Amid the Russia-Ukraine war, China has opened its wallet to keep trans-Eurasian Express moving as operators are covering “war insurance” and have slashed rates for the services.
An operating company affiliated with Xi’an in March began covering war insurance payments for shippers transporting goods into and out of the Chinese city via the China-Europe Railway Express, or China Railway Express. This applies to all Russian and European destinations along the network, reported Nikkei Asia.
War insurance is being taken out for freight going through Russia, Belarus and Poland — all neighbours to Ukraine. The policies hedge against the increased risk of damage or detention from military operations and encourage the use of the China-Europe express by mitigating costs and concerns among cargo owners.
All post-departure costs that the client is not responsible for are covered. Costs are shouldered if a train is turned back because of sanctions, reported Nikkei Asia.
Freight from Shanghai to Russia along the express has increased by roughly 20 percent since the start of the Ukraine war, according to Shanghai media affiliated with the ruling Communist Party.
The use of the China-Europe express as an alternative route is said to be on the rise. But overall freight from Shanghai along the rail line has dropped 40 percent or so since the start of the war, reported Nikkei Asia.
However, international shippers, such as Germany’s DHL, appear to have shied away from using the Eurasian express routes to Europe that transit through Russia. German automakers and auto suppliers are believed to be avoiding shipping through Russia for fear of cargo being seized.
With the diminished demand from Europe, the Shanghai operating company is cutting freight rates by about 20 per cent to drum up business.
The China-Europe express forms the central part of Chinese President Xi Jinping’s Belt and Road initiative to expand the Asian power’s economic sphere of influence. The line connects roughly 70 Chinese cities to 180 or so cities in 23 European countries.
There were about 15,000 China Railway Express trips in 2021. Routes connecting China and Russia accounted for the largest share, at nearly 7,000.
In this climate, observers see Chinese financial support for the Eurasian express helping the sanctions-slammed Russian economy, reported Nikkei Asia. (ANI)