FROM EIR DAILY ALERT

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China-Europe Rail Freight Has Risen Sharply Despite EU Russia Sanctions

March 7, 2018 (EIRNS)—Bloomberg News, citing a new report from the Center for Strategic and International Studies (CSIS) in Washington, reported that the value of cargo sent between China and Europe by rail surged more than 140% in the first six months of last year. The value of the cargo would have been much higher if the EU sanctions on Russia had been lifted. Agricultural produce sanctions imposed by Russia in retaliation for the U.S.-Europe 2014 sanctions on Russia, blocked the export of agricultural products to Russia, and since China-bound rail freight goes through Russia, European carriers have been prevented from tapping into this potentially lucrative market. This is the reason why trains going back to China are sometime half-empty.

China has taken some measures to overcome that problem, Bloomberg pointed out. “Chinese subsidies can cover as much as $7,000 per container, or more than half the cost, CSIS estimates. That sort of support makes the cost of running half-empty trains back from Europe less prohibitive. China’s massive trade surplus with the region means as much as 70% of the transcontinental rail freight goes west,” the article said.

“Recent growth has been very dramatic. It feels like a new service is being announced every month,” says Jonathan Hillman, director of CSIS’s Reconnecting Asia Project and author of the report. While rail only accounts for 0.9% of cargo volume—and 2.1% of value—shipped between the two markets, Hillman said it was possible that that share would double over the next decade.