China's Belt and Road Initiative: Risk Outlook China's Belt and Road Risk Outlook | Page 5

TRANS-EURASIA
TRADE
ROUTES
The growth of China-Europe rail transit has sparked intense interest as new routes have created new
openings for trade, set to compete with slower shipping routes. But there are inescapable limits.
China is predicting 15% annual growth in
container volumes exported by rail to Europe
every year for the next 10 years. Thus far, growth
has largely been driven by generous subsidies for
rail routes in China. As European firms find niche
export markets in China via rail, volumes are
running up against logistical constraints in Russia
and Trans-Caspian routes are growing more
attractive.
China has three primary rail routes linking it to
Europe: Russia’s Trans-Siberian Railway from China’s
northeast, the Trans-Siberian via Mongolia, and
Kazakhstan’s rail system as well as Turkmenistan’s
carrying goods to Caspian ports. At that point, goods
are shipped across the  Caspian to Azerbaijan where
they’re then loaded onto the rail network crossing
the South Caucasus and into Turkey.
THE RUSSIA ROUTE
Rail transit volumes through Russia have limited room to grow. Profitable rates for the Trans-
Siberian route stand at $8,000-$9,000 per 20-foot container. It costs $1,000-$2,000 to deliver the same
via container ship. China is now mulling pulling its subsidy support covering 40-50% of the cost of