU, only 11.8% of the total volume reported by China – 1.26 million TEU – in the same period. Last year, the share was 25.7%, and in 2021, it was 42.3%. The arrival points in Europe have also been reduced to five countries – Belgium, Hungary, Poland, Germany and the Netherlands, down from 11 in the last two years.
Since the war started, Liu from Toprail has lost 75% of her old clients – mostly European and big brands – on the route between China and Europe. “The China-Europe Railway Express – in the narrow sense – has sort of returned to the state when it was initiated more than 10 years ago,” Liu said. The railway saw rapid expansion before the war as an alternative to sea and air freight among Chinese and European traders since the first train departed in 2011. From China to European countries, train shipments cost a fifth of the price of air shipments and are 75% faster than sea shipments, according to China Railway. This makes rail an attractive option for some high-value products in high demand, including electric cars and e-commerce goods. The China-Europe Railway Express was most popular in 2021, when demand was surging, prices were skyrocketing and route congestion was high as the pandemic wreaked havoc on the global shipping network and the Suez Canal saw an unprecedented blockage.
The Middle Corridor is looking like it could become a viable option for shippers. President Xi Jinping threw his support behind that Caspian Sea route last month when he unveiled an eight-point action plan for the Belt and Road Initiative. The first point called for “speeding up the high-quality development of the China-Europe Railway Express” and “participating in the construction of the Trans-Caspian International Transport Corridor”. In the last couple of years, some shipments have made the trip, but there are not yet any regular services across the Caspian. Though shorter in distance, the Middle Corridor takes at least 38 days for a train setting off from China to arrive in Europe, compared with 12 days along the northern route through Russia, the South China Morning Post reports.
