Plane, train, and automobile. All are now options for shipping goods throughout Asia and Europe with China’s recently launched direct freight train service to London, showing the country’s intent to increase trade in the region. The move could have a large impact on the global shipping space and could be a much-needed economic boon for countries along the route.
New Freight Train
It might not be the fastest method, but the new route by China Railway could definitely make waves in the shipping business. The train will take between two weeks and 18 days to travel the 12,000 miles between China and London directly and can carry loads of clothes, bags, and household items.
It is the first time China and Great Britain have been connected by a direct rail line. The route starts in the Eastern China town of Yiwu and goes through seven different countries. Although the route is direct, it isn’t completely seamless: along the way, containers much be reloaded because many of the railways have different gauges, meaning a single train can’t travel the entire journey.
The final destination is Barking Rail Freight Terminal in East London, which connects directly to the High Speed 1 rail line to the European mainland, meaning China could use London as a loading area for transporting goods to many other European cities.
New Silk Road
The new railway line is part of a bigger plan by the Chinese government. Since 2013, China has been working to improve its trading routes and connections throughout Europe, in what is often called the new Silk Road after the ancient Chinese trading master plan that dominated the region with its widespread routes.
The “One Belt, One Road” initiative is a multi-billion dollar plan to increase trade and spread goods throughout the region. Faced with slowing economic growth within its country and by depleting exports, China turned to building infrastructure and trade routes to turn things around. Its exports totaled $2.27 trillion in 2015, a drop from $2.34 trillion in 2014.
By connecting to London via rail, the city becomes the 15th city in eight European countries to join the initiative, which uses 39 lines to connect the European cities with 16 cities in China. The new railway follows the path of the original Silk Road from 200 BC, but with a modern twist that allows goods to cross borders easier and more quickly.
Economic Impact
China Railway already has services between China and other cities in Europe, including Hamburg and Madrid, but the direct connection to London will be huge for China’s trade and investment goals. Countries could be more likely to increase operations in China knowing that it can connect fairly quickly with a network of other countries and markets.
Adding rail as a shipping option also provides more choice for manufacturers. Rail has advantages over both current shipping options—it is cheaper than air and faster than sea—and allows shippers to consider new options that could lower transportation costs.
The railway is best designed for commercial goods producers like clothing or household items, but could be used for a variety of other items.
Lower shipping costs could decrease the overall costs of goods or lead to increased revenue margins for the companies. Because the goods are brought into London’s bustling commercial rail station, they can easily be transferred to reach other cities in Europe not currently on China Railway’s route, therefore possibly expanding trade even further.
The impact of the railway will be felt far beyond China, however. The timing is particularly advantageous for the UK, as it looks for global trade deals prior to the uncertainty of its departure from the European Union, which could have deep effects on trade when it loses free trade with other EU member countries.
Smaller countries along the rail line, like Kazakhstan, could also see strong economic growth as they are linked to stronger countries and have goods more regularly flowing through their country.
Aside from asserting China’s economic influence in the region, many experts also predict that expanding the new Silk Road will expand the country’s political influence throughout the area, a region that is becoming increasingly important on the global stage.
Increased trade routes will allow China to spread its goods throughout the region and set the terms for many of the trade deals.
The railway between China and London has the potential to grow into a large-scale trading operation and could change how we view trade and shipping throughout Europe and Asia.