Decrypting the Belt and Road Initiative: Barriers and Development Paths for Global Logistics Networks
Abstract
:1. Introduction
- RO1: Outline and assess the current barriers that the BRI presents, from an LSCM perspective, that inhibit efficient operations along BRI paths.
- RO2: Provide indications of strategies for dealing with current BRI barriers.
- RO3: Propose and assess future development scenarios for the BRI.
2. Background of the Belt and Road Initiative
3. Research Design
3.1. First Stage: Group Exercise to Derive BRI Barriers, Strategies, and Development Scenarios
3.2. Second Stage: Assessment of BRI Barriers, Strategies, and Development Scenarios
4. Results
4.1. Current BRI Barriers
Our clients are used to having fixed prices for certain transport routes and volumes. In the case of rail transportation between China and Germany we are struggling to provide fixed prices since the subsidies for Chinese rail terminals are changing constantly. Once we establish a profitable and stable connection we have to change the domestic terminal to remain profitable, which leads to problems for our logistics planning on a regular basis. However, without the Chinese subsidies, the demand for rail transportation would be much lower than it is today.
A few years ago, a train between Xi’an and Duisburg took around twelve days on average. Today, in 2019, this connection takes around 16 days, sometimes even more, which is mainly caused by the infrastructure bottleneck that we face at the Malaszewicze/Brest terminal.
Europe and China are the most important trade partners regarding the Belt and Road Initiative but are not working together as closely as necessary. If everything is done correctly, the initiative can be a win-win situation for all countries and stakeholders involved since it facilitates trade and consequently economic development. But currently, it seems to me that Europe does not have a unified voice to talk to China and to set up joint actions.
4.2. Strategies to Leverage the Potentials of the BRI
4.3. Future Development Paths of the BRI
5. Implications
6. Final Remarks
Funding
Acknowledgments
Conflicts of Interest
References
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# | Industry Type | Total Number of Employees | Annual Turnover | Participant Management Level | Years of Professional Experience in LSCM |
---|---|---|---|---|---|
1 | Retailer | More than 10,000 | €5–10 bn | Department manager | 19 |
2 | Logistics service provider | 2500–5000 | €250–500 m | Executive assistant | 4 |
3 | Logistics service provider | 5000–10,000 | €1 bn–2.5 bn | Department manager | 13 |
4 | Association | Up to 50 | Up to €10 m | General manager | 6 |
5 | Logistics service provider | 1000–2500 | €250–500 m | Team member | 4 |
6 | Consulting | Up to 50 | Up to €10 m | General manager | 10 |
7 | Logistics service provider | More than 10,000 | Above €10 bn | Department manager | 6 |
8 | Logistics service provider | 250–500 | €500–1000 m | Team leader | 10 |
9 | Manufacturing, Machinery/equipment | More than 10,000 | €5–10 bn | Team leader | 22 |
10 | Logistics service provider | More than 10,000 | €2.5–5 bn | Team member | 25 |
11 | Logistics service provider | 5000–10,000 | €5–10 bn | Department manager | 10 |
12 | Manufacturing, Electronics | 50–250 | €10–50 m | Department manager | 12 |
13 | Logistics service provider | 2500–5000 | €1–2.5 bn | General manager | 30 |
14 | Manufacturing, Electronics | More than 10,000 | Above €10 bn | Department manager | 20 |
15 | Logistics service provider | Up to 50 | Up to €10 m | General manager | 39 |
Industry Type | Annual Turnover | Total Number of Employees | Participants’ Management Level |
---|---|---|---|
Logistics service provider|n = 19 | Up to 50|n = 4 | Up to 10 m €|n = 4 | Team member|n = 6 |
Retailer|n = 3 | 50–250|n = 4 | 10–50 m €|n = 3 | Team leader|n = 5 |
Manufacturing, Consumer goods|n = 2 | 250–500|n = 4 | 50–250 m €|n = 5 | Department manager|n = 24 |
Manufacturing, Chemicals & Pharmaceuticals|n = 2 | 500–1000|n = 5 | 250–500 m €|n = 6 | General manager|n = 15 |
Manufacturing, Automotive|n = 8 | 1000–2500|n = 3 | 500–1000 m €|n = 5 | Member of the board|n = 2 |
Manufacturing, Electronics|n = 5 | 2500–5000|n = 6 | 1 bn–2.5 bn €|n = 7 | |
Manufacturing, Machinery/equipment|n = 8 | 5000–10,000 n = 3 | 2.5 bn–5 bn €|n = 2 | |
Manufacturing, Raw materials/mining|n = 1 | More than 10,000|n = 23 | 5 bn to 10 bn €|n = 6 | |
Others|n = 4 | Above 10 bn €|n = 14 |
BRI Barrier | Strategy | Effectiveness | SD Effectiveness | Complexity | SD Complexity |
---|---|---|---|---|---|
Missing harmonization of customs | Digitalization of customs clearance process | 6.19 | 0.90 | 5.79 | 1.23 |
Establishment of EU-wide standards for interpretation of goods | 5.67 | 1.17 | 5.48 | 1.37 | |
Creation of political associations to draw attention to the topic by lobbying | 4.60 | 1.40 | 4.87 | 1.40 | |
Volatile prices for railway due to volatile (and non-transparent) subsidy system | Block space agreements: customer, service providers and Chinese provinces agree on volumes for a longer period and a fixed price | 5.42 | 1.12 | 4.83 | 1.41 |
(Cross-industry) cooperation of multiple customers to consolidate volumes for more bargaining power for stable prices | 4.58 | 1.41 | 4.85 | 1.34 | |
Establish cross-industry lobby organization to show China that volatile prices keep customers from using the railway | 4.29 | 1.72 | 4.48 | 1.32 | |
Buy insurance to cover price volatility | 4.19 | 1.51 | 4.62 | 1.61 | |
Capacity shortage of railway infrastructure (e.g., terminals and wagons/cars) | Digitalized and standardized documents along the track to avoid waiting trains due to incorrect documents | 5.94 | 1.10 | 4.96 | 1.56 |
Upgrading of more double track sections to avoid waiting trains | 5.58 | 1.17 | 5.15 | 1.34 | |
Increased transparency on current and expected capacity bottlenecks and planned construction works as well as impact on transit times | 5.42 | 1.23 | 4.35 | 1.43 | |
Having infrastructure expansion financed directly by European companies instead of waiting for government action | 5.10 | 1.30 | 5.44 | 1.31 | |
More optimized, coordinated timetables of trains | 5.08 | 1.43 | 4.44 | 1.63 | |
Additional cross-border terminals around Brest/Malaszewicze | 4.94 | 1.39 | 4.48 | 1.20 | |
Cross-industry cooperation through a neutral, third-party authority that creates synthesized transparency on customer orders and schedules them accordingly | 4.94 | 1.36 | 4.88 | 1.37 | |
Establishment of giga-cargo trains on the main tracks in the former Soviet Union | 4.81 | 1.66 | 4.75 | 1.53 | |
Creation of political associations to draw attention to the topic by lobbying | 4.23 | 1.35 | 4.63 | 1.47 | |
Tracking and tracing along the rail track | Logistics service providers put GPS trackers on containers by themselves | 5.69 | 1.20 | 3.40 | 1.73 |
Implementation of a tracking system, similar to the one for ships, for trains | 5.63 | 1.11 | 4.29 | 1.31 | |
Establishment of data standards to regularly report train/container locations | 5.42 | 1.10 | 5.10 | 1.29 | |
Increase funding for further development and deployment of smart interconnected train infrastructure | 5.02 | 1.22 | 5.06 | 1.25 |
# | Scenario | Probability (Mean) | SD Probability | Vulnerability (Mean) | SD Vulnerability |
---|---|---|---|---|---|
1 | China’s protectionism increases and Europe’s dependence on China increases | 4.94 | 1.13 | 4.77 | 1.42 |
2 | Owing to the BRI, industrial production of Eastern Europe moves further east (industrial center of gravity moves east) | 4.81 | 1.18 | 4.25 | 1.19 |
3 | Significant sea freight volume from China to Europe will be handled via southern European seaports | 4.38 | 1.39 | 4.06 | 1.17 |
4 | Dobrá establishes itself in the long term as a strong intermodal terminal to relieve Brest/Malaszewicze | 4.23 | 1.12 | 3.37 | 1.04 |
5 | Transport by rail from China to Europe will become a strong competitor to sea freight | 4.10 | 1.78 | 3.71 | 1.63 |
6 | The Northern Sea Route will be established as a viable option for sea freight between China and Europe | 4.06 | 1.46 | 3.87 | 1.39 |
7 | Import customs clearance to Europe is carried out according to a uniform standard | 4.04 | 1.47 | 3.06 | 1.32 |
8 | China and Europe get closer to each other and develop a common strategy regarding the BRI | 3.96 | 1.56 | 3.62 | 1.76 |
9 | IT standards for data exchange among all partners will be established | 3.88 | 1.64 | 3.62 | 1.61 |
10 | China reduces subsidies drastically for railway | 3.69 | 1.60 | 4.71 | 1.57 |
11 | The United States of America is increasingly isolated from world trade by the BRI | 3.69 | 1.45 | 3.98 | 1.25 |
12 | China and Europe reach a free-trade agreement | 3.62 | 1.60 | 3.37 | 1.68 |
13 | Europe develops a unified strategy for how to respond to the BRI | 3.33 | 1.55 | 3.54 | 1.38 |
14 | New transport technologies, e.g., Hyperloop, UAVs, and AGVs, will disrupt the logistics industry and make the rail connection obsolete | 2.58 | 1.47 | 3.79 | 1.64 |
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Nitsche, B. Decrypting the Belt and Road Initiative: Barriers and Development Paths for Global Logistics Networks. Sustainability 2020, 12, 9110. https://doi.org/10.3390/su12219110
Nitsche B. Decrypting the Belt and Road Initiative: Barriers and Development Paths for Global Logistics Networks. Sustainability. 2020; 12(21):9110. https://doi.org/10.3390/su12219110
Chicago/Turabian StyleNitsche, Benjamin. 2020. "Decrypting the Belt and Road Initiative: Barriers and Development Paths for Global Logistics Networks" Sustainability 12, no. 21: 9110. https://doi.org/10.3390/su12219110
APA StyleNitsche, B. (2020). Decrypting the Belt and Road Initiative: Barriers and Development Paths for Global Logistics Networks. Sustainability, 12(21), 9110. https://doi.org/10.3390/su12219110