The train traffic between China and Europe via the New Silk Road is growing inexorably. In 2018, over 370,000 containers were transported between East and West by rail. Since rail is much faster than ship, overland transport offers faster lead times and significantly lower capital commitment. Thus, its use can be a building block in working capital optimization.
What exactly is the New Silk Road?
The land connection of the New Silk Road is not a single railway line, but a network with connections from northern China via Russia or Mongolia and another connection from central China via Kazakhstan, Russia and Belarus. The most important railway stations in Germany are Hamburg and Duisburg, where around 35 trains arrive each week. Other stations are Leipzig, Nuremberg and Munich; in Austria, trains from the Far East head for Vienna.
What benefits does the New Silk Road offer?
A major benefit is the lower capital commitment due to faster train cycles. The faster transport times of the train not only allow a faster time to market, which is critical for some industries for example, fashion companies.. They also reduce capital commitment in two ways: Firstly, the goods arrive faster, are processed and sold faster. Secondly, inventories can be reduced, as delivery frequencies can be increased. These factors have a considerable impact on working capital and should therefore be taken into account when choosing the means of transport.
Detailed contents of the magazine article:
- Consumer goods travel west, components travel east
- Lower capital commitment due to faster clocking
- For which goods is the train suitable?
- Opportunities for new suppliers
- Conclusion & recommendations for action
Further topics in the magazine issue:
- Supply Chain Finance – Win Win Win!
- New Silk Road – Shorter lead times and less capital commitment
- Raw materials study – economic slump expected
- Interview – Economic policy developments in China
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