New Silk Road – Opportunity for the European Logistics Industry?
The Chinese government plans to resume or further expand trade flows between Asia, Europe and Africa by road, rail and ship with the One Belt, One Road (OBOR) initiative. Many European companies are skeptical about China's projects, while new markets are opening up at the same time.
The One Belt, One Road initiative has five objectives:
Networking of facilities
From hydroelectric power station to high-speed line
China has created a fund of 40 billion dollars and at the same time launched the “Asia Infrastructure Investment Bank” (AIIB) with 100 billion in seed capital to carry out the projects of the initiative. According to German Trade and Invest (GTAI), Chinese companies invested more than $55 billion in countries along the Silk Road from 2014 to 2017 and will continue to drive the expansion of transport and energy infrastructure on this route in the coming years. Projects include investments in a Pakistani hydroelectric power project and the construction of a high-speed line from Moscow to Kazan. Dozens of bilateral government agreements have also been concluded.
Most of the projects are awarded to Chinese companies
Although the OBOR initiative explicitly invites foreign companies to participate in the project, it is often difficult for them in reality to assert themselves against the competition from the Middle Kingdom. A study by FH St. Gallen even assumes that 80 percent of the major projects will be awarded to Chinese companies in the One Belt, One Road initiative. The US Center for Strategic and International Studies investigated 2,200 projects and found that only 3.4 percent were awarded to non-Chinese companies. Andreas Breinbauer, Vice Chancellor of the University of Applied Sciences of the Vocational Promotion Institute BFI Vienna and Department Head of the Logistics and Transport Management study major, also pointed out:, also pointed out: “Silk road projects are financed only partly by multilateral banks such as AIIB (about 10 percent), where there is a good spread of participants in the projects and only one third of the project partners are Chinese companies. The main lenders are Chinese state or state-affiliated banks (about 90 percent), which preferably support Chinese companies, and these are again mainly state-affiliated companies.”
New markets for European companies
Nevertheless, many companies also see opportunities in the New Silk Road. According to a study by the FH of the BFI Vienna, Department of Logistics and Transport Management, 90 percent of Austrian companies surveyed believe that the initiative will have a positive impact on Austria over the next ten years. In Germany, a survey conducted by the Chamber of Foreign Trade in China showed that 35 percent of German companies based there rated the impact positively.
In addition, China is one of the most important trading partners for many European countries – not the least due to growing e-commerce – so that they would benefit from an expansion of transport possibilities. Thanks to the new land corridors via which goods are transported by freight train, they reach their destination after a transport time of twelve to 20 days. As a result, the cargo can be transported both more quickly compared to sea freight and more cheaply compared to airfreight. The expansion of the infrastructure and the economic developments in the countries along the route that are triggered by it can open up new sales markets or facilitate business activities for European companies in the future.
As Europe's largest railway port, the Port of Hamburg also sees opportunities in the One Belt, One Road initiative. “The New Silk Road strengthens the good connections between Hamburg and its trading partner China,” Axel Mattern stated, CEO of Hafen Hamburg Marketing e.V. His organization manages a number of EU research projects in the field of railway hinterland transport. “There are already 235 train connections weekly between Hamburg and China from numerous suppliers, which can be expanded further.”