Goods from Urumqi in China’s Xinjiang Uygur autonomous region will soon enjoy lower logistics costs and shorter travel time to Azerbaijan, Georgia, Iran and Turkey, as a result of new cargo routes due to open this year.
The routes, part of the Sino Euro Cargo Railway program linking China with the Caucasus region and the Middle East, are now under test operation, according to He Jun, a deputy general manager of the Xinjiang China-Euro Combine Logistics Co Ltd in charge of route management of the Sino Euro Cargo Railway.
“The new routes will further boost trade between China and economies involved in the Belt and Road Initiative,” said He.
He added that the company is seeking clients willing to join the test running of the routes. “Most of the clients we are currently looking for are in the home accessory sector, which we found is of great need in countries in the Caucasus and Middle East areas,” said He.
He added that the new routes were proposed at a time when logistics networks no longer met the growing demand of China’s cross-border trade with these areas.
The Sino Euro Cargo Railway program so far has 19 Europe-bound routes departing from Xinjiang, China’s inland transit hub facing the international market, and reaching 17 countries including five Central Asian countries including Kazakhstan, and European countries such as Germany and Spain.
As of July, 1,739 trips had been made on the rail cargo service, which was launched in 2014.
In 2017, total shipments rose 261 percent year-on-year. According to Liu Qi, a government official at the Economic and Information Commission of Xinjiang that regulates the trains’ daily operations, this year 1,400 trips are expected to be made from Xinjiang.
“The Sino Euro Cargo Railway is growing to be a vital artery to strengthen trade ties between China and economies involved in the Belt and Road Initiative, and beyond,” He said.
He explained that as the Sino Euro Cargo Railway trains use standard shipping containers, it can cut the shipping time by about 20 percent, compared with the past when they used regular freight trains and had to wait for the train to be fully loaded with goods from other clients before departure.
“A reduced shipping time can lead to a drop in costs,” said Xiao Guodong, chairman of Ba Yi Steel Co Ltd, a Urumqi-based steel group operated under Baosteel Co Ltd.
Xiao said it takes about 30 days for their steel to be shipped to Moscow, but now the shipping time is 10 days and costs have been cut by 5 percent due to a shortened shipping period.
Xiao also noted that the company is eyeing more potential markets, especially those involved in the Belt and Road Initiative, as those countries have preferential policies to encourage mutual trade, and the increasing routes linking China with those countries guarantee less costly logistics.