Explainer | What is the China-Europe Railway Express, and how much pressure is it under from the Ukraine crisis?
- The China-Europe Railway Express, or China Railway Express (CRE), is key logistical cog in President Xi Jinping’s Belt and Road Initiative
- It provides an alternative to container shipping for transporting Chinese manufactured goods to Europe via Russia
As the Russian invasion of Ukraine is causing additional strain to the global supply chain that is already dealing with coronavirus-related disruptions, rail transport in the region that is at the nexus of Asia and Europe has become a direct victim.
The cross-continent network has served as a critical pipeline for Chinese exports to Europe in the past few years, especially during the ongoing global shipping crisis as costs soared and port congestion worsened.
But now it is facing the most serious challenge in its history.
What is the history of CRE?
Providing an alternative to container shipping, the CRE transports a variety of Chinese goods – ranging from clothing and household appliances to car parts – in containers to European consumers by rail.
It does not travel along a single route, but a network of railways that span over the two continents- departing from China, passing through Central Asia and finally arriving in western Europe – mirroring the ancient Silk Road.
The first train departed in 2011, from Chongqing in southwestern China to the German city Duisburg.
In 2021, a record of 15,183 train trips were made along the Eurasia route – compared to only 17 a decade ago – transporting 1.46 million twenty-foot equivalent unit (TEU) containers, according to China’s state railway operator.
As of January, more than 50,000 train trips have brought 4.55 million TEU of cargo worth US$240 billion to 180 cities in 23 countries in Europe, figures from the China State Railway Group Company showed.
What routes does CRE cover?
The eastern, central and Western corridors are the three major routes for the CRE.
The central route carries goods made in central China, as well as southern coastal provinces such as Guangdong – the manufacturing powerhouse of the country.
It enters Mongolia through Erenhot – another border city in Inner Mongolia, and then passes through Russia before entering eastern and western Europe.
Most of the routes run through Russia, Belarus and Poland, while a small number of trains also pass through Ukraine and en route to Hungary.
How has CRE been affected by the Ukraine invasion?
Trains passing through Ukraine have been suspended or diverted, while the main route, which does not pass through Ukraine, has been so far operating normally.
Both the European Union and the United States have included Russian Railways – the country’s state-owned railway company – on their sanctions list.
How much can South Korea, Japan help EU reduce its dependency on China?
Car manufacturers, including BMW and Audi, have suspended shipments by train to China due to the war, while international shippers, such as Maersk and DHL, have halted their business involving the rail routes.
But despite the uncertainties, trains carrying cargo have continued to depart from various cities in China, according to state media reports, with 502 trains departing from Yiwu to Europe in the first four months of the year.
To mitigate risks and concerns, many Chinese logistics companies have also started covering the war insurance payment for their clients who opt to transport their goods via the railway.
What are the challenges ahead for CRE?
Passing through dozens of countries is an asset during peacetime, but amid rising geopolitical tensions, the CRE seems particularly fragile compared with air and ocean freight.
It has heavily relied on government subsidies for operation and rapid expansion since it started, as its own profitability level remains low.
Congestion also remains a critical problem for all the routes due to strict border check procedures.
The issue has been amplified since the coronavirus pandemic began as more disease preventive measures are being carried out.
