RLL Container Report - 25 January 2017
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 25 January 2017
The New Corridors of Power
The Chinese and Pakistanis have recently opened a new road corridor from Xinjiang, Western China all the way down to the port of Gwadar in the far south-west of Pakistan - a distance of some 3,500 km. As part of the inauguration ceremony, the Chinese despatched a convoy of 50 trucks, which took two weeks to complete the long and arduous journey. The corridor from Xinjiang to Gwadar is being touted as a new alternative transport and economic corridor to the traditional and much longer sea route via Shanghai and the Straits of Malacca.
In addition to the road, Chinese loans and companies are also assisting in the construction of power plants, a railway and other infrastructure projects in Pakistan, which form part of the China-Pakistan Economic Corridor project worth an estimated USD 50 Billion. The new rail line from Xinjiang will eventually link up with the Pakistani rail network providing Chinese exporters in the western part of the country with an outlet for their goods destined for Pakistan, the Middle East and East Africa.
Unfortunately, a long outstanding border dispute with Pakistan over the provinces of Jammu and Kashmir, means that India has no overland route to Afghanistan and on from there into Central Asia. It was for this reason that India has invested heavily in an intermodal hub based on the Iranian port of Chabahar on the Gulf of Oman, which lies a mere 72 kilometres to the west of the port of Gwadar. India plans to invest USD 500 million in the Iranian port project, which would open up an alternative transit corridor for the Indian trade not only to Iran but also to Afghanistan and the countries of Central Asia.
India will establish a regular shipping service from the western port of Kandla, in the state of Gujarat, to Chabahar, which will allow India to tap into Iran’s vast energy resources of both oil and gas. To this end, India recently committed USD 400 million in the form of steel rails to upgrade the old rail line connecting the port of Chabahar with the city of Zahedan, near Iran’s border with Afghanistan. One of the first tasks for the new shipping line from Kandla will be to deliver these rails to the Iranian Railways.
At the same time, other road and rail improvement projects currently under way in Iran will enable Indian merchants to tap into the rising demand for consumer goods in the populous cities of northern and western Iran. By the time the rail line north of Chabahar is upgraded, Iran will have completed its two cross-border connections to the CIS broad gauge rail network via Turkmenistan in the north and Azerbaijan in the west. This latter route provides a direct connection through Eastern Turkey and from there straight into South Eastern Europe. At the same time, the rail and road routes via the Caucasus act as a far quicker link than the all-water route to the markets in Western Russia and Ukraine.
John Keir, Ross Learmont Ltd.
25 January 2017
Copyright ©, 2017, John Keir