Chinese cities building rail links to Europe

As China builds a new Silk Road economic belt, more than a half-dozen cities are competing for goods and investment from multinationals to boost rail operations to Europe.

With shorter transport times and lower freight costs, international rail lines linking western and central China to Europe have helped improve regional connectivity and trade.

Since 2010, major Chinese cities, including Chengdu, Chongqing, Xi'an, Zhengzhou and Wuhan have all launched weekly or monthly modern block train services to different European destinations. It's part of China's efforts to turn its inland resource and labor-rich cities into international trade hubs.

Chengdu, the capital of Sichuan province, expects a two-way express rail service with Lodz, Poland to begin in the second half of 2014, Chen Zhongwei, director of the Chengdu Logistics Office, said. The route opened in April 2013.

Chinese cargos to Europe mostly consist of industrial yarn, automobile parts, new materials, IT goods, electronic and garment products, as well as daily necessities.

Based on its rich manufacturing and labor foundation, China has long had a trade surplus when doing business with the majority of partners in Europe. Chinese trains usually return empty.

"Because of the one-way China-Europe rail operation, the cost is significantly higher than sea transportation," Chen said. "We are working with various European wine, industrial parts and pharmaceutical makers to remove their goods from aircraft, which carry high cargo costs, and then load them into our block trains to ship to the Chinese market.

"With more European products and parts shipped to Chengdu through regular railway services, foreign companies seeking investment opportunities in China will be more inclined to establish their regional headquarters, branches and manufacturing facilities in the capital of Sichuan," Chen said.

Transcontinental rail operators in Chongqing municipality and Zhengzhou, the capital of Henan province, are also improving transport options to domestic and European clients - such things as online booking, free short-term warehouse storage and services for loads measuring less than a container. Sales offices in Warsaw, the German city of Duisburg, Shanghai and Hangzhou are planned to attract manufacturers from different industries.

A temperature-controlled freight cargo service on the Chongqing-Xinjiang-Europe route is planned to gain more market share in handling temperature-sensitive products such as Dutch dairy goods, German vaccine and chemical products. The move is aimed at taking on international players like DHL International GmbH and Deutsche Bahn AG.

Eager to enhance its earning ability on the rails, China's coastal cities such as Guangzhou, Lianyungang and Suzhou plan to fully open new rail routes to Europe.

"Ocean transportation has long been the main method to support China's export-dominated economy, but the nation is no longer relying on that business as heavily as it used to," said Zhu Xiaoning, a professor of traffic and transportation at Beijing Jiaotong University.

"Without fast rail solutions to Europe and well-developed ports in China, Chinese companies may face heavier competition from Southeast Asian countries such as Vietnam and Indonesia, which have lower labor costs and enjoy shorter transit times by sea to reach Europe."

Zhu said Chinese companies should grab the transcontinental rail trade between Southeast Asia and Europe soon, as railways have already linked inland hubs with the southwestern border province of Yunnan and the Guangxi Zhuang autonomous region.

(China Daily USA 05/19/2014 page13)