Can link stay on track in the wake of Ukraine invasion? The China-Europe Railway Express, or China Railway Express (CRE), is a key element in President Xi Jinping’s Belt and Road Initiative. The network has served as a critical pipeline for Chinese export

What is the history of CRE?

Providing an alternative to container shipping, the CRE transports a variety of Chinese goods – ranging from clothing and household appliances to car parts – in containers to European consumers by rail.

It does not travel along a single route, but a network of railways that span over the two continents – departing from China, passing through Central Asia and finally arriving in western Europe – mirroring the ancient Silk Road.

The first train departed in 2011, from Chongqing in southwestern China to the German city of Duisburg.

The demand for freight was significantly boosted after Xi officially launched the Belt and Road Initiative in 2013 amid calls to deepen economic cooperation between China and Europe.

The coronavirus pandemic, which has snarled port operations globally, caused massive shipping delays and sent sea freight costs soaring, has also driven many exporters and importers to explore trains as a transport option.

In 2021, a record 15,183 train trips were made along the Eurasia route – compared to only 17 a decade ago – transporting 1.46 million twenty-foot equivalent unit (TEU) containers, according to China’s state railway operator. As of January, more than 50,000 train trips have brought 4.55 million TEU of cargo worth US$240 billion to 180 cities in 23 countries in Europe, figures from the China State Railway Group Company showed.

What routes does CRE cover?

The eastern, central and Western corridors are the CRE’s three major routes.

The eastern route is designated for exports from the coastal areas, such as Yiwu – a city dubbed China’s manufacturing showroom in eastern Zhejiang province.

It exits China through Manzhouli in the Inner Mongolia autonomous region and passes through Russia before entering Europe through Belarus and Poland.

The central route carries goods made in central China, as well as southern coastal provinces such as the manufacturing powerhouse, Guangdong.

It enters Mongolia through Erenhot – another border city in Inner Mongolia – and then passes through Russia before entering eastern and western Europe.

The Western route is mainly for exports from western China, and it goes into Kazakhstan via Alashankou or Khorgos in the Xinjiang Uygur autonomous region and then further into Europe.

Most of the routes run through Russia, Belarus and Poland, while a small number of trains also pass through Ukraine and en route to Hungary.

How has CRE been affected by the Ukraine invasion?

As the war continues, concerns over further shipment and supply chain disruptions along the route are growing.

Trains passing through Ukraine have been suspended or diverted, while the main route, which does not pass through Ukraine, has been so far operating normally.

But the sanctions on Russia – a country all the main routes must pass through – have further complicated the situation.

Both the European Union and the United States have included Russian Railways – the country’s state-owned railway company – on their sanctions list.

Even though the European Union sanctions so far had been financial – focusing on the transactions of financial assets – which meant rail operations were not included, the growing uncertainty had led many European customers to cancel their bookings and switch to sea freight, industry insiders said.

And the joint decision by US and its Western allies to exclude selected Russian banks from the Swift financial messaging system has also raised questions over freight settlements for the Russian section of the route, although the actual impact remains to be seen.

What are the challenges ahead for CRE?

Congestion remains a critical problem for all the CRE routes due to strict border checks

Passing through dozens of countries is an asset during peacetime, but amid rising geopolitical tensions, the CRE seems fragile compared to air and ocean freight.

Efficiency is another key weakness as the CRE is used predominantly for westbound Chinese exports, with empty trains often returning to the mainland.

It has heavily relied on government subsidies for operation and rapid expansion since it started, as its own profitability level remains low.

Congestion also remains a critical problem for all the routes due to strict border check procedures.

The issue has been amplified since the coronavirus pandemic began as more disease-prevention measures are being carried out.