7 ms·

So what? The trade route only just opened up. The numbers started at zero and started only recently, so of course they are small. By how much the trade is going

So what? The trade route only just opened up. The numbers started at zero and started only recently, so of course they are small. By how much the trade is going to increase and at what rate is what everyone is arguing about. People underestimate how large Eurasia is along its east-west axis and how underdeveloped it is in parts. I predict the naysayers and doomsayers will be eating their hats. In nominal terms the US is the world's largest economy. Let's put it at ~$20tn gdp nominal with moderate growth. EU is about ~$17tn with less than moderate growth say and China is about ~$13tn and growing fast. Problem is that EU and China are at opposite ends of the Eurasian landmass. Anything that reduces trade times and cost between the poles of this massive continent and interconnects a combined ~$30tn economy is going to have an enormous impact. But even so the article contradicts itself. “The overwhelming majority of China's trade with Europe is by sea and air. Overland routes don't cut it” What the detailed stats show is that by value rail is 2% and road is 6% of total trade. (Air is 28%). Take into account that, “Just 10 years ago, regular direct freight services from China to Europe did not exist. Today, they connect roughly 35 Chinese cities with 34 European cities.”[1] And that, “Rail services are considerably cheaper than air and faster than sea”[2] So 2% of trade captured in 10 years. So if people stop thinking in terms of years and start thinking in terms of decades it is obvious that improvements in land logistics will far surpass those of sea and air. By the middle of the century it is anybody's guess what fraction of total trade will be capture by road and rail but it could be very significant. From my reading most analyses put Khazakstan as one of the major bottlenecks, an upgrade there could have huge knock on effects. (And that's not even taking into consideration different sized rail gauges.) [1] https://www.csis.org/analysis/rise-china-europe-railways https://www.csis.org/analysis/rise-china-europe-railways [2] https://csis-prod.s3.amazonaws.com/s3fs-public/180228_fig1.png https://csis-prod.s3.amazonaws.com/s3fs-public/180228_fig1.p...

JumpCrisscross 8y ago
> The trade route only just opened up This is about the fundamental capacity constraints and costs of rail versus maritime transport. The former will always be more expensive than the other, and always be further capacity constrained. The only thing that could change that is a quantum leap in several technologies, in which case the current investments become useless. > “Rail services are considerably cheaper than air and faster than sea” Where are you getting this quote?
- anken 8y ago
  In this comparative study from New Zealand: https://www.nzta.govt.nz/assets/resources/research/reports/497/docs/497.pdf https://www.nzta.govt.nz/assets/resources/research/reports/4... you can find a Comparative evaluation of transport modes where maritime shipping is cheaper than train, but this depends on the number of containers (you can put much more on a vessel). If we can increase the number of containers on trains, this could change. Also right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/ https://www.train-chain.com/) and usually around 30 days by sea.
  - JumpCrisscross 8y ago
    > If we can increase the number of containers on trains, this could change This increases wear on the train and tracks. We might have materials breakthroughs that change the balance. But such materials would make (a) shipping more efficient and (b) large fractions of the existing Belt and Road obsolete. > right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/ https://www.train-chain.com/) and usually around 30 days by sea Emphasis on can. In any case, there is a reason the world's commercial shippers are all focussing on Arctic maritime routes. Rail is a neat way of controlling territory. It's better than trucking or flying, when it comes to cost. But water beats it at scale.
- nabla9 8y ago
  > The former will always be more expensive than the other, and always be further capacity constrained. Yes. But it's also much faster. This creates new opportunities. Rail freight is not replacing sea or air freight, it's supplementing it. Expensive but faster freight means that heavy but valuable items can be delivered faster. Heavy Air freight (>100 kg) typically costs 15-20 percent of the value of the goods. Rail wright can be expected to cost 5-10 percent easily, more for items weighing more than 1000 kg. That's value created by the rail.

JumpCrisscross 8y ago

> The trade route only just opened up This is about the fundamental capacity constraints and costs of rail versus maritime transport. The former will always be more expensive than the other, and always be further capacity constrained. The only thing that could change that is a quantum leap in several technologies, in which case the current investments become useless. > “Rail services are considerably cheaper than air and faster than sea” Where are you getting this quote?

anken 8y ago
In this comparative study from New Zealand: https://www.nzta.govt.nz/assets/resources/research/reports/497/docs/497.pdf https://www.nzta.govt.nz/assets/resources/research/reports/4... you can find a Comparative evaluation of transport modes where maritime shipping is cheaper than train, but this depends on the number of containers (you can put much more on a vessel). If we can increase the number of containers on trains, this could change. Also right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/ https://www.train-chain.com/) and usually around 30 days by sea.
- JumpCrisscross 8y ago
  > If we can increase the number of containers on trains, this could change This increases wear on the train and tracks. We might have materials breakthroughs that change the balance. But such materials would make (a) shipping more efficient and (b) large fractions of the existing Belt and Road obsolete. > right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/ https://www.train-chain.com/) and usually around 30 days by sea Emphasis on can. In any case, there is a reason the world's commercial shippers are all focussing on Arctic maritime routes. Rail is a neat way of controlling territory. It's better than trucking or flying, when it comes to cost. But water beats it at scale.
nabla9 8y ago
> The former will always be more expensive than the other, and always be further capacity constrained. Yes. But it's also much faster. This creates new opportunities. Rail freight is not replacing sea or air freight, it's supplementing it. Expensive but faster freight means that heavy but valuable items can be delivered faster. Heavy Air freight (>100 kg) typically costs 15-20 percent of the value of the goods. Rail wright can be expected to cost 5-10 percent easily, more for items weighing more than 1000 kg. That's value created by the rail.