New Silk Road during the war in Ukraine
Since 2020, the global supply chain has faced many challenges. First, the outbreak of the pandemic led to quarantine almost all over the world, then the rapid demand for goods led to a break in supply chains. The second half of 2021 brought some stabilization as the markets gradually began to saturate, which was also affected by rising inflation. For the first time in several months, a decrease in the weight of transported goods was recorded compared to the previous period. However, 2022 has brought new challenges that the industry has not faced in the 21st century. Railway Supply magazine writes about this with reference to Nakolei.
On February 24, a war broke out in Ukraine, forcing the restructuring of supply chains. Every importer as well as logistics service providers face many challenges. Among them, first of all, it should be noted the security, timeliness and reliability of supplies, the use of available resources in accordance with the sanctions announced by the European Union. Most of the connections on the New Silk Road ran through Russia, Belarus and Poland, and connections to Budapest were endangered by the route through Ukraine.
Companies that remained on the Asia-Europe rail route were able to see transport costs drop within a few weeks due to the PRC government policy, which quickly responded by heavily subsidizing rail traffic as its flagship New Silk Road project.
The huge demand for alternative transport routes between Asia and Europe has sparked a real revival of the Trans-Caspian Corridor in 2022. More and more companies have moved their cargoes to the southern corridor in the hope that this will help avoid the delays experienced by maritime transport due to the sudden increase in demand from importers. The advertised transit time of 40-45 days seemed acceptable, but cargo weight also began to increase rapidly on this route, putting the capacity of the route to the test, in particular the terminals and ports along the route.
A few weeks later, the transport time in 2022 was increased to almost 60 days, and companies, in an effort to deliver their products to their customers on time, began to gradually return to the main rail route through Russia, seeing that the transport time is almost five times shorter and the cost is lower more than double.
The New Silk Road underwent a great test of its value immediately after the start of the war in Ukraine. Initially, the market was skeptical about the future of the rail link between China and Europe, and in particular about its main route through Russia. However, after an initial decline in demand, the railway revived, and, in addition, interest in the Trans-Caspian corridor increased. According to experts, rail transport can also be a profitable alternative to maritime transport, where rules and prices are dictated by shipowners.
For the transportation of goods from China to Europe, rail transport remains the best solution. Orders have been moved to the rail route due to the risks associated with shipping, such as lack of space on ships or extended travel times. The time of transportation by rail to Małaszewicze is about 12-14 days, which, compared to 32-35 days by sea. It’s a big time saver.
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