On the occasion of the 10th anniversary of the "Belt and Road Initiative", China-Europe trains are moving towards a mature channel, but they are also facing new challenges.
In the past ten years, China-Europe trains have operated a total of 77,000 trains, transported 7.31 million TEUs, and the value of goods exceeded 340 billion US dollars, reaching 217 cities in 25 European countries, becoming an important bridge for international economic and trade cooperation.
Recently, the China-Europe International Cooperation Forum (hereinafter referred to as the "Forum") was held in Lianyungang, Jiangsu Province. Cong Liang, deputy director of the National Development and Reform Commission, delivered a speech at the forum and gave the above data.
However, at the same time of rapid growth, changes in foreign trade structure and the impact of falling shipping prices have brought new challenges to China-Europe trains, and topics such as local subsidies have once again attracted attention.
The bank has a large scale and a wide range.
Wang Guowen, director of the Institute of Logistics and Supply Chain Management of China (Shenzhen) Research Institute for Comprehensive Development, told CBN that the above data showed that the China-Europe train operation was large in scale and wide in scope, which played an important role in maintaining the stability of the industrial chain and supply chain and communicating the trade between Europe and Asia, especially during the epidemic.
According to the data of the China-Europe train portal launched on the opening day of the forum, since 2023, there have been 3,327 freight trains in Alashankou, 2,317 in Horgos, 3,276 in Manzhouli, 2,152 in Erlian, 562 in Suifenhe and 4 in Jiangbei, and the overall number is on the rise.
Not only that, but the role of several major assembly centers in China-Europe trains has also become increasingly apparent. From January to June this year, China-Europe trains (Chengdu-Chongqing) started 2732 trains, up 29.6% year-on-year; Goods transported exceeded 220,000 TEUs, up 24% year-on-year, ranking first in China. In the first half of the year, China-Europe Chang ‘an operated 2619 trains, an increase of 46.2% over the same period of last year. The total cargo transported was 2.493 million tons, an increase of 64.1% over the same period of last year.
Moreover, the operating efficiency of the train is gradually improving. As of September 15th, the China-Europe train has opened five routes, with a total of 80 trains, including Xi ‘an to Duisburg every Wednesday and Saturday, Chengdu to Lodz every Saturday, Duisburg to Xi ‘an every Tuesday and Lodz to Chengdu every Thursday.
Compared with ordinary trains, the running time of European trains in the whole timetable is reduced by more than 30% on average, which provides more stable and high-quality train products, which injects new kinetic energy into ensuring the safety of international supply chain, smoothing the domestic and international double circulation and promoting the trade between Asia and Europe, and also marks that the high-quality development of Chinese-European trains has entered a new stage.
This forum has gone further on the basis of 10 years. According to Xinhua News Agency, the forum has achieved 48 cooperation achievements, including launching the China-Europe train portal, publishing the whole schedule of China-Europe trains, implementing the electronic bill of lading for China-Europe train multimodal transport, implementing the capacity expansion and reconstruction project of key railway ports and rear passages of China-Europe trains, and increasing the traction capacity of China-Europe trains.
Not only that, Wang Guowen said that the traffic volume of the southern line is increasing significantly on the main channel of China-Europe trains. If the China-Kyrgyzstan-Urumqi Railway is completed and opened to traffic, the pattern of the "Belt and Road" and China-Europe trains will also change. We have countermeasures on the North-Central-South Line to form a more balanced channel development.
Facing new challenges
While the trains in Central Europe are still growing rapidly, their structure is also changing, and the trains going to Russia are growing rapidly.
Tang Tingting, assistant general manager of Sichuan New Silk Road Multimodal Transport Co., Ltd., told CBN that in the past, the business of the company’s European and Russian lines was about 80:20, but now it is 30:70, and the Russian line business is the main one. As a whole, China-Europe trains are mainly large-scale direct passengers and customized trains on some train platforms.
Wang Guowen said that the structural changes that China-Europe trains are facing are on the one hand due to the decline in global trade, which is mainly due to the decline in consumer demand in Europe and the United States, but the impact on China-Europe trains is not as obvious as that on shipping, because the proportion of China-Europe trains in global trade is not high, and it is not affected by the shrinking global trade demand, and it has little impact on the middle and high-end value goods transported by China-Europe trains.
He said that the structural changes in China-Europe trains are mainly due to the changes in the Sino-Russian trade structure after the conflict between Russia and Ukraine. Originally, oil and gas and other commodities were mainly transported through pipelines, but now grain, fertilizers and various commodities are growing rapidly, which are suitable for railway transportation.
According to statistics released by the General Administration of Customs of China on September 7th, the trade volume between China and Russia increased by 32% from January to August 2023, reaching US$ 155.101 billion. It is estimated that the trade volume between the two countries is expected to reach 200 billion US dollars in 2023, which is one year ahead of the target set by China and Russia to reach 200 billion US dollars in 2024.
However, Wang Guowen believes that from the growth of the southern line, there is still a high demand for trains in Europe, and the future pattern depends on the construction progress of the southern line.
Not only that, after experiencing high growth under the epidemic, China-Europe trains are also facing new challenges.
Tang Tingting said that now all platform companies are lowering the booking price, and the profits of freight forwarding companies have returned to the pre-epidemic level, or even increased. Generally speaking, the general feeling in the industry at present is that the enterprises engaged in China-Europe train transportation have felt greater pressure.
In addition to the uncertainty brought by regional conflicts to the smooth operation of the trains, Tang Tingting said that the phenomenon of consumption degradation in Europe and the United States is obvious, and the pressure on foreign trade exports at the front end has increased, which in turn has increased their pressure. The structure of railway transport goods has changed, the shipments of traditional manufacturing industries have decreased, and the shipments of automobiles and parts have increased. But for small and medium-sized logistics and freight forwarding companies, it is more difficult to get orders.
At the same time, the impact of shipping prices on China-Europe trains is becoming more and more obvious. Tang Tingting said that the price of shipping has dropped again and again, and many small and medium-sized shipping companies have opened direct ships to Russia, and the price is also very advantageous. For example, the direct shipping to St. Petersburg is below $4,000, which has a great impact on railway transportation.
In this situation, the problem of local government subsidies has surfaced again. In the early stage of channel development, local governments provide certain financial subsidies, which plays a positive role in cultivating the market. Since then, the Ministry of Finance has asked local subsidies to gradually decline. However, now that the shipping price has dropped and the price gap has appeared again, local subsidies have once again attracted attention when competing for goods.
In April last year, the Chongqing Municipal Finance Bureau said in response to the NPC deputies’ suggestions that at present, Shapingba District’s subsidy funds for China-Europe trains (Chongqing New Europe) are about 800 million yuan per year, mainly from the municipal cash logistics park’s tax and land leasing subsidies. In 2019, 2020 and 2021, the city’s subsidy funds for logistics parks are about 5 billion yuan, which can fully cover the district-level demand for subsidies for China-Europe trains. At the same time, Chongqing’s subsidy to Central European trains (Chongqing New Europe) is calculated according to the cost and freight rate of train operation. With the deepening of market-oriented operation, the freight rate will increase accordingly, and the total subsidy expenditure will gradually decrease, and the share undertaken by Shapingba District will also decrease accordingly. It is estimated that the share undertaken by the district level will drop to about 500 million yuan in 2021, and it will also show a downward trend in the following years.
In May this year, the Jiangsu Provincial Department of Finance responded to the proposal of the CPPCC, showing that according to the financial subsidy standard of the Ministry of Finance, it should be controlled reasonably, and the financial subsidy intensity of each line should decline year by year. In combination with the fact that the number of China-Europe trains in our province has increased rapidly every year, the provincial finance has arranged for the subsidy fund of China-Europe trains to remain unchanged at 160 million yuan every year in the past three years, helping the provincial trains to cultivate large-scale international freight trains with strong competitiveness.
Wang Guowen said that when the channel is mature, especially when it is in balance, it should return to marketization as soon as possible.
Tang Tingting said that in the fierce competition, some employees will be eliminated, and the remaining enterprises may go through a period of merger and reorganization, and they will join hands with each other to provide more stable services and develop better programs and routes, which should be beneficial to the long-term development of China-Europe trains.
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