RLL Container Report - 15 February 2017
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 15 February 2017
The dawning of a new railway age in South East Asia
As the New Year broke over South-East Asia, Laos started on the construction of a new standard-gauge linking the landlocked country to the Chinese rail network. Stretching just over 400 kilometres, the new route runs south from the Sino-Laotian border at Boten via Luang, Prabang, Vang Vieng until it reaches Vientiane, the capital of Laos. For the Laotians, the line provides a great opportunity to expand co-operation in trade and tourism with its giant neighbour to the north. The project is estimated to cost USD 1.2 Billion and is divided into three sections each to be built by subsidiaries of China Railway Group (CRG).
For their part, the Chinese cherish the much bigger goal of a far shorter and quicker route for its exports from southern provinces to deep-sea container ports in South-East Asia. Vientiane lies on the eastern border of Thailand, from where it is only 660 km down to Bangkok and its port on the Gulf of Thailand. To put this in perspective, the distance from Kunming to the nearest main port in South China, Shenzhen is roughly equivalent to the distance from Kunming to Bangkok. Just beyond Thailand’s biggest city lie the key box ports of Kuala Lumpur and Singapore with links south to Indonesia and Australasia in addition to the major East-West trade routes.
The Chinese are not having it all their own way in the region. They face stiff competition from their Japanese rivals, who have been busily marketing to the Thais and the Burmese their skills in constructing high-speed rail links. Later this year, Japan International Co-operation Agency is scheduled to commence work on a major upgrade to the rail line in Myanmar (Burma) connecting Yangon to Mandalay via the new capital city, Naypyitaw. Currently the rail journey takes 16 hours but the plan is to halve this by the time the line is fully upgraded in 2025.
China has also been frustrated in its attempts to construct a rail line via the town of Muse on the Myanmar-China border all the way down to the deepwater port at Kyuukphyu in Rakhine State. At 1,100 km the distance is relatively short and it would give a huge advantage to the export industries located in the south-west of China to have such quick access to a deep-water box terminal in the Bay of Bengal.
On the other hand, the Chinese have had greater success when negotiating with the Malays. Towards the end of last year, Malaysia elected to award a major rail project, the East Coast Line, to China Communication Construction Company. The 620 km project costing USD 12.25 Billion will link the capital, Kuala Lumpur with Kelatan on the north-east coast of Malaysia, opening up that part of the country to greater trade and tourism opportunities. For their part, the Singaporeans and Malaysians will welcome the opportunity to expand their container hubs, which could dispatch regular container trains up into a part of southern China that was until recently considered to be “terra incognita”.
John Keir, Ross Learmont Ltd.
15 February 2017
Copyright ©, 2017, John Keir