A look at China’s ‘New Silk Road’
February 21, 2019
(Credit: HuffPost)
A new report by ING has been examining the New Silk railroad, opened via China’s Belt & Road Initiative and how it could “revolutionise transport routes between the East and West.”
According to ING, the report reveals that the railroad “will make the transport of goods twice as fast as sea freight and four to six times cheaper than air freight.” As a result, shippers will be able to “optimise supply chains by choosing a combination of modalities.”
The railroad will also have a positive impact on the environment, states the report, “contributing just 5 percent of the CO2 emissions of current air freight options.” As a result, companies will have an additional environmental incentive to use the railroad to transport goods.
ING declares that shippers of “higher-valued” items, such as electronic equipment, wine, clothing and cheese, “will be most likely to benefit from cost efficiencies because every day in transit makes the delivery more expensive.”
While there may be some challenges to the railroad’s success, such as its reliance in Chinese subsidies and the prioritising of passenger trains in Western Europe, ING says “The rail network in Central and Eastern Europe does however offer more space and countries like Poland and Hungary are interested in becoming a ‘gateway to Europe’ overland.”
“The New Silk Road represents a potentially revolutionary shift in the way that goods are transported between China and Europe,” said Rico Luman, Senior Economist at ING. “That said, one modality does not always cancel out another, so we expect, in practice to see an increased combination of rail with air transport and/or sea transport. Not only does this help to spread risk, but also offers opportunity for a more optimum servicing of supply chains.”
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