New Silk Road – The golden middle wayFaster than sea freight, cheaper than air

Rico Luman

Sr. Sector Economist Transport & Logistics

ING Economics Department

Rico.Luman@ing.com

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Belgium and the Netherlands in the periphery of the silk roadnetwork

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Container volumes on The New Silk road enjoy double digit growth

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The Silk Road from door to door - more than 15 days, less than 25

China ChengduKazakhstanEurope Belarus

2 22 days 5 days

5,300 km

3 days

2,800 km

2 days2 days

1,500 km

Control tower

Total duration

Transport rail 10 days

Customs and/or switch to another track gauge width 4 days

Pre and on-carriage transport 4 days

Weekend impact/buffer time 3 days

Total 21 days

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What do logistics service providers do (‘control tower’)?

• Considering transport options

• Organise the transport including pre and on-carriage

• Bundling transport

• Arrange the (local) customs formalities

• Arrange containers

• Insure the transport

• Arrange track & trace

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Silk Road valuable as middle ground option

• Air freight excels in lead time

• Sea transport is relatively

cheap due economies of scale,

but bound to ports

• Silk Road: in between option in

price and speed

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Modality choice mainly concerns speed and costs

Decision criteria:

1.Speed (transit time)

2.Transport costs

3.CO2-footprint

Modaliteitskeuze lang

niet altijd evident

Product characteristics (like value) leading in decision proces

Basis beslisroute vervoersopties

Primary decision based on

(1) Required speed

More detailed decision

based on:

(2) Transport costs and

(3) CO2-footprint

High

Low

Speed is essential in case of:

• High value products

• Project shipments

• Fresh products (like flowers)

• When the customer prefers speed and pay for it

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Silk Road option 4-6 times cheaper than air freight and

interesting for transport to (deep) hinterland destinations

7

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Train much more climate friendly than aeroplane

• Sustainability cannot be high but are

becoming a factor of interest

• Silk road is much more climate

friendly thain air freight

• CO2-price will influence future

transport costs (as emissions will be

priced)

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Most promising for higher valued consumer products

Determining the silk road domain:

1.Transport is permitted (not banned)

2.Products have sufficient value

3.Product have a certain time sensitivity

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Large overlap of Western European air cargo with the New Silk

Road scope

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Silk road is growing fast and here to stay as multi-modal option

Challenges:

• The Silk road still got bottlenecks

• Business case still depends on Chinese

subsidies. What happens beyond 2020?

• W-European railway capacity is restricted.

Opportunities:

• Ample opportunity for improvement of

efficiency remains.

• Multi-modal solutions are the future

• Western Europe could develop its export role

via the silk road option.

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What about the influential role of China in investments?

Geopolitically relevant, less for choices in logistics

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Concluding remarks

1. Silk Road: still small, but growing and developing fast.

2. It’s a middle ground option compared to sea and air

3. For deep inland the Silk Road could surely be worth it.

4. The same is valid for goods now transported by air.

5. An intelligent multimodal combination for specific

products and destiantions might be the future.

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Thank you for your attention– Room for discussion

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