China’s global logistics could suffer

The military aggression of the Russian Federation against Ukraine and the subsequent sanctions make it difficult for China to export to the EU market and neutralize the investments in the New Silk Road route.

Logistical sanctions against Russia threaten the success of China’s global One Belt, One Road project, which has already invested $4 trillion, as well as China’s exports to 140 countries worth $1.8 trillion.

This is reported by the railway magazine Railway Supply.

China’s Belt and Road Initiative was announced in 2013, and since then Beijing has signed export agreements to 140 countries.

As part of this initiative, China has invested $4 trillion in long-term seaport leases, rail and road development, and energy supply.

China’s trade with 140 countries reached $1.8 trillion in 2021, up 24% from a year earlier, according to China’s Ministry of Commerce.

Railway delivery of Chinese goods to Europe involves the transportation of containers through all of Russia or Kazakhstan, and then through Belarus and Poland.

This route is better known as the New Silk Road, which is an important part of the One Belt, One Road project. Another link is the port of St. Petersburg, where containers are reloaded onto ships bound for Europe.

However, this route is becoming vulnerable to the intention of Poland and the Baltic States to block the freight railway communication with Russia.

In addition, in Russia there is an acute problem of a shortage of wagons and congestion of railway lines connecting the Far East with the center of the country.

For these reasons, individual freight forwarders involved in the transportation of Chinese goods are looking for ways to deliver goods by rail through Kazakhstan and Georgia. In addition, many shippers from Europe and China have redirected their shipments from rail to sea.

As a result, although the European Union has not yet officially banned rail imports transiting through Russia, the flow of goods with Chinese products has significantly decreased.

At the same time, it has become more difficult to refocus on maritime cargo transportation – global players like Moeller-Maersk, Hapag-Lloyd, MSC, CMA CGM stopped working with Russian ports, and maritime insurers stop insuring cargo from Russia and Belarus.

All this limits the ability of Chinese companies to work with traditional counterparties along the Silk Road.

Thus, the military aggression of the Russian Federation against Ukraine and the sanctions that followed make it difficult for China to export its products to the European market and make the investments already invested in the New Silk Road route ineffective.

China will have to significantly revise its logistics plans and supply chains, which will require a lot of time and additional investment.

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