People wave Chinese and Union flags as they pose for photographs during the departure of a freight train transporting containers laden with goods from the UK en route to Yiwu in the eastern Chinese province of Zhejiang. Photo: AFP
by Tom Holland
by Tom Holland

Puffing across the ‘One Belt, One Road’ rail route to nowhere

Compared to sea or air, the Europe-China freight service just makes no economic or environmental sense, either coming or going

Two weeks ago, a 34-wagon freight train trundled out of the London Gateway container terminal on the UK’s Thames estuary bound for Yiwu in China’s Zhejiang province. It is still on its way. As you read this, it will be hauling its cargo of pharmaceuticals, vitamin pills, baby milk, soft drinks and Scotch whisky across Central Asia. It is expected to arrive at its final destination towards the end of this week, probably on Friday.

By the time it does pull into Yiwu, the train will have completed an epic journey, chugging 12,000km across nine countries in 18 days, with multiple stops along the way to switch locomotives and trucks to cope with all the changes in railway gauges and signalling systems.

The first-ever freight train from Britain to China started its mammoth journey on Monday along a modern-day “Silk Road” trade route as Britain eyes new opportunities after it leaves the European Union. Overall, the economic business model of transport of material by land over 12,000km in 18 days is in doubt, however. Photo: AFP

The first of what is intended to be a regular eastbound rail freight service between London and China, the train had its departure duly hailed by China’s state media as a landmark achievement for President Xi Jinping’s (習近平) pet “Belt and Road” project to extend China’s economic influence across Asia to Europe. The junior British trade minister wheeled out to wave it off was reported to be “delighted” it was leaving.

Possibly he was. But while the logistical complexity involved in mounting the new service is undeniably impressive, the claims made for its economic and environmental benefits fail to stand up to scrutiny.

Trucks transport shipping containers at a port in Qingdao, east China's Shandong province. Shipping by train from China to Europe would be faster than by sea, but also much more expensive. Photo: AFP

Let’s put aside disbelief that there could be any British soft drink for which there is such demand in China that it would make commercial sense to manufacture the stuff in the UK and truck it by rail across Asia, rather than simply making it from concentrate in China. Irn-Bru perhaps? It hardly seems conceivable.

Instead, it is the breathless claim that the rail service is cheaper than air freight and faster than shipping by sea that needs closer examination. This is undoubtedly true, but in itself it is hardly a selling point. You might just as well point out that rail is slower than air freight and more expensive than marine transport, which of course is equally true. The real question is what demand is there for the new service, eastbound or westbound. The answer is: very little.

A freight train transporting containers laden with goods from the UK, is prepared ahead of departure from DP World London Gateway's rail freight depot en route to China. London is the 15th city to be linked to a new freight network offered by the state-run China Railway Corporation, which is billed as cheaper than air transport and quicker than shipping by sea. Photo: AFP

Eastbound marine container rates from Europe to China shot up at the beginning of this month. The week our train left, it cost slightly more than US$1,500 to ship a 40ft container by sea from Europe to China. The cost of sending the same container by rail was quoted at US$2,500, two-thirds more expensive. The cost differential between westbound services was even wider, with sending containers from China to Europe by rail two and a half times more expensive than by sea.

Yes, rail is quicker, taking roughly half the time of the sea journey. But it is hard to think of any goods for which it would be worth paying such a hefty premium to get them to their destination in 18 days rather than 35. High-value products – expensive pharmaceuticals, perishable foods, valuable electronic components which must arrive on schedule to comply with strict just-in-time inventory management strategies – go by plane, especially given the additional control of environmental conditions that air transport offers. Pretty much everything else loses little or nothing by taking the slow boat.

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Certainly Scotch whisky, which has typically spent 10 years or more maturing in dank Highland cellars, has no great need to reach the market a couple of weeks sooner. Nor do the shoes and socks that made up much of the cargo of the first westbound rail service from China to the UK earlier this year gain anything by arriving a few days earlier at twice the cost.

Neither can the rail service be scaled up to the extent that it would rival seaborne freight for economy. A single large container ship can carry 10,000 40ft boxes between Europe and China in five weeks. To shift as many boxes by rail would require 294 of the trains that left London two weeks ago. And to get them all to their destination within five weeks, they would have to leave at intervals of no more than 80 minutes apart constantly for 17 days.

A Boeing 777 Air China Cargo plane gets loaded in Lautzenhausen, Germany. Air cargo is more expensive that freight, but also offers faster delivery and more environmental controls on transported materials. Photo: EPA

Assuming a very modest average cost of US$2 million per kilometre, upgrading the Euro-Asian railway freight system to handle such volumes – in both directions – would cost at least US$50 billion. Probably it would be many times more. In short, intercontinental rail freight as touted by “Belt and Road” supporters can never be economic.

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Finally, the railway route’s promoters claim that rail freight is less environmentally damaging than shipping by sea. With the trains hauled by 3,000-horsepower diesel locomotives, a quick back-of-an-envelope calculation shows that it takes slightly more than 30,000 kilowatt hours of energy to transport a single container between Europe and China. Transporting the same box on a large container ship with 110,000 horsepower engines uses around 6,700 kilowatt hours of energy, or less than a quarter as much.

Sure, marine bunker fuel is dirtier than diesel, but not by that much. In short, shipping by sea emits a fraction of the pollution of transport by train. The railway enthusiasts’ claim of greater environmental soundness is flat-out wrong.

So the hype surrounding our train, still puffing its way from London to Zhejiang, simply doesn’t stand up. The idea of a “Belt and Road” rail cargo route between Europe and China remains nothing more than a fanciful curiosity.

Tom Holland is a former SCMP staffer who has been writing about Asian affairs for more than 20 years