|China-Europe container traffic across EEU to almost double by 2020|
|Author: CSEBA / SEEbiz|
|23rd June 2018|
|LONDON - Container traffic between China and Europe spanning the territory of the Eurasian Economic Union (EEU) will almost double between 2017 and 2020, the Russia-led Eurasian Development Bank (EDB) expects.|
There has already been a sharp increase in railway container traffic between China and the EU, transiting via EEU countries — principally Russia, Kazakhstan and Belarus — but around 80% of deliveries are still made by sea. The growth of transit container traffic through the EEU depends on the development of trade between China and the EU, although EEU countries will need to expand their transport infrastructure and remove a number of barriers, the EDB report warns.
The EDB’s Silk Road Transport Corridors report released on April 12 projects a jump in the number of 40-foot container equivalent units (FEU) transiting the EEU region from the 131,000 FEU recorded in 2017 to 200,000-250,000 FEU by 2020.
The report noted that between 2010-2017 the transit of container traffic from China to the EU has grown from 7,000 FEU to nearly 131,000 FEU. It states that much of the ongoing expansion in transit would be dependent on freight rates, which currently average at $5,500 per FEU. “Subsidy-driven reduction of China–Europe railway container freight rates by 30%-50%, has resulted in a 19-fold increase of container traffic,” the report says. Current rates encourage further growth of container traffic to 500,000 FEU in 2030, according to the report.
Growth rates are expected to decline after 2030 if not supported by lower freight rates as well as “investments in the debottlenecking of the transport and logistics infrastructure” and “and international coordination of transport policies at the level of Greater Eurasia”, it notes.
The EDB’s most optimistic scenario sees aggregate container traffic along the China – EEU – EU route sees growing to 1.3mn 20-foot equivalents (TEU) “in the long term”.
“According to our calculations the maximum additional container traffic that could be attracted to EEU railway networks is estimated at 2.7 million FEU (5.4mn TEU), including West–East traffic of 325,000 FEU (650,000 TEU) and East–West traffic of 2,375,000 FEU (4,750,000 TEU),” the report adds. “However, the large imbalance between existing and additional West–East and East–West freight traffic may prevent EAEU railway networks from attracting all potential freight traffic along the China–EAEU–EU axis.”
The projections are in line with the goals of China’s One Belt One Road (OBOR) initiative, which seeks to turn much of the EEU into a transit hub for Chinese goods exported to Europe. The volume of EEU imports from China switchable to railway container traffic currently amounts to 4mn-5.5mn tonnes per year or 250,000-300,000 FEU (500,000-600,000 TEU). As it stands, container traffic has the potential to increase eight-fold or nine-fold, the EDB’s report maintains.
The EEU was commenced in 2015 on the basis of a customs union created in 2010 and originally included Russia, Kazakhstan and Belarus among its members — Armenia became a member of the free-trade bloc in January 2015, while Kyrgyzstan joined in August 2015.