Assessing the market niche of Eurasian rail freight in the belt and road era

• Published date: 16 June 2020
• Date: 16 June 2020
• DOI: https://doi.org/10.1108/IJLM-12-2019-0351
• Pages: 729-751
• Author: Xu Zhang,Hans-Joachim Schramm
• Subject Matter: Management science & operations,Logistics

Assessing the market niche of

Eurasian rail freight in the belt and

road era

Xu Zhang

School of Transport Engineering, Environment and Planning,

Technological University Dublin, Dublin, Ireland, and

Hans-Joachim Schramm

Department of Global Business and Trade,

Vienna University of Economics and Business, Vienna, Austria and

Department for Operations Management, Copenhagen Business School,

Frederiksberg, Denmark

Abstract

Purpose –This paper presents an overview of the recent development of Eurasian rail freight in the Belt and

Road era and further evaluates its service quality in terms of transit times and transport costs compared to

other transport modes in containerised supply chains between Europe and China.

Design/methodology/approach –A trade-off model of transit time and transport costs based on

quantitative data from primary and secondary sources is developed to demonstrate the market niche for

Eurasian rail freight vis-a-vis the more established modes of transport of sea, air and sea/air. In a scenario

analysis, further cargo attributes influencing modal choice are employed to show for which cargo type

Eurasian rail freight service is favourable from a shipper’s point of view.

Findings –At present, Eurasian rail freight is about 80% less expensive than air freight with only half of the

transit time of conventional sea freight. Our scenario analysis further suggests that for shipping time-sensitive

goods with lower cargo value ranging from $US1.23/kg to $US10.89/kg as well as goods with lower time

sensitivity and higher value in a range of $US2.46/kg to $US21.78/kg, total logistics costs of Eurasian rail

freight service rail is cheaper than all other modes of transport.

Practical implications –As an emerging competitive solution, Eurasian rail freight demonstrates to be an

option beneficial in terms of transport cost, transit time, reliability and service availability, which offers a cost-

efficient option enabling shippers to build up agile and more sustainable supply chains between China and

Europe.

Originality/value –Our study firstly provides a comprehensive assessment of present Eurasian rail freight

including a thorough comparison with alternative modes of transport from a shipper’s point of view.

Keywords Belt and road initiative, Eurasian land bridge, Trans-Siberian railway, Container block train,

Service quality, Transport cost, Transit time, Cargo value, Value to weight ratio

Paper type Research paper

1. Introduction

In 2013, the term ‘Belt and Road’first came into the spotlight as China’s masterplan initiative

to revive the Ancient Silk Road was announced by Chinese President Xi Jinping. Following

the National Development and Reform Commission (NDRC) (2015), the now called ‘Belt and

Assessing the

market niche

729

This paper forms part of a special section “Impacts of the Belt and Road Initiative on Global

Supply Chain and International Logistics”, guest edited by Paul Tae-Woo Lee, Kamonchanok

Suthiwartnarueput, Kevin X. Li, and Ying-En Ge.

We would like to thank the journal editors and reviewers for their constructive feedback and

recommendations. We also like to acknowledge all the interviewees for their valuable time and insights,

and to everyone who provided contacts for interviews, this study would be not possible without such

kind collaboration. We would further like to thank the participants of the 2018 NOFOMA conference for

the valuable feedback on a previous version of this article.

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 14 December 2019

Revised 19 February 2020

6 April 2020

Accepted 3 May 2020

The International Journal of

Logistics Management

Vol. 31 No. 4, 2020

pp. 729-751

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-12-2019-0351

Road Initiative’(BRI), is often communicated as a ‘National Vision’and ‘Foreign Strategy’

towards regional cooperation, and it is also mentioned about infrastructural project

construction and investments (Van der Leer and Yau, 2016).

The BRI includes two major parts –the New Silk Road Economic Belt and the 21st-

Century Maritime Silk Road (hereinafter referred to as the Belt and the Road respectively).

Both represent a network of ports, railways, roads, pipelines and utility grids connecting

China with Central Asia, West Asia and parts of South Asia, Europe and Africa (NDRC, 2015;

Tian, 2016). Although the BRI is more than just physical connections (Tian, 2016), it provides

a blueprint framework for Chinese diplomatic, commercial and foreign infrastructure policies

to get access to new markets for trade and investments (Van der Putten and Meijnders, 2015).

The aims of the BRI are to (1) promote connectivity of Asian, European and African

continents via land, sea, and air, (2) establish and strengthen regional cooperation and

partnerships among the countries along these routes and (3) facilitate the flow of economic

resources and integration of markets (Song, 2015).

The Belt part of BRI revives the Ancient Silk Road as a land route for trading between the

East and the West –not by camel or donkey but by railway (Otsuka, 2001), and goods remain

in the same container for the entire intermodal journey (Rodrigue, 2017). Currently, the

Eurasian rail freight only takes a small share of the total transport volume between China and

Europe (Bucsky, 2019). However, with the rapid growth of freight transport on the rail routes

along the Belt, the Ancient Silk Road trading routes are coming back to life again as container

block trains have emerged as an alternative transport mode there in recent years (see

Figure 1). In 2019, it is reported that there are 8,225 container block trains with 725,000 TEU

transported on the Belt (MOFCOM, 2020).

In response to the emergence of Eurasian rail freight, most research studies on Eurasian

rail freight and the BRI are policy studies or consultancy work (Davydenko et al., 2012;

UNECE, 2012,2017;Rastogi and Arvis, 2014;Ardunio, 2016;Galushko, 2016;UIC and Roland

Berger, 2017;Jak

obowski et al., 2018;Vinokurov et al., 2018). In addition to this, a rapidly

increasing number of scholarly contributions deal with the competitiveness of container

block train operations between China and Europe like Rodemann and Templar (2014),

Besharati et al. (2017),Chen et al. (2017),Seo et al. (2017),Yang et al. (2018a,b),Wiegmans and

Janic (2019),Jiang et al. (2018,2019),Wen et al. (2019),Bucsky (2019),Dunmore et al. (2019),Lu

et al. (2019),Kundu and Shen (2019) or Feng et al. (2020) as well as some more in the Chinese

language as discussed in Liu et al. (2018) and Lee et al. (2018). Other less related works are

Song et al. (2011),Song and Na (2012),Tsuji (2013) or Kim et al. (2020) focusing on multimodal

freight transports via Trans-Siberian Railway (TSR) with a short sea leg from China, South

Korea and/or Japan to Russian Far East. Another stream of literature deals with a comparison

Source(s): CRCT (2019), Modor Intelligence (2019), Zhang (2019)

Container block trains p.a.TEU transported p.a.

600000

500000

400000

300000

100000

0

200000

6000

7000

5000

4000

3000

1000

0

2011 2012 201720162013 2014 20182015

2011

TEU WB TEU EB Trains WB Trains EB

2012 201720162013 2014 2018e

2015

2000

Figure 1.

China–Europe rail

freight continues

to soar

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