chinese one belt, one road initiative - tim consult€¦ · as part of the chinese one belt, one...

Chinese One Belt, One Road Initiative

ONE BELT, ONE ROAD INITIATIVE

LINKING CHINA MORE CLOSELY TO ASIA, AFRICA AND EUROPE BY LAND AND SEA


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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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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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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


Survey results


(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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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%


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

[email protected]

Maria Kupfer

Analyst

Telefon: +49 621 150 448 41

[email protected]

Tim Consult GmbH

L 15, 12-13

68161 Mannheim, Gemany

Telefon: +49 621 150 448 0

[email protected]

www.timconsult.com

MORE INFORMATION HERE

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chinese one belt, one road initiative - tim consult€¦ · as part of the chinese one belt, one...

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