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Chinese One Belt, One Road Initiative
ONE BELT, ONE ROAD INITIATIVE
LINKING CHINA MORE CLOSELY TO ASIA, AFRICA AND EUROPE BY LAND AND SEA
ONE BELT, ONE ROAD INITIATIVE
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ContentINTRODUCTION ....................................................................................... 3
INSIGHT INTO THE CHINESE ONE BELT, ONE ROAD INITIATIVE ................. 4
SURVEY: SHIPPERS’ EXPERIENCES WITH THE EURASIAN LAND BRIDGE .... 5-8
ANALYSIS OF EASTBOUND-WESTBOUND TRADE IMBALANCE .................. 9
CHINA’S TRANSPORTATION AND TRADING SUBSIDIES ............................ 11
CHINA’S INVESTMENTS INTO NEW CORRIDORS AND PORTS ................... 12
CHINA’S INVESTMENTS INTO AFRICAN PORT INFRASTRUCTURE ............. 13
CHINA’S DIRECT INVESTMENTS IN THE EU ................................................ 14
CHINESE ONE BELT, ONE ROAD INITIATIVE – FINDINGS IN SHORT ............ 15
TIM CONSULT & ITS MARKET INTELLIGENCE INITIATIVES ......................... 16
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This e-book is realized based on our sea freight experts’ analysis of the Eurasian
Land Bridge supplemented by the results of a master thesis realized in close
cooperation with the MII Global Ocean Transport.
In addition it contains information on the trade imbalance between westbound
and eastbound transports as well as the investments and subsidies currently
implemented by the Chinese government to expand transport infrastructures.
Finally, we present the results of a survey on the use of the Eurasian Land
Bridge, to which close to 200 renowned European shippers participated.
Connecting the Far East, Central Asia and EuropeIntroduction
As part of the Chinese One Belt, One Road Initiative, more and more
services are being implemented for end-to-end supply chains in trade
between the Far East, Central Asia and Europe. For shippers, this creates
new interesting alternatives to air and sea transport.
As a result of this development, our sea freight experts have been
analyzing the developments of the Chinese One Belt, One Road Initiative
since autumn 2017. The results are primarily made available to the
members of our Market Intelligence Initiative Global Ocean Transport in
the form of an annual report. The update report 2019 has been available
since the beginning of August. The main focus of the report is on
container transports by rail on the Eurasian Land Bridge.
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The “New Silk Road”, as the One Belt, One Road Initiative is also called, is a
long-term project in China dedicated to the development of transport, supply
and trade infrastructures. To this end, a large number of Chinese infrastructure
investments and economic co-operations will be bundled to improve transport
connections. Professionals expect profound effects on the global economy.
The aim of the initiative is to link China more closely with Asia, Africa and Eu-
rope by land and sea.
Insight into the Chinese One Belt, One Road-Initiative
New roads, railway lines, bridges, ports and power stations are planned, which
will be built based on historical routes between China and the West. Asia, Africa
and Europe will be included in the project.
In addition, numerous oil and gas pipelines and telecommunications networks
are planned. The necessary financing will be provided through the Asian Infra-
structure Investment Bank (AIIB) and the Silk Road Fund, which were estab-
lished specifically for this initiative. Existing bilateral finance companies such as
the Asian Development Bank (ADB) have also announced their participation.
Chinese One Belt, One Road Initiative• Eurasian Land Bridge• Maritime Silk Road• Economic co-operations
Routes of the Eurasian Land Bridge Container Rail Project
Northern routeMongolian route
Southern routeRegular railway service Deutsche Bahn
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In June of this year Tim Consult realized a survey among European shippers to
ask them about their experiences with the Eurasian Land Bridge.
For the transport of certain products like electronics or fashion the Eurasian
Land Bridge is an attractive alternative to sea and air freight. Transports per
rail from China to Europe are faster than those per sea and less expensive than
air transports. That is why the survey focused on the Eurasian Land Bridge.
We received answers from close to 200 renowned European shippers which
helped us to get a clearer picture of the Eurasian Land Bridge conditions. The
participating shippers were asked about the current usage, future plans and
operative challenges.
The survey results are summarized on the following pages.
Survey: Shippers’ Experiences with the Eurasian Land Bridge
European shippers plan to expand usage of Eurasian Land Bridge
Researched topics in detail:
• Future trend in usage of the Eurasian Land Bridge
• Most frequently used terminals
• Main reasons for delay of container trains on the Eurasian Land Bridge
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ONE BELT, ONE ROAD INITIATIVE
Facing the growing importance of trade between the Far East, Asia and
Europe it was interesting to find out how European shippers assessed the
situation. More than 120 out of close to 200 participating shippers informed
Transports via the Eurasian Land Bridge
Source: Tim Consult survey
us about their plans concerning transports via the Eurasian Land Bridge. More
than 30% of them are planning to increase usage of Eurasian Land Bridge
over the next two years.
Current usage Planned usage
53% 47% 58%
34%
8%
Regular Seldom More often than in 2018 Less often than in 2018
About the same as in 2018
Survey results
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ONE BELT, ONE ROAD INITIATIVE
China’s Rail services have been expanding throughout Europe, with a growing
number of cities connected directly to China, including main European rail
terminals. We asked shippers about their preferred terminals on the northern
and southern routes.
According to the survey Duisburg is Europe‘s most popular terminal for
importing goods via northern route & southern route. On the northern route
Duisburg is followed by Moscow and Hamburg. In China Zhengzhou, Chengdu
Terminals in Europe and China
and Wuhan are the three most frequented terminals on the northern route.
Measurement is based on the number of transports per year.
On the southern route Duisburg, Hamburg and Lodz are considered the most
important terminals in Europe. In China Chongqing, Shenzen and Zhengzhou
occupy the places one to three.
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Terminals northern route Terminals southern route
Western terminals
1. Duisburg
2. Moscow
3. Hamburg
4. Düsseldorf
Chinese terminals
1. Zhengzhou
2. Chengdu
3. Wuhan
4. Changsha
5. Dalian
6. Shenyang
7. Suzhou
Western terminals
1. Duisburg
2. Hamburg
3. Lodz
4. Malaszewicze
5. Munich
6. Mannheim
7. Warsaw
8. Rotterdam
Chinese terminals
1. Chongqing
2. Shenzhen
3. Zhengzhou
4. Xi’An
5. Chengdu
6. Yiwu
7. Wuhan
Source: Tim Consult survey
Survey results
Source: Tim Consult survey
(rated per no. of transports/year) (rated per no. of transports/year) (rated per no. of transports/year) (rated per no. of transports/year)
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ONE BELT, ONE ROAD INITIATIVE
An important decision criterion for the choice of the Eurasian Land Bridge for
transports to and from China is the adherence to scheduled transport times.
According to the survey participants, schedule reliability across the Eurasian
Land Bridge is mainly influenced by operational processes in the border
Schedule Reliability across Eurasian Land Bridge
terminals followed by incorrect or incomplete customs documents. But also
infrastructure, weather conditions or additional work due to consolidation
and deconsolidation have an important impact.
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Main factors influencing schedule reliability
Delays during the operations of the border terminals
Incomplete/incorrect customs documents
Poorly built or maintained infrastructure
Weather conditionsAdditional work due to consolidation/
deconsolidationGauge change process
Increased shunting at the container terminal
Communication problems with service providers/ carriers; language barriers
Other incomplete/incorrect documents
Short-term political decisions
Accident due to technical failure (train)
Robbery/terror
0% 5% 10% 15% 20%
Source: Tim Consult survey
Survey results
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Commodities transported
Comparing westbound and eastbound transports on the Eurasian Land Bridge
we found out that mainly machines and other industrial products followed by
glass and metal products are carried both westbound and eastbound. The biggest
differences between westbound and eastbound transports can be seen in wood
industry products with 11% eastbound and 2% westbound and consumer goods
with 6% westbound and 2,5% eastbound.
Analysis of eastbound-westbound trade imbalance
Westbound Eastbound
Raw material Consumer goods Chemical products Wood industry products
Glas & metal products & materials
Machines, equipment, industrial products
19%
10%6%
7%2%
18,5%
7,5%2,5%
10,5%
11%56%
50%
Source: Research of Ludwig-Maximilians-Universität München
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Quantity westbound and eastbound trains
Keeping in mind, that China is the world’s largest exporter, it is not surprising
that the number of westbound trains is higher than the number of eastbound
trains. In 2017 about two-thirds of all container trains were westbound, while
only one-third was eastbound. In 2018 the share of eastbound trains reached
42% of the total container trains. At the same time the number of eastbound
trains has increased by 52% and westbound trains by 35% in comparison to
2017. According to Chinese rail freight forwarders, the overall volume on the
Eurasian Land Bridge will continue to increase
Transport costs
The imbalance between westbound and eastbound trains is reflected by
43% higher prices for westbound trains. Current costs of transporting a
40’ container from China to Europe stand at $US 9,200 with subsidies per
container going up to $US 5,700.
The twice as high westbound container freight rate is conditioned by less
demand for eastbound services and a higher percentage of eastbound subsidies
from Chinese government in comparison to westbound.
Transit times
The westbound inland haulage is in general shorter than the eastbound.
Westbound connections have transit times of up to two days less compared to
eastbound connections. Depending on the route chosen they count between
13 to 19 days compared to 14 to 20 days eastbound for the route Duisburg to
China and vice versa. The transit time of container trains connecting Asia and
Europe has been reduced by 50% on average from 2008 until 2019.
Eastbound – westbound trains ratio
58%
WB
EB
WB
EB
2017 2018
1000
2000
3000
4000
5000
6000
7000
42%
65%
35%
Num
ber o
f tra
ins
Westbound Eastbound
Source: China Rail Transport Corporation, Ltd.
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In order to be competitive, Chinese cargo companies receive transportation
and trading subsidies from the government. About 60% of the transport
costs per container are financed with the help of subsidies. They are realized
in the form of standard subsidized rates, special „tailor made“ rates, which
make rail competitive to ocean freight or in the form of volume discounts.
Subsidies are paid more and more on a local level varying by city between 10
to 83% of market transportation costs.
The Chinese government is planning to reduce the rail subsidies with the
aim of operating the transportation network on a purely commercial basis.
The big question now is whether the current network can function without
subsidies.
China’s transportation and trading subsidies
Subsidies:• about 60% of transport costs
per container• 10 to 83% of market transportation
costs dependent on city
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China invests into infrastructure projects worldwide and has more projects
planned already.
New train connections
Since May 2019 the Helsinki-China corridor is open. The Lyon-China corridor
is available for refrigerated products. Furthermore the Zhuzhou – Minsk
corridor is open since July 2019.
In addition a Singapore-Kunming railway is planned. China is going to build
railways in Serbia, Montenegro, Bosnia-Herzegovina and Macedonia. In 2020
Duisport will build a rail terminal in Minsk. Partners are China Merchants &
the Belarusian State Railways. Finally China-Laos railway is scheduled to be
open to traffic in December 2021.
Activities by ports
In May 2019 Cosco Shipping invested $3bn in Chancay Multipurpose Port
Terminal, Peru. In January 2019 Colombo Port City, funded by China,
completed land reclamation. Furthermore China signed an agreement to
invest in the ports of Trieste, Italy and Rijeka, Croatia. China has also signed
BRI deals with 18 Arabian countries. Finally China is expected to invest in
Vasco da Gama Terminal in Sines port, Portugal.
China’s investments into new corridors and ports
New corridors:• Helsinki-China• Lyon-China for refrigerated products• Zhuzhou-Minsk
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China’s investments into African port infrastructureWithin the scope of the maritime silk road project, China heavily invests
into African port infrastructure. In 2018 China lent $60 billion to Africa for
infrastructure development.
At least 46 existing or planned port projects in sub-Saharan Africa are funded,
built and/or operated by Chinese entities. Africa is expected to increase its
exports to China to ameliorate the trade imbalance. In return for investment
capital, some sub-Saharan African countries grant China resource concessions.
The Sub-Saharan Africa region ranked as the second-largest recipient of
investment and Chinese construction projects worldwide after Europe.
Most recent and biggest projects:
• Suez Economic Zone: 8,2 bln. USD investment
• Ethiopia-Djibouti Railway: 4 bln. USD
• Tema Port Expansion: 1,5 bln. USD
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After more than a decade of expansion, China’s outward direct investment in
the EU has slowed over the last two years. The amount of Chinese foreign direct
investment in the EU peaked at more than €37 bn in 2016 and has fallen since
then amidst a slowdown in Chinese investment globally. In European countries
outside the EU, Chinese investment also dropped in 2018.
The top 3 EU countries for Chinese investments from 2010 until 2018 are UK,
Germany and Italy.
China now owns or has a stake in twelve maritime ports in the EU.
China’s direct investments in the EU
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2014 2015 2016 2017 2018
5
40
10
15
20
25
30
35
China’s direct investment in the EU
Billi
ons
of e
uros
Source: www.bbc.com
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• There is an enormous trade imbalance between east and westbound,
which is also reflected in the prices.
• The success of the Eurasian Land Bridge depends heavily on China’s
infrastructure investments and state subsidies for carriers.
• Transit time has been halved between 2008 and 2019.
• The operation of border terminals is an essential factor for the
reliability of timetables.
• Although China is very active in Africa, relevant trade media report a
slowdown in Chinese global investment.
Chinese One Belt, One Road Initiative – Findings in short
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Tim Consult – The market engineers
In today’s interconnected global economy, companies continuously face
the complex task of managing and optimizing worldwide value networks.
Successful performance depends on precise and rapid adaption.
As highly experienced international consultants in logistics and end-to-
end supply chain management, we design applicable solutions to help our
customers confront and master these challenges. For more than 20 years, we
have supported our clients independently and neutrally from our locations in
Mannheim and New York City. Since 2018 we have been part of Transporeon.
• Benchmarking & best practice analysis
• Global procurement strategies
• IT-supported tender management
• Land, air, ocean & express
Transport
• Strategic network design
• Supply chain planning
• Horizontal & vertical cooperation
• Organization & processes
Network
• World-wide cloud platform for transport
logistics
• Supply chain digitalization
• Innovative services & tools
• Global network of shippers & logistics
service providers in over 100 countries
Digital Logistics
Combined strengths for your success
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Tim Consult’s Market Intelligence Initiatives
MII Europe Road & Rail
MII Global Ocean Transport
MII Global Air Cargo
MII North AmericaTruck & Intermodal
• round trip
• single trip
• unbalanced roundtrip
• packed incl. reefer & bulk
• FTL
• LTL
• contracted & spot
• 90,000 lanes
• 6 bn €/year freight spend
• 7 m FTL/year
• port-port
• pre-carriage
• on-carriage
• dry cargo, reefer & tank
• FCL
• LCL
• inland haulage
• 18.000 port pairs
• 6 bn $/year freight spend
• 7 m TEU/year
• airport-airport
• pre-carriage
• on-carriage
• general cargo
(main & lower deck)
• dangerous goods (PAX/CAO)
• temperature controlled
• 35,000 lanes
• 1.5 bn $/year freight spend
• 600 kt/year
• round trip
• single trip
• unbalanced roundtrip
• packed incl. reefer & bulk
• FTL
• LTL
• contracted & spot
• 30,000 lanes
• 4 bn €/year freight spend
• 4 m FTL/year
Keep in touch with Tim Consult’s Market IntelligenceClemens Schapeler
Manager Market Intelligence Initiative Ocean
Telefon: +49 621 150 448 70
Maria Kupfer
Analyst
Telefon: +49 621 150 448 41
Tim Consult GmbH
L 15, 12-13
68161 Mannheim, Gemany
Telefon: +49 621 150 448 0
www.timconsult.com
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