Oleg Belozerov, the President of Russian Railways, has signed a multilateral agreement with Chinese Railways, Belarusian Railway, Deutsche Bahn, the National Company Kazakhstan Temir Zholy, Ulaanbataar Railway, and Polskie Koleje Państwowe SA (Polish State Railways, Inc.) to deepen cooperation on the organization of container trains between China and Europe.
The Russian announcement read, “The agreement has been signed in order to facilitate multinational cooperation on the organisation of container trains across Eurasia, and is likely to further increase the railway share of China-European transport on the freight transport market, help strengthen trade links, and integrate the plans for infrastructure development.
The six parties have effectively agreed to increase traffic volumes, intensify efforts to create logistics infrastructure facilities, improve the organisation of transportation and introduce new technologies to reduce travel time. In particular, the parties intend to support the development of competitive through-rates for freight transportation on container trains between China and Europe within the framework of their respective countries’ national legislation, and make efforts to create uniform service standards. In addition, the parties aim to actively develop new transport and logistics products, facilitate the organisation of the transport of cross-border goods based on electronic commerce, postal items, and goods requiring controlled temperatures in refrigerated containers.
The participants of the agreement note the need to organise cooperation on information, including electronic data exchange and preliminary electronic information on freight goods and vehicles moving across borders, the simplification of control procedures at checkpoints, and the reduction of customs clearance time. A joint working group on container trains between China and Europe will be set up to implement the signed agreement.”
A common assumption concerning trans-Eurasian rail is that the cost is too expensive to compete with shipping. However, this does not take into account two factors: firstly, the need for faster transport times for perishable goods, and the delivery of goods within the rail network itself, say from China to Kazakhstan or from Russia to Mongolia. Shipping cannot compete with overland market economies, an important issue when considering that internal trade among the Eurasian Economic Union nations has grown by some 38 percent over the past twelve months.
The initiative also brings closer the concept of digital commerce taking a large slice of Trans-Eurasian trade; Russia is already well advanced in this and is preparing, along with China, for digital connectivity along the routes. Countries such as Germany and Poland, however, still need to up their game in this regard; the multilateral agreement signed should help EU nations come up to speed with the Chinese and Russian initiatives.
Rail is not the only 5G methodology China is deploying along the Silk Road. It is pushing ahead with unmanned container shipping along the maritime routes with the first container ships expected to be in service by 2025.
Chris Devonshire-Ellis is the Founding Partner and Chairman of Dezan Shira & Associates. He is based in Europe. The firm provides European businesses and governments with strategic, legal, tax and operational advisory services to SMEs and MNCs investing throughout Asia and has 28 offices across China, India and the ASEAN nations as well as St. Petersburg and Moscow. Please contact the firm at email@example.com or visit the practice at www.dezshira.com
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