Thursday, November 16, 2017

New Silk Road train link connects Finland, Nordic countries with China


The first direct cargo train heading to Xi'an in China left from the Finnish city of Kouvola on Friday 10 November, 2017. Kouvola Innovation




With the launch of its first direct cargo train link to China last week, Finland became the first Nordic country to establish itself as a node in China’s emerging New Silk Road trade network.

The new rail link, connecting the southeastern Finnish city of Kouvola with Xi’an and Zhengzhou in central China, is the fastest among the many similar connections opened between China and Europe in recent years. It only takes ten days for trains from Kouvola to travel the 8,000km route through Russia and Kazakhstan to Xi’an.

The direct transportation route to China’s fast-developing central regions is expected to offer new business opportunities for companies in Finland, as well as other Nordic and Europe countries.

“The rail connection will create jobs in Kouvola but it is also significant for the economy of Finland and the Nordic region,” said Simo Päivinen, Development Director at Kouvola Innovation Oy.

The Kouvola-Xi’an rail link, which will initially run once a week, is part of China’s Belt and Road initiative - an ambitious plan proposed by Xi Jinping in 2013 to boost trade across Eurasia through massive investments in infrastructure, including railroads.

The rail connection was developed by the Finnish and Chinese cities involved in the project, alongside partners in Russia and Kazakhstan. Kazakhstan Railway's transport and logistics service provider KTZ Express, which is a big player in the China-Europe cargo train traffic industry, operates the route.

“We began preparations in 2013 and started city-level discussions with Xi’an and Zhengzhou in 2015 and 2016. The Chinese were eager and ready to open this route,” Päivinen went on.


The route of the Kouvola-Xi'an direct cargo train connection. Kouvola Innovation

Faster and cheaper route

According to Päivinen, shipping cargo by sea from Finland to China takes several weeks but remains the cheapest option. However, if the goods need to be further transported from Chinese ports to inland destinations, the cost can more than double, making the much faster Kouvola-Xi’an route a competitive option in terms of price as well as speed.

Besides Finnish and Nordic companies, the route could be attractive to firms based elsewhere in Europe, too.

“Currently, all cargo train traffic from Central Europe to China passes through Poland and Belarus and that route suffers from congestion,” Päivinen said.

The fact that Finland, Russia and Kazakhstan share the same track gauge means that containers only need to be reloaded once during the trip, at the Khorgos dry port on the border between Kazakhstan and China.

“China is investing more and more in developing its central regions and the new route offers the possibility to reach these,” said Olli-Pekka Hilmola, Professor of Logistics at the Lappeenranta University of Technology.

“The advantage in terms of transportation speed is considerable, which can help companies to reduce inventory levels and storage costs as well as improving product quality and margins for high tech, fashion, food, project-based, seasonal and other such products,” Hilmola concluded

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