The China-Europe Railway Express, also referred to as the China Railway Express (CRE), occupies a central position within President Xi Jinping’s Belt and Road Initiative, functioning as a cornerstone of international rail freight sector. In recent years, this transcontinental network has gained prominence as a critical channel for Chinese exports to Europe. Its importance has been accentuated amidst the current global shipping crisis, characterized by soaring costs and aggravated port congestion. More insights into this initiative will be unveiled in subsequent sections of the blog.
What is China-Europe Railway Express and how it influencing the global rail freight sector
The China-Europe Railway Express, also referred to as the China Railway Express (CRE), encompasses a vast network of international multimodal container rail services, connecting cities in China with their counterparts across Europe. This initiative provides ground transportation for cargo, diverging from the traditional maritime routes that historically linked these regions. Introduced in 2013, the China-Europe Railway Express stands as a pivotal component of China’s Belt and Road initiative, steadily expanding its reach to include cities in Asia, Africa, Oceania, and Latin America. For many shipping companies, the China-Europe Railway Express has emerged as a more reliable alternative to sea transport, owing to its advantages in terms of speed and cost-efficiency.
The routes of CRE
The China-Europe Railway Express (CRE) operates along three main corridors, each tailored to specific geographical regions, facilitating the movement of goods between China and Europe:
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Eastern Route:
- Primarily serves Chinese exports from coastal regions, notably Yiwu in eastern Zhejiang province.
- Exits China through Manzhouli in Inner Mongolia, crosses Russia, and enters Europe via Belarus and Poland.
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Central Route:
- Dedicated to goods produced in central China and southern coastal provinces like Guangdong, a key manufacturing hub.
- Enters Mongolia through Erenhot in Inner Mongolia, traverses Russia, and extends to both eastern and western Europe.
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Western Route:
- Facilitates exports from western China, entering Kazakhstan via Alashankou or Khorgos in the Xinjiang Uygur Autonomous Region.
- Further extends into Europe, with routes often passing through Russia, Belarus, and Poland. Some trains also transit through Ukraine en route to Hungary.
How the Chine-Europe Railway Express is gradually becoming an alternative to container shipping
The China-Europe Railway Express (CRE) is emerging as a compelling alternative to traditional ocean freight shipping, enabling the transportation of a wide array of Chinese goods. These goods, ranging from clothing and household appliances to automotive parts, are conveyed in containers via rail to European consumers. Diverging from a fixed route, the CRE operates through a dynamic network of railways spanning both continents. Originating in China, the route extends across Central Asia and culminates in Western Europe, effectively retracing the historic Silk Road.
The rail freight route provided by the CRE traverses the vast expanse of Eurasia, avoiding potential maritime chokepoints like the Red Sea. As a result, businesses can mitigate the risks associated with disruptions in maritime trade routes and ensure the uninterrupted flow of goods.
The CRE is helping to mitigate supply chain concerns amidst the Red Sea crisis
By offering a dependable transportation option that bypasses regions of concern, the CRE contributes to the stability of global supply chains.
The short-term repercussions of the Red Sea crisis have been significant, leading to the suspension of services to ports such as Haifa, Ashdod, and Jeddah by various shipping companies, as noted by Zhong Zhechao. With ongoing attacks on ships along this crucial shipping route affecting global maritime commerce, some Chinese exporters are turning to the China-Europe Railway Express services. This strategic pivot stems from the imperative to ensure timely delivery of goods while sidestepping the substantial operational costs associated with circumnavigating the Cape of Good Hope. The China-Europe Railway Express offers a viable alternative, presenting a more secure and reliable transportation option for exporters amidst the challenges posed by the Red Sea shipping route.
An official, identified only as Zhang, remarked, “If the situation in the Red Sea continues, it is certain that the shift will gain momentum.” This transition underscores the strategic significance of China-Europe freight trains, providing an overland alternative to maritime trade and bolstering the resilience of cross-continental commerce. Crucially, in terms of efficiency, rail freight holds a clear advantage over sea transport. With a decade of high-quality development, China-European freight trains can complete the journey in about 12 days, significantly faster than the typical sea transit time of 35 to 45 days.
Moreover, in terms of costs, rail freight is only marginally more expensive than sea transport, particularly as the cost gap narrows after rerouting via the longer Cape of Good Hope route. This underscores the attractiveness and competitiveness of the China-Europe Railway Express as a dependable and efficient mode of transportation.
The future of CRE
While the China-Europe Railway Express (CRE) offers extensive connectivity through dozens of countries, particularly advantageous during peacetime, it is susceptible to fragility amidst escalating geopolitical tensions, especially when compared to air and ocean freight. One notable vulnerability lies in its efficiency, as the CRE primarily caters to westbound Chinese exports, often resulting in empty trains returning to China.
Since its inception, the CRE has heavily depended on government subsidies for both operation and rapid expansion, as its profitability remains low. Congestion poses a critical challenge for all routes due to stringent border check procedures, a problem exacerbated by the onset of the coronavirus pandemic. The heightened implementation of disease preventive measures has further exacerbated congestion issues, compounding the operational hurdles faced by the China-Europe Railway Express.