A China-European train full of self-testing equipment for COVID-19 leaves Xiamen, east China’s Fujian Province, heading to Duisburg, Germany, on Wednesday. This is the first train transporting anti-epidemic supplies from Xiamen. The station has operated a total of 967 trains between China and the EU since 2015. Photo: cnsphoto
Freight train services between China and Europe will see some manageable disruptions given rising demand and mature services and facilities, traders and industry representatives said, in response to recent speculation about the possible removal of government support for cross-border freight trains next year.
Although freight train services have experienced unprecedented challenges, they continue to break records in terms of the number of trains dispatched. Industry insiders believe that the train service already has the potential to fully occupy the market with subsidies becoming less important.
Speculation about the cancellation of subsidies was recently raised at the European Silk Road Summit held in Amsterdam, Netherlands, by several Chinese industry participants, according to media reports.
While many traders and industry representatives were not fully aware of this speculation when reached by the Global Times on Friday, they believe the actual impact on train services will be within expectations and manageable if subsidies are reduced in the future.
There is a possibility that train subsidies could end next year, since they have been reduced year-on-year and cannot continue forever, a senior industry insider told the Global Times on Friday.
In addition to market trends, the reduction in subsidies will signal a change in trade focus towards Southeast Asian countries, which are expected to remain the top trading partner with China this year, especially with the opening of the China-Laos railway. The person said.
From the current point of view, eliminating subsidies for China-Europe bullet trains should have more advantages, because “after 10 years of development, China-Europe bullet trains have gained a relatively stable group of customers, including some in Germany and some others.” . The insider said that northern European countries, such as Belarus, are an increasingly important hub for trains.
“The intensity of market demand for trains is already much greater than the intensity of subsidies. For example, the price of shipping a 40-foot container was $10,000, but now it has reached about $20,000, and the subsidies are only a little.” Kang Shuchun, director of the China Federation of Logistics and Purchasing, told the Global Times on Thursday, referring to the increasing role the market plays in cross-border transportation services:
The subsidy is around $1,000 per 40-foot container (depending on regions), while the Chinese government will phase out the subsidy by the end of 2023 – it was planned to be the end of 2022, but this has been extended by a year due to Covid-19, according to Jackie Yan, founder and CEO of New Silk Road Intermodal, cited by Loadstart.com, a foreign industry service provider.
At its peak, the subsidy was between $3,000 and $5,000 per container, but has now dropped to $1,000, according to media reports.
Although subsidies have been reduced year after year, demand for train services has remained resilient despite logistical hurdles, the pandemic and other factors this year.
The latest data from Chinese Customs showed that from January to November, about 14,000 freight trains were sent between China and Europe, a year-on-year increase of 20.3 percent, bucking the trend.
Tommy Tan, president of Shanghai EPU Supply Chain Management Co, an agent for freight trains between China and the EU, told the Global Times on Friday that he would always choose trains between China and Europe, whether they have subsidies or not.
“Our customers have not asked about support so far this year. They are more concerned about whether the containers are enough and whether the transportation time is normal,” Tan said.
While speculation about the exact timing and outcome of the subsidy removal remains, insiders said there would be some pressure on places lacking sources of goods and cities with high demand for trains if the subsidy is cut.
Moreover, relatively high value-added products, including new energy products, will make up an increasing proportion of China and Europe’s express products, while low value-added goods such as bulk goods will be shipped via cheaper sea freight as a result of the… On the change in subsidies.
