VTG Aktiengesellschaft (if it is alright with everyone we will just refer to the company as VTG from now on) which is based in Hamburg will become joint venture partner to Cosco Logistics of Beijing.

VTG will purchase 50% share in the Chinese logistics service provider, Cosco-Vopak Logistics which is located in Shanghai. A contract has been signed with the seller, Vopak North China B.V. The parties agreed not to disclose the purchase price.

VOTG Tanktainer, a 100% subsidiary of the VTG Group, has for several years been in the expanding Chinese market for tank containers.

The new company, which is named Cosco-VOTG Logistics, will specialize in logistics services for the transport of chemicals for the chemical and petrochemical industry.

VTG is one of Europe’s leading rail logistics and wagon hire companies. With about 48,400 rail freight cars, VTG has Europe’s largest private wagon fleet. In addition to the hiring of rail freight cars, the Group offers global tank container transport and comprehensive mulit-modal logistics services mainly around rail transport.
Source: Ad Hoc News

That amazing figure of 300% is predicted in rail transit cargo from China and South Asia through Kazakhstan to Europe. Mark you, it is starting from a very low base.

Fast growing freight forwarding and logistics service company, STL, plans to build bonded warehouses and an intermodal container terminal at the Kazakhstan town of Khorgos, on the China border which is already a busy border crossing as our picture shows.

STL’s intermodal hub is due for completion by 2010 and complements the Kazakhstan government’s US$500 million investment to upgrade rail and road infrastructure to meet demand for booming cargo volumes from China to Central Asia, CIS and Russia.

Erlan Dikhanbayev, Managing Director of STL said, ‘We estimate that rail freight volumes to and from China will grow by 300 per cent during the next four years via Khorgos and there is demand to expedite transit cargo by rail and road between China and Europe.

‘The upgraded infrastructure and streamlined Customs procedures will mean faster transit times between China and Europe.

‘STL’s investment in this intermodal hub will provide our customers with shorter border transit times, improved security and better tracking and tracing of containers.’

The Kazakhstan authorities are looking to attract 4% of cargo volumes currently by sea between China and the EU and move it by rail.

STL provides a freight services to destinations Kazakhstan, Uzbekistan, Kyrgyzstan, Ukraine, Russia through gateways in Qingdao.
Source: Arabian Business

The experiments for this have been going on for some time and trains have been running on a regular schedule from China to Germany, but only once or twice a month.

Die Welt reported, citing Manfred Michel of China United International Railway Container Transport (CUIRC), the company operating the trains states that Deutsche Bahn will open a direct cargo train link between China and Germany within three months. As Deutsche Bahn owns an 8% stake in CUIRC so we can take it that is an authoritative statement.

The trains will take 15 days to travel the 9,850 km between Berlin and Beijing. Air cargo — more expensive and liable to increase — takes two to three days between Germany and China, while sea freight takes around 35 days.

Norbert Bensel, head of Deutsche Bahn’s logistic operations said, ‘The cargo trains can’t compete with sea freight, but for express goods or oversize volumes they do make sense.’

The German rail operator is set to be partially privatized by the end of the year.
It is in talks with Russian railways RZD to take stakes in each other. This will be helpful because is RZD is Deutsche Bahn’s main partner for the inter-continental connection between China and Germany.

More on another side of rail development in China in the China Economic Review under Niu Yue, Niu Yue then scroll down to A through train casualty.
Source: Forbes

In China Securities Journal Wei Qiang, vice-director of UBS Securities, is reported as saying the railway sector will see an annual investment gap of RMB200 billion ($28.60 billion) in three years.

He said the railways need RMB1.25 trillion in capital over the five years between 2006 and 2010.

Capital expenditures will exceed RMB300 billion annually over the next three years, resulting in an investment gap of RMB200 billion for the period.

UBS’s research report says that compared with other industries including power, telecommunications and banks, the railway sector is still in its initial phase with more reconstruction pressure.

Wei Qiang said the Ministry of Railways will inject more capital in three listed companies — Daqin Railways, Guangshen Railways and Tielong Container Logistics —  and attract more commercial capital, including private capital.

He said, ‘It is impossible to issue bonds or loans to fill the gap. He explained that in 2006, the Ministry of Railways’ capital and interest repayments totaled RMB56 billion, far higher than the profit of RMB3.2 billion.
Source: China Daily

Ping An Insurance, China’s second biggest insurer, will pay $2.3 billion for a 14% stake in the Beijing-Shanghai High-Speed Railway.

Ping An has raised billions of dollars recently to pay for such acquisitions.

In remarks posted on the central government’s Web site, Cai Qinghua, who is also vice minister of the Railway Ministry, said the National Council for the Social Security Fund would also buy a stake in the railway, investing RMB10 billion ($1.4 billion) for an 8.7% interest.

Construction of the railway has already begun in Beijing. This is one of these solid investments which China throws up where the scale of investment is so large that only the very, very big players and the government can afford to ante up.

We are looking at $2.7 billion for 24.7%. Using back-of-envelope economics that has to be about $10.4 billion all up and so a return of something closer to a billion dollars a year, rather than half a billion is expected.

That is very serious investment but you can see that a high speed run between Bejing and Shanghai is a natural.

Instead of the misery and expense and time of hacking it to the airport you get on the train ten minutes before it is due to leave, work on your laptop and before you know it you are at the center of your destination city. Which means it is as near as guaranteed investment as exists.
Source: Businessweek

Construction could start this year on three railways in the Xinjiang Uygur autonomous region. This according to sources with the National Development and Reform Commission (NDRC).

The region is bounded to the north by Kyrgyzstan, Kazakhstan, and Russia; to the east by Mongolia and Gansu; to the south by Qinghai and Tibet; and to the west by Jammu and Kashmir, Afghanistan, and Tajikistan.

The NDRC plans to invest RMB4.25 billion ($591 million) in the three railways: the Lanxin, Nanjiang and Kuitun railways.

According to Chinanews.com, work on the Jingyihuo Railway, the first electric railway in Xinjiang, has accelerated and should be complete by the end of this year,

Experts say developing Xinjiang’s rail capacity will make it easier to exploit its massive stores of energy resources. With estimated reserves of 20.8 billion tons of oil and 10.8 trillion cu m of gas, Xinjiang is seen as a strategic complement to Heilongjiang, China’s top natural gas and oil producer.

Currently the only railway linking Xinjiang with central Asia is a 460-km line between Urumqi and Alataw Pass, where it connects to Kazakhstan railways.
Source: China.com

The Economist with a major article — not all totally complimentary — on the galloping pace of building and expansion in China.

Some examples of growth.

Beijing’s new airport terminal, seen here during construction, was designed by the British firm Foster + Partners, and planned and built in four years by an army of 50,000 workers.

The terminal is 3km (1.8 miles) long. The floor space is 17% bigger than all the terminals at London’s Heathrow combined (including about-to-open Terminal Five). Part of a $3.8 billion expansion, which included the opening of a third runway in October, it is due to open at the end of this month, weeks ahead of schedule.

It is the ninth busiest airport in the world.

And it is part of the rush to improve China’s logistics infrastructure.

Between 2001 and the end of 2005 more was spent on roads, railways and other fixed assets than was spent in the previous 50 years. According to the state media, investment will see double-digit growth every year for the rest of the decade.

The world’s longest sea-crossing bridge is due to open in June: a 36km six-lane highway across Hangzhou Bay.
Shanghai is home to the current world-record holder for such a structure, the 32km Donghai bridge. This was opened less than three years ago to link the city with Yangshan port.
Yangshan is intended to be one of the world’s biggest deep-water facilities when completed at some point after 2010.
From August the 115km journey from Beijing to Tianjin, its nearest port, will be reduced to half an hour with the inauguration of a bullet-train link
Work began in January on a 1,300km line between Beijing and Shanghai which will be completed in five years’ time.
The world’s highest railway from Golmud to the Tibetan capital, Lhasa was completed in 2006.
Since the 1990s China has built an expressway network criss-crossing the country that is second only to America’s interstate highway system in length. By the end of 2007, some 53,600km of toll expressways had been built. The aim is to have 70,000km of expressways by 2020.
The World Bank says that China’s railways carry 25% of the world’s railway traffic on just 6% of its track length. In the past couple of years investment has grown considerably. This year’s target is $42 billion, compared with a total of $72 billion in the preceding five years.
The increase in air passenger traffic has been dramatic: from 7 million passengers in 1985 to over 185 million in 2007.
Source: The Economist

In an emergency the normal rules do not apply. The current snow has created serious emergencies in China. So the government has mobilized all the cargo trains to ensure coal transport for electricity supply of the snow-hit regions.

The latest ministry figures showed more than 42,200 container trucks were loaded with power coal in one day last week.

The line between Datong in coal producing province of Shanxi and Qinhuangdao, a port city in Hebei Province, a railway which is exclusively used for heavily-loaded coal transport trains, also set a new daily freight record of one million tonnes.

Last week China’s cabinet installed an emergency command center on Friday morning to coordinate contingency measures for coal, oil and power supply, and transport and disaster relief in the country’s snow-hit regions.

About half the country’s cargo trains, some 300,000 in all, are railway container trucks for the transport of such staple goods as minerals, building materials, timber and steel products.

The worst-hit Hunan, Hubei, Jiangxi, Sichuan and Guizhou provinces have been put under close scrutiny.

Hunan’s Chenzhou, for instance, has been cut off from power and water over the past eight days, leaving thousands of households dark and cold. The cities of Hengyang and Yongzhou have also experienced periodic blackouts.

As the Beijing-Guangzhou Railway is currently under pressure from passenger transport, the Railway Ministry urged cargo trains to take roundabout routes to deliver the coal as quickly as possible.
Source: CargoNews Asia

China will construct two railways linking the western Xinjiang region with the central Asian countries of Kyrgyzstan, Uzbekistan and Kazakhstan.

The RMB6.2 billion ($861 million) railway, linking Korgas (in red on our illustration) on the China-Kazakhstan border with China’s inland railways, will be completed this year.

It will further extend westward to join the Sary-Ozek railway of Kazakhstan, making it the second cross-border rail link between the two countries.

The new link will ease the burden of Alataw Pass, the largest land port in northwest China, which handled five million tonnes of train-laden exports last year, up by 60% from 2006.

China-Kyrgyzstan-Uzbekistan Railway will be next. The planned railway starts from Kashi (Kaxgar) in Xinjiang and extends through Kyrgyzstan to Uzbekistan.

After its completion in 2010, experts said the railway would provide a faster link between western China and central Asia and improve the southern passageway of the new Euro-Asia continental bridge.

Currently, the only railway linking Xinjiang with central Asia is a 460 km line between Urumqi and Alataw Pass, where it connects to Kazakhstan railways.
Source: Uzbekistan News

Premier Wen Jiabao has urged all departments concerned to ensure safe and smooth transportation during the traditional Chinese New Year holidays.

In truth, these exhortations are probably unnecessary because China rail and air all seem to be well organized and immensely keen on moving the largest amount of people ever moved at one time in the world. The only serious worry will be the weather.

Premier Wen Jiboa visited a service zone of an expressway and a railway station and inspected the traffic situation before and during the Spring Festival holidays, the busiest travel season in the country.

The Spring Festival traffic season is 20 days ahead and 20 days after the Chinese Lunar New Year, which falls on February 7 this year. All kinds of traffic will be busy with shipping homebound passengers and food and major industrial goods.

The problem is that since January 12, rare snowfalls, the heaviest in decades for some central and southern provinces, have further worsened the traffic problems in the country. Many expressways and airports have been closed, forcing many passengers to choose railways as their option.

The Beijing West Railway Station, which is expected to see 22 million outgoing and incoming passengers during the Spring Festival transportation season, has opened 266 ticket windows.

The Ministry of Railways recently estimated that railway passengers are likely to reach 178.6 million between January 23 and March 2. Migrant workers account for 70% of the railway passengers.
Source: China View