With both China and Russia gearing up for overseas rail and Arctic shipping potential to Europe, positive moves to accept and accomodate improved rail links are being taken in the Baltics. Russia has recently signaled its desire to extend and redevelop passenger rail services from St.Petersburg to Berlin in a route that sees cross border travel through Latvia, Lithuania, the Western Russian enclave of Kaliningrad and through Poland.
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The coming together of China’s OBOR ambitions with the Russian backed free trade area the Eurasian Economic Union, together with the members of the Shanghai Co-Operation Organisation members, is an issue that has been discussed at the highest levels. While China’s OBOR plans have been well discussed, lesser known are the Shanghai Co-Operation Organisation (SCO) and Eurasian Economic Union (EAEU). Yet both are powerful entities and becoming increasingly so.
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Hats off to Hong Kong’s South China Morning Post for producing one of the coolest multimedia presentations on how China will reach Europe across Eurasia via rail. This excellent graphic shows the route from China moving across Mongolia, Central Asia, and Russia, passing through Eastern Europe before terminating in London. It is well worth a look, although there are other routes, as we have explained previously on this website, that reach further south into the EU.
There has been a great deal of misunderstanding about the financial viability of overland rail compared with shipping. However, rail transportation allows items to be carried over shorter land distances, and is faster, which is preferable for perishable and other items. Rail is also suitable for getting heavy duty equipment into remote land areas – which is exactly what is required to develop parts of the more inaccessible Silk Road regions, and especially in Central Asia.
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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.
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Indicative that new digital automation is arriving faster along OBOR routes, the marine classification society, the American Bureau of Shipping (ABS), has joined the Unmanned Cargo Ship Development Alliance (UCSDA) – a group of classification organizations, shipyards, equipment manufacturers, and ship designers that seek to advance autonomous shipping. The alliance intends to deliver a working autonomous cargo ship by October 2021, with a design that integrates independent decision-making, autonomous navigation, environmental perception, and remote control.
The Unmanned Cargo Ship Development Alliance is chaired by HNA Group, a Fortune Global 500 conglomerate based in Shanghai. HNA’s logistics division has interests in shipbuilding, marine engineering, and bulk trading, and it is on the verge of acquiring Singapore-based logistics firm CWT. Beyond shipping, it has a diverse US$100 billion portfolio of assets around the world, from real estate to technology to entertainment.
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The digital economy, also known as the internet economy, is based on digital computing technologies, comprising new business models such as e-commerce, cloud computing, and payment services. Technology is functioning as a new engine for the development of new revenue streams and enabler of new business models. With China possessing one billion consumers able to access the digital economy, and the State Government putting into plans to deliver to 95 percent of China within 24 hours by 2020, the opportunities for getting produce both into and out of China and the OBOR region as a whole are immense. The digital revolution is impacting on the essential deliverables of the OBOR routes – getting product delivered, on time, safely, and securely. This includes not just e-commerce, but also e-customs and e-government. Supporting services will all be managed by e-platforms.
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Silk Road Briefing
