The year 2021 marks the tenth anniversary of the China Railway Express (CRE). A vast rail freight network linking China to Europe which has been gradually building up. Traffic is taking off, and expansion plans are well underway.
Originally, in 2011, the China Railway Express was just a route for shipping laptops from southwestern China to Germany. Ten years later, it has become a crucial link for trade between Asia and Europe.
Both shipping volumes and value of the CRE present an extraordinary increase. The share of rail freight in China-EU trade has grown from 0,4% in 2011 to 4% in 2020 in terms of value, and from 0,6% to 2% in terms of volume. It was from 2013 that the expansion really took off with the launch of the Chinese Belt and Road Initiative.
The Covid-19 pandemic accelerated the movement. The disrupted ocean shipping generated not only an increase in volume for China-Europe rail freight but also a rare opportunity to shift from a policy-oriented service to a more market-oriented one. This is particularly illustrated by the gradual removal of government subsidies for the rail freight rate in China in upcoming years.
However, because of the rapid growth in demand, the infrastructure in major terminals has reached its limit for ensuring a smooth gauge change for cargo. As a result, the rail freight in this lane is unable to benefit from the growth without facing growing risks of congestion and container shortage.