The Eurasian Land Bridge: Advantages, Disadvantages, Solutions

Dr Ivaylo Gatev, Ph.D. (in Philosophy), University of Nottingham Ningbo China

Abstract

The commercial relationship between China and the cluster of states that make up the European Union is one of the cornerstones of the global economy. With a few exceptions, scholarly accounts of this relationship have paid scant attention to the overland transport networks along which material exchanges between China and Europe take place. Drawing on the insights of the logistics management literature, this article examines the technological circuits, flows and interconnections that shape the character of China-EU commercial exchanges. It argues that the developing rail links between China and Europe present a mixture of opportunities and challenges for the logistics industry that lend themselves to a variety of technical and managerial solutions.

Keywords:

Eurasian land bridge, transport infrastructure, connectivity

Introduction

The commercial relationship between China and the cluster of states that make up the European Union is one of the cornerstones of the global economy. Sino-European trade is growing as are the means by which it is delivered. Currently the vast majority of that trade is carried by sea. Recent years however have seen the proliferation of freight rail links between centres of production and consumption in China and Europe. This report focuses on an aspect of Sino-European relations that is at once topical and understudied. It argues that the developing rail links between China and Europe present a mixture of opportunities and challengesfor the logistics industry that lend themselves to a variety of technical and managerial solutions. The report first introduces the Eurasian land bridge concept found in the logistics management literature before proceding to examine its advantages over other forms of transportation, the challenges that transcontinental freight faces, and the potential solutions to these challenges.

  1. The Eurasian Land Bridge Concept

Arguably the dominant account of Eurasian overland transport is to be found in the logistics management literature. Among the main exponents of this approach are transport geographers such as Brian Slack and logisticians like Rodemann and Templar. Their account is echoed in a series of articles published by the Financial Times and Forbes magazine on the developing alternatives to ocean shipping between Europe and Asia. This body of literature puts forward the Eurasian land bridge concept. The concept refers to an all-land route for the transportation of cargo and, eventually, people across the Eurasian supercontinent. Transcontinental overland shipping involves operating regular freight train services between inland terminals in Europe and East Asia. Sending cargo via the Eurasian land bridge holds a promise to evolutionise logistics between the largest producer and the largest consumer market in the world.

The main impetus behind the rail land bridge idea is the large volume of trade between China and Europe. The possibility of servicing part of that trade by means of rail freight transport provides the economic justification for the land bridge (Slack, 2000: 7). Changes in the Chinese economy resulting in the manufacture and export of higher value added goods also favours the development of overland transport across Eurasia. The transition from low-cost to high-end manufacturing in China opens up a new logistics market that puts premium on speed and reliability of delivery. Finally, both China and the EU currently experience a gradual shift in production activity away from coastal areas and towards their respective hinterlands in Western China and Eastern Europe (Rodemann and Templar, 2014: 76). This creates a logistical need for new trade routes that follow the shortest distance on the map.

Responding to this need, the logistics industry began in the late 2000s trial runs of intermodal freight trains carrying containerised cargo between China and Europe via Kazakhstan and Russia. Blocks of container trains started shuttling across the Eurasian steppe providing “point-to-point services dedicated to individual shippers” (Rodemann and Templar, 2014: 74). As their frequency and coverage expanded, these services became direct land links between specific customers at the two ends of the land bridge.

Figure 1: Regular freight train services operating between cities in China and the EU (Dec 2016)

 

City Pair Frequency Since Goods
Chongqing – Duisburg three times weekly; daily in peak season; weekly from Duisburg 2011 laptops, printers and computer monitors (westbound); vehicles (eastbound)
Leipzig – Shenyang twice weekly 2011 automotive parts from Germany (eastbound only)
Zhengzhou – Hamburg twice weekly in both directions; three times in peak season 2013 tyres, industrial yarn, high-end shoes and apparel (westbound); electronics, construction machinery, auto parts, and medical equipment (eastbound)
Chengdu – Lodz three times weekly to Lodz 2013 laptop computers and computer accessories (westbound); food and beverages (eastbound)
Suzhou – Warsaw weekly 2014 DHL block trains
Yiwu – Madrid twice weekly from Yiwu; once every two months from Madrid 2014 stationary and craft products (westbound); cured ham, olive oil and wine (eastbound)
Wuhan – Hamburg weekly in both directions 2014 clothing, electronic products, general merchandise (westbound); plastics, auto parts, cosmetics (eastbound)
Changsha – Hamburg three times weekly 2014 machinery and equipment, electronic products, chemicals, ceramics
Harbin – Hamburg weekly 2015 electronic equipment, automotive parts and clothes (westbound)
Shenyang – Hamburg weekly 2015 industrial goods from northern China and South Korea (westbound)
Hefei – Hamburg weekly 2016 photovoltaic components, computers and textiles (westbound)
Chengdu – Rotterdam weekly 2016 DHL block trains
Wuhan – Lyon twice weekly 2016 mechanical, electronic and chemical products (westbound); automobile parts, wine and agricultural products (eastbound)
Yiwu – London pilot train 2016 textiles, suitcases, household goods (westbound only)

Source: China Europe Rail Express <www.chinaeuroperailwayexpress.com>

The logistics management literature advances a conceptual understanding of the Eurasian land bridge primarily as a logistics phenomenon. It sees intercontinental transport between China and Europe as an important component of contemporary supply chain management. Multinationals, such as Foxconn and Hewlett Packard, invest in direct rail links between production centres in China and distribution hubs in Europe in order to streamline their operations. The literature examines Eurasian overland transport as part of an “ongoing endeavour to take costs out of supply chains” (Christopher cited in Rodemann and Templar, 2014: 70). It focuses on factors that expedite rail freight between China and Europe and factors that inhibit its operation, resulting in higher costs.

  1. Advantages

Analysed from a purely supply chain perspective, the land route has a number of advantages measured in terms of lead time, factor cost, and product integrity. Because it involves shorter distances than travelling between Europe and China by sea, the land bridge has a time advantage over ships. It offers distance savings that translate into shorter delivery times. At the same time, the flat geography of the countries through which it passes gives transcontinental rail substantial cost savings compared to air transport. Benchmarked against ocean shipping in terms of lead time and air freight in terms of cost, the land bridge concept is said to fill a ‘strategic niche’ between two alternative transport modes each of which has important drawbacks (Rodemann and Templar, 2014: 71). It thus serves as a via media between two logistical extremes and provides an intermediate or middle ground solution to shippers who have to strike a balance between time and cost.

This cost-benefit analysis becomes highly relevant where shipping high value-added goods is concerned. Premium, high-end merchandise such as electronics can be damaged through prolonged exposure to sea air. Transporting such cargo by sea would not only delay but could also destroy shipments unless special packaging is used which adds to transportation costs. Sea freight rates are also affected by the hinterlandisation of production in China and Europe. As centres of industrial activity gradually move further inland and away from sea ports, the associated transshipment costs of sea freight are set to rise making rail an attractive alternative (Rodemann and Templar, 2014: 77). The advantage of the land bridge is that it spans the interior of the Eurasian supercontinent thus reducing pre- and post-haulage costs. National strategies implemented by the Chinese and Kazakh governments to improve cross-border rail connections and the creation of a customs union in the post-Soviet space result in further cost reductions by eliminating inefficiencies associated with border crossings (Slack, 2000: 2; Forbes, 2016).

  1. Challenges

If the Eurasian land bridge is deemed to have considerable advantages over its alternatives, it is at the same time beset by various technical, logistical and competitive challenges. These challenges stem from an ocean shipping industry that increasingly relies on bigger and faster vessels capable not only of realising large economies of scale but also of eroding the time advantage of the land bridge (Slack, 2000: 10). In this context transcontinental rail freight has to rely on ever larger subsidies from Chinese provincial and local governments which calls into question its sustainability. At the same time the expected opening of the Northern Passage shipping route in the Arctic and the development of road haulage in central Eurasia puts competitive pressure on rail freight. The former threatens to further erode its time advantage and the latter to significantly reduce its customer base (Rodemann and Templar, 2014: 80).

In addition to the competitive challenges outlined above, the logistics management literature points to problems of throughput capacity and other constraints that hinder the development of the land bridge. It discusses difficulties with single tracking and low degree of electrification along certain segments of the route, and the inconvenience caused by passengers and freight sharing tracks (Slack, 2000: 9). The resulting bottlenecks represent weak links in the logistics chain causing congestion and delays that increase in direct proportion with the size of the traffic flow in the system. This is compounded by human factors, such as missing expertise resulting in inefficiencies and yet more delays, as well as vandalism and theft that usually occur at border crossings and that impose additional costs in the form of cargo protection and insurance (Rodemann and Templar, 2014: 79).

But perhaps the greatest challenge comes from the uneven technological and administrative terrain along which the land bridge is being constructed. This terrain is composed of several railway systems characterised by differences in infrastructure, equipment and management. Differences between railway systems manifest themselves in inconsistent track and loading gauges, buffer heights, voltages, as well as different coupling, signaling and safety systems, all of which require time-consuming transfers and changes of rolling-stock. They also involve different regulations governing, for example, the length of block trains and the stacking of containers, the crossing of borders, as well as tariff structures that vary from one end of the land bridge to the other (Slack, 2000: 9; NYT, 2013). It is not just that Eurasian overland transport has to deal with different standards, protocols, and transit rates that complicate its operation and drive up costs. It is also that the transport sectors of the countries involved are organised differently. This poses problems in terms of differences in the priority assigned to national and international rail traffic and in diverging understandings of transport reliability which for some countries involves time windows and for others estimated arrival times (Rodemann and Templar, 2014: 79). Both affect scheduling and the handling of delays.

  1. Solutions

The logistics management literature proposes a variety of technical and managerial solutions designed to improve the performativity of the land bridge. These range from locomotives with hybrid propulsion to deal with the uneven degree of electrification along the land bridge, to rolling stock capable of switching bogies of different gauge, to the standardisation of loading and buffer heights (Slack, 2000: 6). The proposed measures aim to increase the travel speed and throughput capacity of the land bridge thereby reducing its operation costs. The ‘pursuit of continuously taking costs out of the system’ leads logisticians to advocate a certain degree of interoperability and integration of national rail transport networks. This is seen in proposals to create international timetables for rail freight across Eurasia, the development of common traffic prediction models, and the densification of supportive infrastructure for information exchange between railway systems (Rodemann and Templar, 2014: 80).

The literature advocates a gradual approach to system integration. Rather than a grand project to link Europe with Asia, Slack advocates a series of incremental steps to be taken from both ends of the land bridge (2000: 12). This strategy is predicated on the continuous patching up of differences between national standards until full interoperability is achieved. The patching up is driven by private operators motivated by commercial gain who emerge as the main actors in this narrative. Agency in logistics management accounts is dispersed along an array of actors that include railway companies, dry port authorities, intermodal operators, forwarders, and land bridge customers who negotiate with governments and infrastructure owners to advance connectivity and exchange along a network of Eurasian land ports and hubs. The corporate media provides some heroic accounts of how the logistics industry pushed and cajoled national authorities into simplifying border crossing procedures that allowed the first pilot trains between China and Europe to complete their journey on time (Forbes, 29 June 2016).

References

Forbes (2016) How Those China-Europe ‘Silk Road’ Trains First Began. Forbes Magazine, 29 June 2016.

Forbes (2016) Why the China-Europe ‘Silk Road’ Rail Network Is Growing Fast. Forbes Magazine, 28 January 2016.

FT (2014) Geopolitics Cast Shadow over New Silk Road. The Financial Times, 17 October 2014.

NYT (2013) Hauling New Treasure Along the Silk Road. The New York Times, 20 July 2013.

Rodemann H and Templar S (2014) The enablers and inhibitors of intermodal rail freight between Asia and Europe. Journal of Rail Transport Planning and Management 4 (3): 70-86.

Slack B (2000) Eurasian Landbridges: Opportunities, Constraints and Challenges. Presented at Eastern Regional Organisation for Planning and Human Settlements, 17th World Congress, 11-13 October 2000, Asan City, South Korea.