New Silk Road succeeds in cost reduction, less volatile than ocean freight

 

News article: New Silk Road succeeds in cost reduction, less volatile than ocean freight

Eurasian rail freight has become more competitive due to significant cost reduction.

  x31 Chief Commissioner

Location: gallifrey
Last year, 370 thousand TEUs were transported by rail between China and Europe, an increase of 35 per cent compared to 2017. The imbalance of east-west freight traffic decreased during 2018: the number of westbound trains grew by 37 per cent compared to a 90 per cent increase in eastbound trains.
Somebody
Amazing figures quoted here and still rail is cheaper than ocean voyage but is rail still being subsidised by China?

I don't understand the idea of more eastbound than westbound with china exporting so much product why the imbalance?





New Silk Road succeeds in cost reduction, less volatile than ocean freight

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  justapassenger Chief Commissioner

1. Yes, rail is still being heavily subsidised.Note that the story doesn't actually claim that rail is providing cheaper prices than maritime freight, only that the rail prices are cheaper than they were previously and that they are less volatile than maritime freight.
The figures show that the price of just the broad gauge segment through the former USSR countries is 2-4 times the price of taking the same container all the way from Shanghai to Rotterdam by ship, even before you consider the standard gauge segments in China and central/western Europe.

2. It is a higher percentage increase in eastbound freight, not a higher absolute quantity.
When you start from a really low base, high percentage increases are really easy to achieve. Further to this, the index itself shows that eastbound prices are cheaper due to it being backloading on trains which have to run anyway to get the wagons back to starting points for the forward loading runs.

3. Consider that this is a story based on a press release, not investigative journalism.
The story is a slightly edited version of this press release by the Eurasian Rail Alliance, a consortium of the rail operators in Kazakhstan, Russia and Belarus which operate the trains over the broad gauge segments, so of course it is going to big up all the parts that look good for their rail operations and either ignore or minimise the bits which make other modes look good.

Notice they bury right near the bottom a grudging acknowledgement that sea routes still account for over 98% of the China-Europe freight market.
  BrentonGolding Chief Commissioner

Location: Maldon Junction
Great post JAP. And extra points for using "big up". Love it!

BG

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