The recent successful trial of a new multimodal trade route connecting China’s Shandong province to Azerbaijan’s capital, Baku, marks a significant development in global trade logistics and China’s Belt and Road Initiative (BRI). This innovative route, which combines rail and sea transportation across the Caspian Sea, offers a faster alternative to traditional sea routes for cargo bound for Europe, potentially reshaping trade patterns across Eurasia.
Efficiency and Time Savings
The new route, part of the Trans-Caspian International Transport Route, has demonstrated remarkable efficiency. Cargo shipments, including truck parts, tires, and air conditioners, reached their destination in just 18 days, reducing transit time by approximately one-third compared to conventional sea routes. This significant time saving could have far-reaching implications for supply chain management and just-in-time delivery systems for businesses operating between China and Europe.
Route Details and Logistics
The journey begins in Shandong province, with goods departing from Jinan and Qingdao by train. The cargo then crosses into Kazakhstan, traverses the country by rail, and is shipped across the Caspian Sea from Aktau port to Alat port in Azerbaijan. From there, it reaches Baku by rail, with some goods continuing onward to countries such as Türkiye, Georgia, Romania, and Italy. This multimodal approach leverages existing infrastructure while creating new connections, exemplifying the kind of logistics innovation central to the BRI.
Strategic Importance
China’s investment in this route aligns with its broader strategic goals:
Enhancing the China-Europe Railway Express: By diversifying transportation options, China strengthens its overland connections to European markets.
Advancing the Belt and Road Initiative: The new route contributes to the development of high-quality BRI projects, fostering economic cooperation along the way.
Strengthening ties with Shanghai Cooperation Organization (SCO) members: The route passes through several SCO countries, potentially deepening economic integration within this group.
Creating new market access: The China-SCO Local Economic and Trade Cooperation Demonstration Area in Qingdao aims to become a gateway for SCO members to access Asia-Pacific markets, expanding trade networks in multiple directions.
Economic Impact and Growth
The demonstration area in Qingdao has shown impressive growth, with the total value of trade with SCO members increasing by an average of 77% annually over the past six years. This growth is supported by:
Comprehensive service platform: Offering trade, customs clearance, logistics, and financial solutions.
Extensive rail network: 32 rail routes connecting 54 cities across 23 BRI and SCO partner countries.
Strategic location: Proximity to Qingdao’s international airport and seaport, facilitating multimodal transportation.
Industrial development: Over 2,000 trade entities and 130 BRI and SCO industrial projects established in the area.
Challenges and Future Prospects
While the new route shows promise, several challenges may need to be addressed:
Infrastructure development: Ensuring consistent quality and capacity along the entire route.
Geopolitical considerations: Navigating the complex political landscape of Central Asia and the Caucasus.
Competitiveness: Maintaining cost-effectiveness compared to traditional sea routes and other overland options.
Environmental concerns: Balancing increased trade with sustainability goals.
Looking ahead, the success of this route could lead to:
- Increased investment in infrastructure along the Trans-Caspian International Transport Route.
- Development of new logistics hubs and special economic zones.
- Shift in global supply chain strategies, particularly for time-sensitive goods.
- Greater economic integration of Central Asian and Caucasian countries into global trade networks.
The new Shandong-Baku route represents a significant step in China’s efforts to reshape Eurasian trade logistics. By offering a faster alternative to traditional sea routes and strengthening overland connections, China is not only enhancing its own trade capabilities but also potentially transforming the economic landscape of the regions along the route. As this and similar initiatives develop, they may have profound implications for global trade patterns, regional economic development, and the balance of economic power across Eurasia.
