DEVELOPMENT OF RAILWAY TRANSPORTATION BETWEEN CHINA AND THE EUROPEAN UNION COUNTRIES
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1 DEVELOPMENT OF RAILWAY TRANSPORTATION BETWEEN CHINA AND THE EUROPEAN UNION COUNTRIES JIŘÍ NOŽIČKA Unversty o Pardubce - Jan Perner Transport Department o Transport Management, Marketng and Logstc Abstract: European and Chnese economes belong to the largest economes n the world. These economes are also heavly ntertwned nto bdrectonal suppler-customer chan. Blateral trade between European countres and Chna was n the nnetes o the last century relatvely weak. Development o the Chnese economy caused an ncrease n the volume o oregn trade. Chnese leaders began to promote the development o the New Slk Road. Ths trade route n addton to martme has two ralway routes - northern and southern. Snce 2008 there has been sgncant development o connectons and transport volumes on these routes. Ths artcle wll deal wth the analyss o the development o ral to ral routes, the New Slk Road. Keywords: transport, ralroad, slk road economc belt, nternatonal trade. JEL classcaton: F230, O180, L910 Grant alaton: 1 Introducton The man means o transport on the hstorc Slk Road were caravans that crossed rom Chna through Persa and Araba to the east coast o the Medterranean Sea. Overland transport route was secured or a rst tme by the Roman Emperor Augustus, who negotated peace wth the Parthans n the year 20 BC. As the end o the orgnal Slk Road s consdered the year 1453 when the Ottoman Empre conquered Constantnople and reused to promote European trade. The second mean o transport were shps that saled rom Chna past Indonesa, Inda and the Red Sea. The rst regular naval lnks wth Chna were ntroduced by the Portuguese n The thrd mean o transport was a tran. In 1905 was completed a comprehensve ral lne known as the Trans- Sberan Ralway, whch joned the Russan Far East and northern Chna wth the European ralway network. 324
2 The European Unon and Chna are the bggest exporters and mporters n the world (Eurostat 2016). For the eectve unctonng o oregn trade t s essental to ensure smooth logstcs chans. TAB. 7: Table o man export and mport partners o the EU n 2015 Man Share (%) Second man Share (%) Thrd man Share(%) Export partner o EU Member states n 2015 Unted States 21 Chna 10 Swtzerland 8 Import partner o EU Member states n 2015 (Eurostat 2016) Chna 20 Unted States 14 Russa 8 As s evdent rom TAB. 1, Chna ensured 10% o total exports o the EU countres n On the other hand, the EU mported rom Chna 20% o the total mported products. It s thereore obvous that the materal lows between these economes are enormous. At the end o the last century the transport between the European Unon and Chna was provded almost only by a shp or by a plane. But n the nnetes Europe launched the Pan-European ralway corrdors project (TEN-T). Central Asa started to buld a network o TRACECA (Transport Corrdor Europe Caucasus Asa) and Chna began to modernze ts ralway network. Nowadays t s possble to provde transport o goods between Europe and Chna not only by shps or planes but also by trans. These transport means are derent n lot o aspects such as speed, costs, saety or envronmental mpacts. Each knd o products has ts own characterstcs that must be consdered n selected type o transport. Products whch quckly become obsolete must be transported quckly to have been placed on the market as soon as possble. On the contrary, products that have a hgh densty and ther applcaton s not urgent take advantage o low transportaton costs. The man subjects o EU trade are machnery and transport equpment (42% o exports. resp. 31% o mports.) The second largest chapter s other manuactured goods. In ths group are electronc components and products (23% o exports and 26% o mports) (Eurostat 2016). Electronc components and products oten belong to a group o products whch could become obsolete very quckly and slow transport could make them less compettve. 2 Lterature revew 2.1 Development o Eurasa ralroad In 2008 the Deutsche Bahn and Russan Ralways created a project o Trans Eurasa Logstcs GmbH (TEL). Deutsche Bahn has prepared the rst tran Bejng - Hamburg. In 2010 began testng o usablty o the Northern Route (va the Trans-Sberan Ralway) and o the Southern Route (va Kazakhstan). A map o these corrdors s can be seen n PIC. 1. In 2011 the rst regular tran between Germany and Chna was launched. Chna launched the Project Slk Road economc belt n Am o ths project s to develop a modern slk route and support the nternatonal trade o Chna. The project ams to create three new 325
3 hgh speed ral corrdors named The Iron Slk Belt. The rst two corrdors copy corrdors that TEL s nowadays usng. The thrd corrdor (n the PIC. 1 the southern blue one) should be bult n uture lnkng Indonesa, Chna, Inda, Pakstan, Iran, Turkey and jon the European network o corrdors TEN-T. PICT. 8: A map o tran corrdors between Europe and Asa (Strategc Demands 2016) On both o current corrdors there s a problem wth ral gauge. Chna and Europe use same ral gauge (1.435 m) But Kazakhstan, Russa and Belarusan use broader gauge (1.520 m). Ether the shppng contaners have to be transloaded rom one tran to another or the boges have to be exchanged on boarders. The rst regular route between the EU countres and Chna was Chongqng - Dusburg n In 2012 ollowed the routes Wuhan - Pardubce (or Foxconn), Chengdu to Lodz (Poland), Zhengzhou - Hamburg. All these routes are on the Southern Route va Kazakhstan. The rst route on the Northern Route was opened Suzhou - Warsaw n Aprl 2014 and later Changsha - Dusburg. The lne Ywu Madrd was launched n Ywu has thus become the rst Chnese cty wth the classcaton o Ter 3, whch opened regular ral lnk to Europe (Elsnga 2014). 2.2 Current stuaton and possbltes n ralway transport Fastest verson o reght tran s a blocktran. It could be a company tran or one customer or a publc tran or multple customers. These trans can travel at top speed due to blocktran prortzaton. There s no shuntng (only techncal stops and transshpment stops at the border) (Schenker 2015). Snce 2015 t s possble to use other servces than blocktrans. It s possble to transport a sngle contaner or contaner groups but there s a longer lead tme due to tran consoldaton n open 326
4 ntermodal system o ralways. Next servce s Less than Contaner Load (LCL) servces. Ths servce s provded by DB Schenker on blocktrans e.g. rom Suzhou (Northern Route) or Chengdu (Southern Route) to Malaszewce. Door to door tme s days (Schenker 2015). Hewlett Packard (HP), Acer and Foxconn began to look or an alternatve o the transportaton o the computer components rom Chna to European actores. Hewlett Packard moved producton rom Chna's coastal areas nland to the cty o Chongqng, where t produces components or the producton, whch takes place n Dusburg, Germany. Transport to the coast and the subsequent transport shps would be tme consumng and thereore these components have been transported throughout Southern Route snce DB Schenker was a poneer o trac on ths route, whch uses the ral network o Kazakhstan (Knowler 2014). Kazakhstan s part o a customs unon agreement wth Russa and the European Unon and once the block trans are cleared at the Kazakhstan border, whch takes our hours, there are no urther nspectons, or delays, requred untl destnaton. Due to the procedure o prelmnary customs normaton under the "electronc tran" contaner tran was made or 90 mnutes(kazakhstan temr zholy 2012). DB Schenker operated about 800 trans n both drectons n Westbound s approxmately 70% (10 11 trans per week on westbound and about 15 trans per week on eastbound). These trans hauled 30, 000 shppng contaners. Estmate o DB Schenker or the year 2016 s 1500 trans. TEL plans an ncrease up to 100, 000 contaners per year by 2020 (Kemp 2016). DHL 150 TEUs were transported by tran between Europe and Chna. The company uses ths type o transportaton when there s a rsk o delay o the delvery and transport shps would cause complcatons. DHL n 2015 establshed a regular ral connecton between Zhengzhou and Hamburg, whch runs twce a week (Knowler 2015). Government o Hube provnce announced that Europe - Wuhan reght trans ran a total o 164 shts n 2015 (98 shts o Outbound trans a 66 shts o Inbound trans), carryng TEUs o contaner cargos. Cargos travel rom Wuhan ncludng electronc equpment, automobles, clothes, general merchandse o companes such as Foxconn or Dongeng. Cargos whch came rom Europe were plastc products, auto parts, cosmetcs, tmber, etc. Government o Hube provnce expects 537 trans n 2016 only or ths provnce (Huang 2016). I cargos are transported by shp rom Chna to Europe, the transt tme would be approxmately 42 or 45 days and the prce per one 40-t contaner would be over 5,000 to 5,500 US dollars. Movng cargo by tran, the transt tme sgncantly decreases. Dependng on the destnaton n Europe, t mght take between 16 and 25 days. Unortunately the speed comes wth a prce. The approxmate prce would be between 8,600 and 8,900 US dollars per contaner. And by ar, at prce o $3.85 per kg would cost $37,000 (Knowler 2015). In the tme beore runnng ral connecton was avalable almost all goods between Chna and the EU were transported by shps. Only smaller volumes were sent by ar. Choce o transport mean depends on the characterstc o the cargo and how urgently t s requred. Heavy, low-value cargo s sent by shps whle hgh-value and tme-crtcal cargo s lown by arcrats. 327
5 Ral reght wll compete manly wth ar transport. Electroncs and automotve manuactures are nterestng n ral reght because the value loss on goods durng the longer sea journey s hgh. Schenker (2015) publshed the ollowng normaton or transportng Hgh Value Good (n ths case t was a notebook) rom Chengdu to Rotterdam n These data are shown n TAB. 2. Data were compared wth data rom other sources and has been ound to be authentc. TAB. 2: Table wth data about transport o one notebook rom Chengdu to Rotterdam n 2015 Door to door lead tme (days) Cost o reght (USD/ one pcs o notebook) Polluton (kg CO2 / ton) ocean 38 1,9 391 blocktran 22 3,8 270 ar (Schenker 2015) The alleged costs n TAB. 2 nclude only reght costs. The goods are the property o company and as such they have to be nanced. Durng transport o goods captal s xed n t. I the goods are beng transported or a long tme, then such transport may cause sgncant rse n captal costs. In the case o consumer electroncs and other precous commodtes, captal costs can reach a hgher value than the cost o transportng goods. In the case when the captal costs are hgher than 7% and one contaner contans goods worth more than USD 2 ml, cumulatve reght costs and captal costs or transport by ral are lower than or transport by shp (Schenker 2016). For these goods, the transportaton by ral s more economcal than the transport by shps. In addton to these purely economc parameters, there can be other benets ound n ral transport. For the products that rapdly become obsolete, t s possble to better explot market opportuntes as the products reach the target markets sooner. I the sem-products are transported or urther processng and shpment by ral t reduces the rsk o subsequent stop n producton due to alure o delvery o sem-nshed products to the actory on tme. 2.3 Rsks Goods n transt are exposed to varous rsks. Transport by ar exhbts the lowest rsk. It s the way o carrage wth the bottom alure rate. There s not so hgh rsk o thet o goods, o ts loss or damage. Such servces may be nluenced by the weather. Goods transported by sea are exposed to rsks caused by adverse weather condtons, whch can cause a delay n delvery o goods. Accordng to the Martme Rskmap (Control Rsk Group 2016) goods must pass rsk areas n the South Chna Sea and Malacca straght and rsk areas o the Somal coast. South Chna Sea s rsky due to dspute about ownershp o area whch s rch n natural resources. Ralway transport s the least dependent on the current weather. But all exstent ralroad corrdors lead across Russa and there are some poltcal tensons between Russa and EU. Escalaton o these tensons could lead to problems wth transport. 328
6 3 Methodology The am o ths paper s to prepare a table or Mult-crtera decson makng about modus o transport between EU and Chna. In the lterature revew the ollowng crtera were mentoned: Door to door lead tmes, Cost o reght, Polluton, Captal costs and Rsks. In ths artcle, the mult-crtera analyss wll be perormed only or the rst three crtera mentoned above. Captal costs are neglgble or certan products and the current rsks o transport on the roads are relatvely low so these actors are not ncluded n the analyss. I necessary, the user can add other crtera ollowng the descrbed procedure and nclude t n the decson-makng process. Weght Sum approach wll be used as a decson method. The reason or ths choce s the quantcaton o the crtera. Another reason s the user's ablty to adjust the weghtng o the crtera based on current condtons (launchng new products, ncreasng consumer pressure on envronmental behavor, etc). The choce o weghts wll be based on recommendatons o an expert n the eld o transport or the standard product, not based on a product that could become obsolete as a consequence o longer transportaton tme thus bndng larger amount o captal durng transport and ncreasng ts cost. The most mportant objectve s the perceved costs o transportaton (60%), ollowed by transport tme (30%) and then the last one s the envronmental mpact o transportaton (10%). The decson process wll be desgned or transport o one notebook rom Chengdu to Rotterdam n In ths artcle the weghted sum wll be used accordng to (Jakob, W. &, Blume, Ch. 2014). The result o ths method wll be one non-domnated soluton wth hghest utlty. Ths method s sutable because there are objectves unctons wth derent scales. These scales wll be normalzed by unctons: norm max ( ) max ( ) mn or objectves to be mnmzed (1) norm max ( ) 1 max ( ) mn or objectves to be maxmzed (2) The bounds o all crtera can be dented by a user. In ths artcle wll be used maxmal value n each objectve n ths case study. Calculaton o utlty (weghted sum) s shown n the next equaton. Weght w has to be selected or each objectve. max k 1 w norm where w 0 or all 1,..., k and k 1 w 1 (3) The type o transport wth maxmal utlty wll be recommended as a best choce or ths case. 329
7 4 Analyss As t was mentoned above the analyss wll be carred out rom data o DB Schenker or transportaton o one notebook rom Chengdu to Rotterdam n 2015 see TAB. 2. A user can adjust the bounds o every objectve accordng to ther present needs. For example they know that the product needs to be mported to Europe n 45 days - then the maxmum value (max ) o the rst objectve s substtuted by 45. In ths analyss values o max and mn wll be substtuted wth the real lmt values or each objectve. By combnng the table TAB. 2 and the lmt values we obtan table TAB. 3. The table also shows speced weghts w, as suggested by experts (0,3; 0,6; 0,1). The sum o the weghts must be equal to one and sze o the weght ndcates the mportance o the gven crteron. TAB. 3: Table wth data about transport, lmt values and weghts Door to door lead tme (days) Cost o reght (USD/ one pcs o notebook) Polluton (kg CO2 / ton) ocean 38 1,9 391 blocktran 22 3,8 270 ar Max Mn 4 1,9 270 w 0,3 0,6 0,1 Each value must be normalzed. All crtera n ths case are mnmzed so we use the ormula (1). Calculaton or a normalzaton o the rst crteron or blocktran wll be as ollows: norm , (4) In the same way we normalze all values and we get table TAB. 4. The last calculaton s the calculaton o a weghted sum as shown n the ollowng equaton (5) or shp transportaton. These values are also shown n Table 4 too. On the bass o these values the order o the varants s determned. k 1 w norm 0*0,3 1*0,6 0,9778* 0,1 0,6978 (5) TAB. 4: Table wth normalzed values and wth values o aggregated value o the utlty Door to door lead Cost o reght Polluton Utlty Order 330
8 tme (days) (USD/ one pcs o notebook) (kg CO2 / ton) (Σ w*) ocean 0 1 0,9778 0, blocktran 0,4706 0, , ar ,3 3. w 0,3 0,6 0,1 From the aggregated value o the utlty t s clear that or the settng o the decson makng process o ths case study transportaton by ral has the hghest total utlty value. Ths type o transportaton wns despte t s best only n one crteron (polluton). Furthermore, ths crteron has very lttle weght (w= 0.1). However, ths varant reached balanced results n more mportant crtera and thus ultmately obtaned greater value o aggregate utlty than other types o transport. On the second place s the transport by shp. Ths transport s very slow, causng zero utlty value o ths crteron. As an opton wth the lowest value o utlty s n ths case ar transport. Whch s ndeed very ast modus, but also t s very expensve and has strong negatve mpact on the envronment. Concluson Internatonal trade between the EU and Chna s and wll be very mportant or both economes. Modernzaton o transport nrastructure n Chna and Kazakhstan beng n progress n recent years can thereore rase expectatons n urther development. Every commodty and every commercal transacton has unque characterstcs whch nluence the choce o transportaton modus. The am o ths artcle was to propose a smple methodology or preparng data or the decson-makng managers. In ths case study, accordng to the data avalable or 2015, ral transport appears to be the best type o transport. However, the user changed the settng o weghts, or range o lmts, then the results wll be derent. Lkewse, the results would be aected by nvolvement o other crtera, such as captal costs or rsk elements. The author, however, beleves that n most settngs o the decson-makng process the ral transport wll stll be the best choce. Ths opnon s supported by a relatvely sgncant annual ncrease n the volume o ralway trac between the EU and Chna. Ths development thus supports the economc growth o all countres nvolved. Lterature: Control Rsks Group Holdng (2016). Rskmap Retreved rom Elsnga, S. (2014). Longest Ralway n the World Now Connects Chna to Southern Europe (Chna Breng). Retreved rom 331
9 Eurostat (2016). Man players or nternatonal trade Retreved rom trade,_2014_%28bllon_eur%29_yb16.png Eurostat (2016). Internatonal trade n goods n 2015: EU s to tradng partners n 2015: the Unted States or exports, Chna or mports. Retreved rom / / BP-EN.pd. Press release 60/2016. Huang, M. (2016). Wuhan-Europe reght trans take the lead. Retreved rom Huang, M. (2016). Frst Wuhan-Xnjang-Europe tran n 2016 sets out. Retreved rom Jakob, W., & Blume, Ch. (2014). Pareto Optmzaton or Cascaded Weghted Sum: A Comparson o Concepts. Algorthms, 7, Kazakhstan temr zholy, Kazakhstan ralways (2012). New contaner tran Asa-Europe n the ramework o the New Slk Road project n 14 days. Retreved orm Kemp, J. (2016). Chna develops Asa-Europe ral corrdor, trplng reght servce n 4 years (AFR Weekend). Australa: Farax Meda Publcatons Pty Ltd. Retreved rom busness/transport/trans/chna-develops-asaeurope-ral-corrdor-trplng-reght-servce-n-4-years go1h9e. Knowler, G. (2014). Electroncs shppers turn to Chna-Dusburg ral route (Journal o Commerce). Retreved rom Knowler, G. (2015). DHL adds servces to ast-growng Chna-Europe ral network (Journal o Commerce). Retreved rom Schenker AG. (2015). Get your busness roklny wth nnovatve ral logstcs solutons between Chna and Europe. Essen: Schenker AG. Strategc Demands (2016). Map o Iron Slk Road. Retreved rom 332
10 Contact: Ing. Jří Nožčka, Ph.D. Unversty o Pardubce Studentská Pardubce 2 Czech Republc jr.nozcka@upce.cz Bre normaton about the author: The author ocuses on macroeconomcs and mcroeconomcs. Wthn the hstorcal development o economc systems he searches or smlartes wth current developments n socety and predcts possble development o current condtons. 333
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