Strong China-Europe rail links boost cargo traffic amid pandemic

While the COVID-19 pandemic has brought unprecedented disruption to the world economy, it has also strengthened the rail links between China and Europe, and industry experts believe the growing volume of rail freight between East and West will aid the economic recovery of countries and regions along the routes of the Belt and Road Initiative.

The number of China-Europe freight trains surged significantly during the first half of this year, with a total of 5,122 trains put into operation, up 36 percent year-on-year, according to the China State Railway Group.

Howard Rosen, chairman of the not-for-profit Rail Working Group, said, "The growth has emphasized the need for fast and secure supply chains, and it has been part of a long-term trend driven by faster delivery times for goods going in both directions as well as a highly reliable service."

According to Carsten Pottharst, managing director of InterRail Europe: "In 2020, we just had a kind of a prolonged Chinese New Year. China restarted with a huge boost of West-bound traffic. One of the reasons is that railway companies were ready, whereas long-distance trucking was difficult in China and also deep-sea capacity was reduced as ships were laying in the ports."

The freight trains have played an important role in helping with the global fight against the COVID-19 pandemic, since large quantities of medical supplies were transported via rail to affected countries and regions. Anti-pandemic supplies totaling 3.67 million items and weighing 27,000 tons were sent during the first half of the year.

Experts said disruptions to air and sea transportation as a result of COVID-19 have presented an opportunity to increase rail freight's market presence.

"Rail freight is an alternative to the quick but expensive option of sending goods by air, and the cheaper but longer option of using sea freight," said Barry Hembling, construction partner in London-based international law firm Watson, Farley& Williams LLP. "While much of the increase will be linked to reduced opportunities for sending goods by air, the crisis is likely to increase opportunities for rail freight."

The China-Europe rail service was established in 2011 and is considered a significant part of the Belt and Road Initiative to boost trade between China and countries and regions participating in the initiative.

With rail freight traffic on the rise, China's top economic planner, the National Development and Reform Commission, recently allocated 200 million yuan ($28.6 million) to support the construction of transportation hubs in five cities to improve China-Europe rail freight services.

Rosen, of the Rail Working Group, said such investment "is welcome and, without doubt, governments coming out of the crisis should now be looking at the way that they invest in transportation", with a view to encouraging more environmentally friendly freight transportation.

He added that economic recovery will depend on being able to ship manufactured goods and key components in both directions to support the revival of manufacturing in China and in Europe as economies emerge from lockdown.

"As consumer demand revives, the manufacturing community will need to be able to respond to that demand quickly and cost-effectively," Rosen said.

While the rail freight sector has survived relatively well in the short term, despite the unprecedented economic downturn, industry observers said that, looking ahead, operators will need to be able to run longer freight trains with more efficient pathways.

"We will need more investment in the railways at a time when governments are very short of funds," Rosen said. "It is essential, therefore, that governments give operators the tools they need to acquire the necessary locomotives and wagons and finance them cost-effectively."

Rail cargo runs at double the speed of seaborne shipments and at half the price of air freight. Rail also creates just a 50th of the carbon emissions of planes.

Hembling, the law firm construction partner, said, "Given the increasing awareness of the climate emergency, (after the pandemic crisis) there is a real opportunity for rail freight to establish itself as an efficient and sustainable alternative to sending goods by air or sea."

Rosen said, "In Europe, the focus on European freight corridors and the designation of 2021 as the European Year of Rail are clear markers demonstrating the determination of governments now to invest in green transportation."

While it is clear that globalization of trade will continue, and the COVID-19 crisis has demonstrated how important supply chain management is to the international community, Rosen said governments "must seize this opportunity and create the conditions for an expansion of the rail sector and for movement of goods between Europe and Asia by rail."