The China-Europe Railway Express is a landmark project of the China-proposed Belt and Road Initiative. In recent years, the railway has achieved great accomplishments in terms of its rail freight volumes, this year in particular. As of early November, there have been more than 10,000 trains.
But CERE is facing several obstacles. Due to the substantial increase in the number of journeys made, the railways, ports, stations and other infrastructure of some countries or regions along the routes cannot bear the capacity, and the shortage of railway locomotives is becoming a bottleneck.
Due to insufficient overseas cargo pooling capacity and domestic consumers’ ignorance of the goods transported along the routes, the domestic market’s demand for imported goods has not been fully tapped and trains returning empty is still a prominent issue.
There is also a lack of coordinated customs supervision along the routes. In recent years, countries along the railway have made certain progress in information exchanges, mutual recognition of supervision and mutual assistance in law enforcement. However, there are still mismatches in customs supervision, inspection and quarantine standards, information exchanges, customs clearance facilitation measures and languages in use.
Some countries along the routes have implemented higher transit freight rates, which have increased the operating costs of CERE.
The following four points should be seriously considered to improve this landmark project. First of all, there needs to be forward-looking research and overall planning for CERE. As a new type of cross-border logistics for international trade, CERE has demonstrated its vitality over the past several years. However, China’s financial departments have made it clear that industry subsidies will be reduced year by year, resulting in market adjustment.
Therefore, it is necessary to consider how to form a stable market to compete with sea and air transportation, which goods are suitable for transporting along the routes, what are the market radiation areas and what should be the overall layout of the overseas market.
Second, a fine balance must be struck between government incentives and industry competitiveness. The declining incentives may be hard for the enterprises involved to adapt to at first, but it is the only way for the entire industry to make the shift to being competitive, optimizing resources for self-driven growth.
However, as a new form of cross-border trade, it should be borne in mind that it is vulnerable at its early stage of growth. Measures should be taken step by step and relevant enterprises should be guided to cater to the market. Actions should be taken in accordance with local conditions. But unified standards are needed so as to form a healthy market with fair competition in the long run.
Third, an overseas warehouse strategy needs to be implemented. The construction of overseas warehouses along the railway routes needs to be actively promoted to make them centers for the assembly, distribution and delivery of goods transported by the trains. Efforts should also be made to turn the overseas warehouses into bonded warehouses.
Research on the planning and layout of overseas warehouses along the railway should be carried out, and such factors as China’s overseas logistics system, construction of overseas economic and trade cooperation zones, international capacity cooperation, and cross-border e-commerce market expansion should be taken into consideration to secure an adequate supply of goods for the overseas warehouses. Guiding funds from national policies can also be used to attract Chinese State-owned enterprises, private enterprises and enterprises along the line to jointly participate in its future construction and operation.
Fourth, domestic trade goods could be transported with the CERE trains to promote the load ratio. They could be unloaded before leaving Chinese territory in major port cities such as Urumqi, Zhengzhou, Xi’an, where outbound goods will be gathered and loaded.
Last but not least, efforts should be stepped up to enhance the integration and facilitation of customs clearance along the route. To enjoy a more convenient customs clearance mechanism, measures should be taken such as unifying cargo codes, strengthening international mutual recognition on inspection and quarantine standards, simplifying inspection procedures, promoting AEO(Authorized Economic Operator) certification and conducting more related cooperation.
At present, with the absence of a customs supervision mechanism for cross-border e-commerce, consideration might be given to countries along the routes adopting China’s import and export customs supervision codes such as 1210, 9610,9710 and 9810. In addition, a comprehensive CERE information platform should be established. On the one hand, it can serve as a center for the interconnection of customs information among the involved countries; on the other hand, it can optimize CERE goods flows in the long term.
The author is the deputy chief of the Division of International Economy at the China Center for International Economic Exchanges.