The impact of China-Europe Railway Express – past, present and future
On March 11, 2020, the World Health Organization officially declared the COVID-19 pandemic. It was something the public both expected and feared. This pandemic is undoubtedly one of the biggest problems the world has faced in recent history. COVID-19 is not just a health problem; it is also a political, economic and social problem.
Under these new circumstances, it was obvious from the start that trade and global supply chains were going to be disrupted. The questions just piled up: how are we going to continue production, will we have enough food, will we have enough medicine and medical supplies, how are we going to organize transport, etc. There were no immediate answers, and every country in the world has tried its best to protect the lives of its citizens and to make everyday life as normal as possible.
What to do when you have transport difficulties?
One of the main questions at the start of the pandemic was how to organize the transport of goods from all over the world? Air traffic was almost non-existent. Cargoes from ships have been blocked in many ports for security reasons. The main alternative was to transport the goods as much as possible by land. Since trucks have a limit on the weight (tonnes) they can transport, the only other transportation alternative was rail. It was around this time that many of us realized how valuable railways are and how useful they are in times of pandemic. Even though the rail sector suffered like others, the results showed that at a global level during the COVID-19 era, the level of rail transport remained the same, and in some countries it was higher. The reasons behind this were that air freight rates increased, truck transport took longer to deliver goods than before due to border procedures, and blank crossings occurred more in ocean freight. .
The importance of the China-Europe Railway Express during the first year of the pandemic
In April and May 2020, due to the combined effects of all the above-mentioned circumstances, China-Europe Railway Express (CURE) has become a safe and fast way to transport goods from China to Europe and vice versa. The main products transported at this time were medical supplies – masks, medical protective suits, goggles, gloves, respirators, etc. Gao Zandong, deputy managing director of COSCO Shipping Lines, said that during those first days of the pandemic, it took just over 10 days to transport medical supplies from Hubei province to Germany. The Xinhua agency reported in the same article that: “From January to May, a total of 12,524 tons of anti-epidemic materials were sent from China to European countries by train. CURE “made a record 1,033 trips in May, up 43% over one year. 93,000 containers were transported, an increase of 48% over one year. When the deadlines are as big as they used to be, during those first months of the pandemic in Europe, it was heartening to know that there is a safe and fast way to receive medical supplies from China.
The trend to use this railroad in 2020 and the first months of 2021 continued to skyrocket. Yicai Global published on its website in April 2021 that the number of CURE trips increased 75% in the first quarter year-over-year (3,398). On top of that, last year that number surpassed 10,000 for the first time in its history, and it was a great result. The same report states that Meng Wei, spokesperson for the National Development and Reform Commission, said at a press conference: “The China-Europe Railway Express made more than 1,000 train trips per month. for 11 consecutive months since May of last year. The freight service had delivered more than 11.0 million units and 89,000 tonnes of COVID-19 pandemic control supplies by the end of last month. “
Judging by this result, we can say that this railway has a unique opportunity to become an even more valuable part of the transport network between China and Europe. The number and volume of goods transported via the CURE network are increasing. More and more companies want to use this network. Maritime cargoes will remain the dominant transport model in the near future as 90% of global maritime transport passes through this route. On the other hand, rail transport is becoming more competitive compared to air freight, and it will be interesting to see if that changes in the future.
Several things need to be changed on the China-Railway Express network to become even more competitive. On the one hand, the problem of the different railway gauges that exist on this route. There are five different ones, while the three types are the most used. Even though the time used to move cargo from one train to another is significantly faster than before, there is still room for improvement. On the other hand, the level of administrative work that must be done for trains to cross national borders. The main thing is to work on digitization and border procedures to shorten the time it takes for trains to cross borders.
China-Europe Economic Cooperation and the Role of China-Europe Railway Express
Before the start of the pandemic, China and the countries of the European Union had good economic relations. Trade was an essential element of cooperation. China was the EU’s second largest trading partner. The volume of trade in 2019 was around 350 billion euros, according to Eurostat data. Investments have had a different story. After many years of good cooperation in the field of investments, the EU has started to change its mind about Chinese investments in its territory. The latest restriction on the relationship became more evident after the European Commission adopted in March 2019 the EU framework for screening foreign direct investment. Valdis Dombrovskis, the EU official, said the EU market was and still is open to foreign investors. Nonetheless, there must be some conditionality regarding foreign investment to secure EU assets and protect collective security. Chinese investments, especially in IT, were no longer so welcome in the EU.
Economic relations between China and the EU due to the pandemic have changed. Eurostat data shows that in the first ten months of 2020, China was the EU’s largest trading partner, due to the increase in trade in the first three quarters of 3.4% in year on year, while between the EU and the United States fell 13% in a year. In addition, at the end of December 2020, China and EU officials, after nine rounds of negotiations, reached in principle a Comprehensive Investment Agreement (CAI). This deal will likely be finalized by the end of 2021, and if all goes well, that would be a huge step in the right direction for both sides. In addition to this, it is also encouraging that China’s latest 14th Five-Year Development Plan, adopted in March 2021, refers to new opportunities for foreign investors in China. China will facilitate the access of foreign companies to the Chinese market. It will also allow new industrial and service areas in which foreigners can invest. All of the things mentioned would improve economic relations between China and the EU. China-Europe Railway Express will benefit from this.
In March 2021, the two sides celebrated the 10th anniversary of the first train that traveled from China to Europe. Last year, with all its difficulties, proved how necessary this railroad is and how much it must be used correctly. Rail freight has many advantages that are important in today’s precarious world. It is a safer way to transport goods than air or sea freight because its operation is less dependent on weather conditions. It is cheaper way of transportation than air freight and takes less time than sea freight. The most important advantage is that rail freight is more environmentally friendly than air freight and its CO2 emissions are slightly higher than those of sea freight. As both China and the EU are committed to creating a more sustainable and greener environment, rail transport will feature prominently in their relationship.
The impact of the Belgrade-Budapest railway on the development of Serbia
Serbia, a small country in the center of the Balkan Peninsula, has been a strong supporter and friend of China and has been a member of two well-known Chinese initiatives from the start, namely 17 + 1 and the Belt and Road Initiative. Through them, Serbia has cooperated with China in different ways. In the economic field, China has invested more than 10 billion euros in Serbia through loans, acquisitions and joint ventures. China has invested in various types of projects such as transportation, energy, metallurgy, production, etc. One of the first projects on which China and Serbia cooperated was the construction of the Belgrade-Budapest railway. China Communication Construction Company and China Railway International are in charge of both parts of this railway, and the project is worth $ 1.412 billion. By building this railway, Serbia will reduce the travel time from Belgrade to Budapest from eight to four hours. This is an important project for Serbia since the Serbian railways have not been modernized for over three decades. In addition, through the modernization of our network and the construction of a modern railway from Belgrade to Niš, Serbia hopes to be part of the wider China-Europe rail network. Hopefully, with these projects, Serbia will join the European road and rail network and become more competitive in the international market.