On January 2, a train loaded with electronic products arrived in Lodz, a city in central Poland, after a 15 day journey from Chengdu, capital of Sichuan province. As the rail route started operating regularly in March, it has become the fastest railway freight route between China and Europe. The regular train, traveling once a week between the two cities separated by a distance of more than 10,000 kilometers, cuts the transport time from 40 to 15 days, according to Chengdu Logistics Office. Previously, products made in Chengdu had to be transported to Shenzhen or Shanghai before being shipped to European ports. The opening of the Chengdu-Lodz direct rail route is Chengdu’s latest effort to improve its infrastructure and establish itself as a major logistics hub in China. Zhang Chi, Director of the Logistics Coordination Center of the Chengdu Logistics Office, said that at present the cost of rail freight is more than two times that of shipping, which is the main reason behind its comparatively slower growth rate. But if the efficiency of rail freight is improved, and given it is faster than shipping, rail transportation will become increasingly popular. “If the train can be fully loaded in both directions, the cost will be reduced. Otherwise the cost will be very high,” said Zhang.

Though almost all of China’s railways use the standard rail gauge adopted by 60% of railways in the world, the country should consider building a broad-gauge railway to facilitate cargo transport between China and Europe, Yu Haiyan, Communist Party Secretary of Lanzhou, capital of Gansu province, said. Almost all of China’s railways use track with a gauge of 1,435 millimeters, but Russia and most of its neighboring countries use a broader track with a gauge of about 1,520 millimeters. The difference in gauge has caused trouble for rail transport on the Eurasia corridor, which starts from Lianyungang in East China and goes to Europe via Central Asia. The land corridor was supposed to shorten the time of shipping freight by rail, but because of the track gauge difference and other factors, Chinese trains have to stop at the border and freight is transferred to foreign trains for the rest of the trip west, he said. Yu, who is heading the development of an experimental economic zone in Lanzhou, suggested that railway authorities should consider building a broad-gauge railway from the border to Lanzhou, a transport hub linking East and West since ancient times. “With a broad-gauge railway, freight can be transported from Lanzhou to Amsterdam in just a week, compared with 40 days by sea from Guangzhou to Europe,” he said. Lanzhou is the ideal location to put one end of the broad-gauge rail line because “its distance from Guangzhou and other coastal areas of China is similar to its distance from the Alashankou Port”, where cargo is moved from Chinese trains to foreign ones on the border, he said. The proposed railway is part of the favorable policies that the Lanzhou New Area, China’s fifth state-level new area but the first one in the underdeveloped western part of China, is trying to get from the central government, the China Daily reports.

Chengdu has played an increasingly prominent role in cargo transport as the starting point of cargo lines to Shanghai, Guangzhou, Nanjing, Xuzhou, Ningbo, Lanzhou and Lianyungang. It is also home to one of 18 container stations. Covering more than 140 hectares, the station was put into use in early 2010. Built to have annual handling capacity of 26.26 million tons, it is said to be the largest in Asia. Logistics parks built around the station link to at least 55 cities. Improved logistics will help local businesses cut their shipping costs by some 30%, according to a local newspaper. Cargo rail links have been extended to Europe. In 2012, a freight route linking Chengdu and Duisburg in western Germany, opened to traffic. Local products can now be shipped to Germany within 16 days. Later that year, InterRail and China Railway International Multimodal Transport Co began a pilot route connecting Chengdu to Lodz, the third-largest city in Poland. Chengdu also boasts a well-developed road network with national-level expressways extending out to Shanxi and Yunnan provinces, the Tibet autonomous region and Chongqing. Thanks to Chengdu’s enhanced transport infrastructure and geographical location, some 50 modern logistics companies including UPS, DHL and Maersk had set up offices in the city by early March, the China Daily reports.

High-speed rail projects create broader economic benefits not measured in traditional cost-benefit analysis, according to a study by the World Bank. “High-speed rail will push China’s economy forward significantly,” said Anthony Wong, former President of the Hong Kong Logistics Association. The comments followed a report by the World Bank, which stated: “The wider economic benefits of high-speed rail in China seem more significant than in developed countries. [The projects] have the potential to deliver significant benefits.” The report said the high-speed railway between Guangzhou, in Guangdong province, and Nanning, in Guangxi, would generate benefits of CNY99 billion over the next 30 years, including CNY49 billion in indirect economic benefits not captured in conventional cost-benefit analysis. After the Beijing-Guangzhou high-speed line opened, the traditional rail link between these two cities was used to transport an additional 20 million tons of freight annually, because passengers switched to high-speed trains, said Zheng Tianxiang, Transport Professor at Sun Yat-sen University in Guangzhou. “This is very important, because trains can bring coal from the south to the north this winter while many trucks can’t transport coal due to the snow,” Zheng said. He said China was overly reliant on trucks to transport freight and needed to expand rail freight transport.

The crushing debt burden of the Ministry of Railways (MOR) has compelled Beijing to impose the biggest rise in rail freight tariffs in a decade. Although that may be bad news for freighters, it came as welcome news on the stock market, where the Hong Kong share price of Guangshen Railway, a freight and passenger rail company operating in Guangdong province, and of Daqin Railway, a coal rail operator; and shares in China Railway Tielong Container Logistics, a rail container operator, all rose on the news. The rate rise will increase Daqin’s revenue by about CNY1.6 billion this year, the Shanghai-listed firm announced. Its turnover was CNY43.5 billion in 2011. The Railways Ministry and the National Development and Reform Commission (NDRC) raised the rail freight tariff by 13%, the largest increase since 2003. Macquarie Analyst He Saiyi said the Railways Ministry’s debt burden was rising and its gearing ratio was beyond control, requiring it to generate more income. “The fact that they raised the tariffs higher than expected shows how desperate they are for cash,” she said. As of September 30 last year, the Railways Ministry’s debt was CNY2.6 trillion and its gearing ratio stood at 61.8%. Freight charges accounted for 50% to 70% of the Ministry’s revenue, and last year it collected CNY320 billion in freight revenues, only slightly above its repayment of principal and interest of CNY300 billion. He Saiyi said freight rates would continue to increase in the next few years. Last year’s 9.5% jump was already high, Bocom International Analyst Geoffrey Cheng said. In 2011, coal accounted for 64.2% of the country’s rail freight, the South China Morning Post reports.