20-10-2018

Japan firms try out China’s ‘Belt and Road’ cargo transport to Europe

Japanese and Chinese logistics firms are paving the way for an alternative route to ship cargo from Japan to Europe faster than by sea by exploiting China’s “Belt and Road” initiative designed to improve regional cooperation and connectivity.

Major Japanese logistics firm Nissin Corp. and Sinotrans, China’s largest integrated logistics service provider, joined hands this summer to undertake a sea-and-rail shipment trial from the Far East to Western Europe via China and Central Asia.

The trial aims to build a new option besides sea and air transport between the two regions, with cargo from Yokohama, Japan’s second-largest port, taking 28 days to reach Hamburg,Germany, about a week less than marine transport.

Nissin said it measured changes in temperature, humidity and shakiness in containers through the trial to assure customers of viable services.

The containers were shipped to Lianyungang port in the eastern Chinese province of Jiangsu and transported westward on a freight train to Khorgos, a border town and transshipment point in China’s Xinjiang-Uygur Autonomous Region adjacent to Kazakhstan. The train passed through Kazakhstan, Russia, Belarus and Poland en route to Hamburg.

Part of the trans-Eurasian railroad is called China Railway Express, operated by state-owned China Railway.

Under Beijing’s “One Belt, One Road” cross-border infrastructure initiative, the Chinese railway firm is taking the lead to boost cargo volume. Chinese local governments subsidize part of the shipment costs, according to Nissin.

The number of freight trains between China and Europe surged nearly twelvefold to 3,673 between 2014 and 2017, with two-thirds bound for Europe.

For the first eight months of this year, the number topped that for the whole of 2017, according to data cited by Nissin and Sinotrans Japan Co., a local unit of the Chinese company, at an industry forum in Tokyo on Sept. 14.

China’s National Development and Reform Commission has set a target of operating 5,000 freight trains a year between China and Europe by 2020.

This is the third option for major shippers in Japan and South Korea, Makoto Ozeki, a Nissin general sales manager, said in his speech at the forum.

“For business continuity plans, large corporations believe that an alternate route from Japan is crucial in case of a rise in geopolitical tensions in the Middle East” that could hamper the sea route via the Suez Canal in Egypt, Ozeki said later in an email interview.

Currently, the shipment cost is three to four times higher than that of marine transport, said Ozeki. But “in the future, we could shorten the duration to 21 days. Also, sea transport fees from Asia to Europe have been on the rise,” he added.

Cargo from Japan includes auto parts and daily necessities, Gao Chen, vice president of Sinotrans Japan, said at the forum.

Nippon Express Co., Japan’s largest logistics firm, also has continued similar trial shipments since last year, transporting cargo such as car components and electrical precision parts upon request by a number of clients.

Some of the customers have experimented with it several times, Yasuo Edo at the International Business Headquarters in Tokyo told in an email interview.

The company also began participating in an experimental trial from September through next March for Eurasian railroad shipments initiated by Japan’s economy ministry.

Jialing-Honda Motors Co., a general-purpose engine manufacturer of the Japanese automaker in Chongqing, central China, uses China Railway Express to deliver its products to Belgium. Nippon Express handles Honda’s cargo and takes 17 days for delivery.

The engines are used for mowing machines and cultivators, among other equipment, said Toyofumi Fukushima, general manager of both the sales division and the logistics division. “Railway transport enables us to deliver (our products) in a timely manner” to cater to seasonable demand in spring and summer, he added.

Trade volume between China and the European Union was worth €573 billion ($657 billion) in 2017, according to the European Commission.

Eurasian railway shipments make up a tiny fraction of the value, but a sharp increase in railway freight volume is stirring hopes of economic benefits in landlocked countries along the routes.

Resource-rich Uzbekistan plans to develop railways connecting with China and Kyrgyzstan to enhance the country’s goods exports, including mineral resources and farm produce, while attracting investments and revitalizing its economy.

“Railway transportation takes 15 days to ship goods from China to Europe, only half the time of marine transport,” Bakhriddinov Mansur, representative director of the Japan Uzbekistan Silk Road Foundation, said in his speech at the forum. “Cargo volume expansion could lead to low-cost logistics.”

In May, Japan and China signed a memorandum of understanding on the establishment of the Japan-China Forum on Third Country Business Cooperation joined by a wide range of private companies and relevant ministries.

The forum’s kickoff meeting will be held in time for Prime Minister Shinzo Abe’s visit to China later this month, with the Japanese leader and his Chinese counterpart to attend the event.

The cooperation includes Japanese companies’ expansion in logistics with the use of railways between China and Europe, according to the Japanese government.

Source: The Japan Times

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