In the first six months of 2023 on the rail route from west China, 350.7 thousand TEU were transported, which was an increase of 14.4% compared to the previous year.
The UTLC Eurasian Rail Alliance (ERA), an alliance of national railways of Kazakhstan, Russia, and Belarus representing 95% of transport between China and Eurasia, emphasises the visible redirection of cargo volume. Instead of going to the European Union, they go, in particular, to Russia and other EAEU countries.
During the first six months of 2023, the volume of cargo transported on the China-Europe-China route amounted to 144.1 thousand TEU, accounting for 32.5% of the total volume transported by the UTLC consortium ERA. A year earlier, the volume on this route amounted to 221.13 thousand TEU and accounted for as much as 72 percent of the whole volume transported by the consortium.
Traffic from China to Europe decreased by 51.2 percent during this time, year to year – from 143.9 thousand TEU dropped to 73.7 thousand TEU. In the opposite direction (from Europe to China), the decline was 49% – from 77.3 thousand TEU in the first half of 2022 to 40.3 thousand one year later.
The main reason for such drastic declines is, of course, the war in Ukraine and its consequences. The sanctions package adopted by the EU introduced a ban on the import of a wide range of goods when transiting through Russia. However, this is only one side of the coin.
While the war in Ukraine had a negative impact on the volume of transport between China and Europe, its decline was a consequence of a deeper problem – the crisis in trade relations between China and the EU. The value of turnover between both economic giants reached USD 314 billion in the period January-May 2023.
In the same period last year, it was as much as USD 340 billion. The EU side was responsible for this decline in turnover. Exports from China to the EU dropped by 11 percent during the first five months of this year, and EU exports to China increased by 1.3 percent. It is clear that the global slowdown is felt much more strongly in Europe. Chinese consumers have not reduced their spending on goods from Europe that much.
New directions
In turn, the volume of transport between China and the countries of the Eurasian Economic Union exploded in the period July 2022-June 2023. For example, freight traffic between EAEU countries and China increased in volume by 177 % year to year (up to 103.6 thousand TEU), from China to Russia by 122.3% (up to 105.9 thousand TEU), and between China and Belarus from an insignificant volume of 356 TEU increased to 26.9 thousand TEU.
It is worth emphasizing that, apart from the blocking of the route to Europe due to the war in Ukraine, which limits transport both through the conflict-torn country and through Belarus, which is indirectly involved in the war, the railway route from China has lost its attractiveness over the last few quarters. The main reason is the improvement of the price competitiveness of maritime transport.
While in June 2022, the average container rate from China to Europe was approximately PLN 7.3 thousand dollars per 40-foot container (FEU), in January this year it was just under 2.1 thousand dollars, and in June only 1.57 thousand dollars for FEU. Over the same period, the ERAI rail rate has changed little. In June 2022, it was $2,987 per FEU, and exactly one year later – $2,944.
Looking at the structure of cargo transported between China and Europe in both directions, three categories dominated – electrical and communication equipment, mechanical equipment and machinery, and computers, as well as automotive. In total, these products accounted for 49% of the volume transported in both directions between the Old Continent and the Middle Kingdom. A year earlier, these three categories also occupied the top three places, but then they accounted for 39% of the transported volume.
The gateway to Europe is still in Poland. Despite the war in Ukraine and the search for alternative railway routes from China to Europe (compared to the one running through Russia and Ukraine or Belarus), the terminal in Małaszewicze still remains the gateway from China to Europe. The four dominant routes in terms of volumes in the above-mentioned relationship have their endpoint in this place.
From there, the goods go on to recipients in Western Europe. Routes going directly to the West are less popular. The most important route from China to Europe is the one from X’ian, which transported 25.6 thousand tons to Małaszewicze. TEU, the second route is from Chengdu (14.5 thousand TEU), the last place on the podium is taken by Chongqing (9 thousand TEU).
Photo: Gary Todd from Xinzheng, China, CC0, via Wikimedia Commons
