Jan Paul Vegt and Lia Yong Gao are the co-founders of G&D Europe they are distributors dealing with exporting, importing and warehousing company based in the Netherlands. The short film presented by BON Cloud from Blue Ocean Network's tells us about the difficulty they are experiencing trying to cut down costs of distributing baby food and milk by means of air freight and searching for a more cost-effective solution.  Four million RMB (Chinese Yuan) was the cost of the last air freight orders which is what raised concerns about how they transported goods to their customers. Sea freight also seemed to be problematic as there can be no accounting for unpredicted weather conditions holding up the cargo which unavoidably missed targets, so the final option, it would seem, was to try the newly forming exponential rail network from Europe to China their choices were either Germany or Rotterdam.

 

 

The ‘Trans-Serbian’ economic rail route was started over one hundred years ago and is what gave rise to shipping between Europe and Asia. Luckily for the G&D Europe distributors, there are many emerging rail connections between China and Europe which are about to save them a considerable amount in transportation costs and open up new business which should become promisingly cost-effective. There are now over twelve China European connections which include Chengdu to Lodz, Suzhou to Warsaw, Zhengzhou to Hamburg, Chongqing to Duisburg, Yiwu to Madrid and Lianyungang to Rotterdam. These new connections have two main ways of connecting, either going north to the Russian Trans-Siberian connection or to the west Tans-Siberian connection which is where Europe and Asia meet.

The Second Eurasian Continental Bridge or New Eurasian Land Bridge which covers eastern China to Rotterdam. (Lianyungang to Rotterdam) is the probable route that will be used by G&D Europe and also passes through Kazakhstan. Great news for any business considering how economically advanced Kazakhstan is due to the wealth of oil and minerals it has in its reserves and in return reflected within its society. It would also seem because of the Customs Union of Belarus, Kazakhstan and Russia goods are inspected less which causes fewer delays and probably because of such trust within the Union reduces the chances of a robbery, which is also a great security bonus for businesses. The only stoppages the trains have to endure is to transfer their containers from train to train on each border. The trains do not cross over continents only the containers do as the train tracks in differing continents have completely different track gauges which can also differ from one country to the next.

 

The benefits of the high-speed rail link

As China is vying to become the biggest economic power in the world, what better way but by increasing transport links and reviving the old Silk Route. Not only have they increased their links to Europe but they are developing the Bangladesh-China-India-Myanmar (BCIM), the trade potential comes close to USD 132 billion and will be partly funded by the Asian Development Bank. This new connection will not just benefit China but will increase the economic state of those areas and encourage cultural crossover. The Chinese Central Government wants to start developing its internal cities encouraging economic growth and stop being the place where the world comes to do its factories manufacturing but becomes a contender that designs high-tech equipment that the west can’t do without making it more appealing to trade to bigger markets. China is also lending out its expertise in high-speed rail design and assisting in conducting feasibility studies to countries such as: California, UK, Germany, North Korea, France and Spain to name but a few and has begun to start work within Indonesia. China has also signed a historic transit trade deal with Nepal which allows it to connect to Tibet and reduce its complete dependence on India for the first time.  

Freight shipped from China to Europe will take less than two weeks which cuts the time it takes to ship orders by sea in half and the cost is less than shipping by air which is incredibly important for perishable goods such as baby food and milk just like G&D Europe’s customer has. It would seem that the rail links are producing a happy median between slow and cheap sea travel and fast but expensive air delivery, welcome news to companies like G&D Europe that need to meet customer targets with fewer costs effectively giving them a higher yielding profit and access to multimodal distribution if and when necessary as it has to be remembered that to send huge amounts of cargo will still be more cost-effective by sea even though it is slower.

 

 

There are of course some downsides to this game changing transport, one which G&D Europe could possibly struggle with is the substantial difference in land and sea freight tariffs. It could be considered that because of such steep competition from the high-speed rail that sea rates are falling in order to keep up with the new technology making it harder for new businesses to switch as quickly coupled with more cargo can be taken by sea. There is also the inevitable competition from other countries such as Japan and China’s main competitors DB Cargo UK (formally known as DB Schenker rail) with that all-important connection from Hamburg in Germany to Zhengzhou in China, this is great news for businesses such as G&D Europe the more competition the better the prices become but bad news for China who seems to want to corner the market.

All in all, this new economic zone that has been recently developed by China’s New Eurasian Land Bridge strengthens its freight links with Central and West Asia and Europe, developing economic growth through its connections and encouraging more businesses to trade. Now that there is a clear rail link from Rotterdam to China, G&D Europe will not have to go to Germany in order to complete their orders but have a nice convenient, cost-effective connection right on their doorstep.

 

 

 

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