Adding more rail links to Europe doesn't help Chinese exports much. Rail is still more expensive and lower capacity than shipping and the shipping lines will be open as long as there's no economic war between the west and China. It's a good addition to have those rail links to Europe for faster deliveries, but I think adding the central and west Asian markets, which are less well connected to the oceans, to China's export destinations will help the western provinces develop and that's another aim of the BRI.
I mean China is also building the largest container fleet with COSCO
. But in general, you have to deal with a lot more geopolitical risks, port congestions and Suez Canal congestions and just long wait time in shipping vs rail. China also doesn't manage most of the port. I read that shipping is 10 to 40% cheaper. Well, it's China's goal to make rail as close to shipping cost as possible. And that would rely on having more capacity over land and such.
Back earlier this year, we were dealing with like 1 to 2 months delays on shipments from China due to port congestion in China and at Long Beach port. And it's terrible for business to not have any certainty on when your ordered goods will get delivered. So, rail is the preferred transportation unless you really want to splurge and use air freight.
If you look at this, rail freight prices can go up and down due to demand. Same with shipping. I think part of the reason why rail freight is more expensive is due to lack of supply. If you add more rail lines, it's entirely possible cost of rail freight will be competitive with shipping. There is a large Capex in building rail, but the actual operating costs shouldn't be that high.
All of this brings us back to the original point of improving efficiency of transportation between Europe and China to allow the EU deindustrialization to benefit China over America. There is very little investment by American elites into improving ports or shipping fleet. They want to let free market to do all the work. It's very short sighted to be so focused on military and not commercial infrastructure.
I wouldn't ditch Pakistan over Iran of course, but as much as I would love to see China-Pakistan trade through the Himalayas flourish, it doesn't appear to be taking off and there keep being incidents of terrorism against Chinese people in Pakistan. China should continue supporting Pakistan, but can China wait for Pakistan to sort out its mess? The rail route from Xinjiang through central Asia and Iran into Pakistan might even be cheaper than the dangerous roads directly through the mountains from China into Pakistan.
If you look at the map, Chabahar is not that far from Gwadar, so they compete against each other. There is not enough traffic to support both. Going through Iran will also reduce the need for that Middle East to Pakistani ports. I don't see Dubai by rail through Iran to China being faster than shipping to Gwadar/Karachi to China. It's not in China's interest to support major infrastructure projects in Iran. CKU -> Afghanistan -> Pakistan works pretty well. China directly to Pakistan is operational. It is in China's interest to continue investing in Pakistan.
Recently, the first land corridor with mostly rail service landed in Afghanistan via Kyrgyzstan and Uzebekistan. We will see how it goes. But you have to generally have some patience. Dominating Central Asian commerce takes time. China clearly wants to keep investing in Pakistani infrastructure for that quicker reach from Xinjiang to Indian Ocean.
This is the one that really stands out. China is setting itself up to be part all the intra-Asia traffic with BRI. of course, Japan may choose to not use BRI for most of its traffic, but there are cases like this with Central Asian commerce where they have to use Chinese railway or ports.
also building a 3rd line from Kazakhstan to China will simply improve the economics of going through Kazakhstan to EU and being involved in Kazakhstan->eastward traffic. Just imagine, any Kazakhstan to East Asia, Western Hemisphere and probably even Oceania will be cheaper through Chinese railway and port. That's what BRI captures.
