REBOOTING THE SILK ROAD

Along windy, dusty roads, the ancient Silk Road connected not just stations and goods, but also people, traditions and culture. Today, the Iron Silk Road provides a viable alternative for transporting modern technology and knowhow between the East and West.

The ancient Silk Road interlinked China to Europe, India and Persia, bringing spices and supplies as well as the finest of silk to new markets. From the third century, for over a thousand years, this trail was a valuable source of commercial and cultural treasures.

Primarily about trade, it also provided a platform for the exchange of ideas, knowledge, traditions and belief systems. However, it wasn’t in fact a single pathway as the name suggests, but a complex network of multiple transport routes, linking villages, towns, oases and cultures. It grew in a flexible, organic way out of economic demand, necessity and opportunity.

The Silk Road Economic Belt and the 21st Century Maritime Silk Road

Today, around 1,000 years after its heyday, such flexible complexity is providing inspiration for a modern revival of the Silk Road. Officially called “The Silk Road Economic Belt and the 21st Century Maritime Silk Road,” this ambitious initiative goes more commonly by the name “One Belt, One Road” (OBOR).

Launched in 2013 by Chinese President Xi Jinping, OBOR is not just about creating one route, but instead involves a huge investment in intercontinental infrastructure that will create multiple trade corridors and hubs overland, maritime routes and ports, as well as oil and gas pipelines across the Eurasian continent. Of all the routes that are being expanded, however, it is essentially the preferred mode of transport from the 19th century that is making a compelling comeback: rail.

Shortest crossing from Europe to China

This Iron Silk Road will basically consist of three rail corridors. Two are active already, while the southerly route is currently under negotiation and construction. However, it’s the main central corridor that provides the shortest, most efficient crossing from Western Europe to central China. Starting from Duisburg, a major transport hub in Germany, this particular corridor stretches over 10,000 kilometers, across six diverse countries and vast unpopulated areas, all the way to the megacity of Chongqing, southwest China.

As Duisburg is located only kilometers away from MAN Diesel & Turbo’s main production plant in Oberhausen, Germany, this particular corridor has opened up a quite direct train link to the company’s main production site in China. One that provides an interesting logistics option.

FREIGHT GAINS

“Sea freight is the cheapest mode to bring goods to China, most flexible from size, too. But often it’s too slow,”

“Air freight is fast, flexible time-wise, but very limited by size. And expensive. With air freight, we found that the additional costs were mostly not in relation to our delivery requirements. We often don’t need such a speedy delivery. We needed something in between, and the Iron Silk Road offers a viable alternative.”

The main production site in Oberhausen is just a short truck ride to Duisburg, where a long train journey through the gateways of China and on to Wuhan starts, followed by another, longer truck connection to Changzhou, where the China plant and regional base for the Chinese market is located.

Logistics coordination

Taking this route, rail freight passes through Poland, Belarus, the Russian Steppe, Kazakhstan, the Gobi Desert and connects China’s deep central region to Europe, on trains run by the state railways of China, Kazakhstan and Russia. As the railway gauges are not yet harmonized along the route, containers have to be offloaded at the Russian borders, in Belarus, and again on arrival at the Chinese border.

Despite these short interruptions, the train journey is otherwise direct and seamless. The accelerating speed of trains, upgraded infrastructure and seamless logistics coordination are expected to drive further improvements in the future. It’s a journey that now takes around 16 days. Just ten years ago, it took more than 30. In comparison, goods on the more circuitous route by sea from Shanghai on the Pacific Coast to Hamburg on the North Sea would cover more than double the distance, around 25,000 km, and still take at least four to six weeks.

An important niche between air and sea freight

“The Iron Silk Road is more than just a logistic route,” highlights Stefan Hütten, Authorized Officer at duisport agency, a logistics partner of MAN Diesel & Turbo and infrastructure provider based out of Duisburg. “As part of the One Belt, One Road strategy, it’s an integral part of a complex supply chain pushed and powered by the Chinese government. It offers a small, important niche between air and sea freight.”

Since the inauguration of the route four years ago, the number of trains arriving at Duisburg from China has increased from just one a week to about 30 a week. “Freight rail service between continents is completely new, and in some ways still in the initial phase,” says Hütten. “But we believe in OBOR.” As a huband-spoke system, Duisburg is the most important point in Europe with regard to the OBOR strategy, which makes it an attractive gateway for MAN Diesel & Turbo.

PRODUCTION INROADS

Petzold had been monitoring the development in freight opportunities from Europe to China for several years, before deciding to introduce it as an in-house logistics option.

Until fairly recently, trains returned to China less utilized. The decision to adopt rail followed extensive real-world tests over a sixmonth period, to learn about the hurdles and opportunities. “We used a new upcoming sensor tag based on IoT technology to monitor geographic position in near time, temperature, shock and humidity, so we could really gain an understanding of how the rail journey could affect our sophisticated, high-tech equipment,” says Petzold. “As the trains cover vast distances, they endure drastic fluctuations in temperatures along the way. Components need to withstand drops in temperatures up to –25 degrees Celsius inside the container.”

Insulated containers can provide protection, but they are a more expensive option. It’s why the type of goods transported by rail are restricted. “We understand the advantages, but also the limitations,” he adds.

Logistic solution with promising future

On the whole, rail transportation is smoother, compared with shipping. But there are significantly fewer connections still, and rail cannot handle oversized shipments. “It is a logistic solution with promising future,” says Chengke Shao, Head of Logistics and Planning at the MAN Diesel & Turbo plant in Changzhou. “For oversize goods, however, the maritime route remains unbeatable.” Bin Yuan, Head of Customs, MAN Diesel & Turbo China, agrees: “As it’s only suitable for standard container loads, it provides an option mainly for certain components. But where it works, it has distinct advantages,” he says.

ON TRACK FOR CHANGE

Limitations will remain, but the advantages are sure to increase as the OBOR initiative evolves more rapidly. By improving connectivity and trade between regions across Asia, Europe and Africa, the strategy is expected to spur increased demand for Chinese goods and services, but also to drive significant economic growth along the whole network.

Although mainly a stimulus campaign to modernize the Chinese national infrastructure, it is acting as a bridge for partnerships with other nations. The geographical area that could potentially be involved is vast. Some estimates put close to 65 countries joining the grid, more than half of the world’s population, and around 30% of the global economy.

Stimulate the dynamism of China-EU trade

Wang Yiwei, Director of the China-Europe Academic Network of Renmin University of China, summarizes the vision in one report by Xinhua, the Chinese state news agency: “China-Europe freight trains not only promote the provincial and city-level cooperation between China and Europe countries, but also stimulate the dynamism of China-EU trade and economic cooperation with convenient logistics and information flows.” It appears the Iron Silk Road could be firmly on track to deliver.