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Direct railroad routes turn vision into profitability

By Cecily Liu in London | China Daily | Updated: 2018-10-24 09:46
The Decathlon freight train transports goods between China and France. CHINA DAILY

Last year, the French sports retailer Decathlon started to transport products made in its factory in Wuhan, capital of Hubei province, to its warehouses in Dourges, northern France, direct by rail.

The company said the option was "more economical, faster and more ecological" than shipping by sea.

The weekly 41-container freight train allowed Decathlon's products to reach France in 16 to 18 days, compared with the 20 days previously needed when transported by sea.

The time and money the company saved as a result boosted Decathlon's profitability and prompted it to further invest in its Wuhan factory. As a result, its supply chain procurement from cities near Wuhan grew by 15 percent.

"We have seen many European companies start or scale up their manufacturing in Wuhan thanks to the logistics cost savings that can be achieved by direct freight trains, and Decathlon is one early example," said Deng Xinchen, of Wuhan Asia-Europe Logistics, which operates the Decathlon train.

Wuhan Asia-Europe Logistics started operating direct freight trains between China and Europe in 2016, when it spotted a business opportunity in the surging trade.

Its trains have linked Wuhan with cities in Russia, Poland, the Czech Republic, Germany and France. The trains have allowed many European companies to open trade links to areas that were previously not economical to reach because sea freight was too slow and air freight too expensive.

On average, rail links reduce costs by 70 percent compared with air freight, and transit times can be reduced by as much as 50 percent compared with cargoes transported by sea.

Wuhan Asia-Europe Logistics is one of several Chinese companies that began operating direct trains between China and Europe in recent years.

Industry estimates suggest that by last year such trains connected more than 30 Chinese cities with 12 European countries.

In doing so, they have turned the vision of Belt and Road connectivity into profitability for many businesses in China and Europe.

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