[Hewlett-Packard, the
Silicon Valley electronics company, has pioneered the revival of a route famous
in the West since the Roman Empire. For the last two years, the company has
shipped laptops and accessories to stores in Europe with increasing frequency
aboard express trains that cross Central Asia at a clip of 50 miles an hour.
Initially an experiment run in summer months, H.P. is now dispatching trains on
the nearly 7,000-mile route at least once a week, and up to three times a week
when demand warrants. H.P. plans to ship by rail throughout the coming winter,
having taken elaborate measures to protect the cargo from temperatures that can
drop to 40 degrees below zero.]
By Keith Bradsher
 |
James Hill for The New
York Times
Centuries ago, the
cargo on the Silk Road across Asia included spices and gems.
Today, it’s likely to
be computers and other electronics, moved by rail along an
often-desolate
7,000-mile route.
|
AZAMAT KULYENOV, a 26-year-old train driver, slid the black-knobbed throttle
forward, and the 1,800-ton express freight train, nearly a half-mile long,
began rolling west across the vast, deserted grasslands of easternKazakhstan, leaving the
Chinese border behind.
Dispatchers in the
Kazakh border town of Dostyk gave this train priority over all other traffic,
including passenger trains. Specially trained guards rode on board. Later in
the trip, as the train traveled across desolate Eurasian steppes, guards toting
AK-47 military assault rifles boarded the locomotive to keep watch for bandits
who might try to drive alongside and rob the train. Sometimes, the guards would
even sit on top of the steel shipping containers.
The train roughly
follows the fabled Silk Road, the ancient route linking China and Europe that
was used to transport spices, gems and, of course, silks before falling into
disuse six centuries ago. Now the overland route is being resurrected for a new
precious cargo: several million laptop computers and accessories made each year
in China and bound for customers in European cities like London, Paris, Berlin
and Rome.
Hewlett-Packard, the
Silicon Valley electronics company, has pioneered the revival of a route famous
in the West since the Roman Empire. For the last two years, the company has
shipped laptops and accessories to stores in Europe with increasing frequency
aboard express trains that cross Central Asia at a clip of 50 miles an hour.
Initially an experiment run in summer months, H.P. is now dispatching trains on
the nearly 7,000-mile route at least once a week, and up to three times a week
when demand warrants. H.P. plans to ship by rail throughout the coming winter,
having taken elaborate measures to protect the cargo from temperatures that can
drop to 40 degrees below zero.
Though the route still
accounts for just a small fraction of manufacturers’ overall shipments from
China to Europe, other companies are starting to follow H.P.’s example. Chinese
authorities announced on Wednesday the first of six long freight trains this
year from Zhengzhou, a manufacturing center in central China, to Hamburg,
Germany, following much the same route across western China, Kazakhstan,
Russia, Belarus and Poland as the H.P. trains. The authorities said they
planned 50 trains on the route next year, hauling $1 billion worth of goods;
the first train this month is carrying $1.5 million worth of tires, shoes and
clothes, while the trains are to bring back German electronics, construction
machinery, vehicles, auto parts and medical equipment.
DHL announced on June 20
that it had begun weekly express freight train service from Chengdu in western
China across Kazakhstan and ultimately to Poland. Some of H.P.’s rivals in the
electronics industry are in various stages of starting to use the route for
exports from China, freight executives said.
The Silk Road was never
a single route, but a web of paths taken by caravans of camels and horses that
began around 120 B.C., when Xi’an in west-central China — best known for its
terra cotta warriors — was China’s capital. The caravans started across the
deserts of western China, traveled through the mountain ranges along China’s
western borders with what are now Kazakhstan and Kyrgyzstan and then journeyed
across the sparsely populated steppes of Central Asia to the Caspian Sea and
beyond.
These routes flourished
through the Dark Ages and the early medieval period in Europe. But as maritime
navigation expanded in the 1300s and 1400s, and as China’s political center
shifted east to Beijing, China’s economic activity also moved toward the coast.
Today, the economic
geography is changing again. Labor costs in China’s eastern cities have surged
in the last decade, so manufacturers are trying to reduce costs by moving
production west to the nation’s interior. Trucking products from the new inland
factories to coastal ports is costly and slow. High oil prices have made
airfreight exorbitantly expensive and prompted the world’s container shipping
lines to reduce sharply the speed of their vessels.
Slow steaming cuts oil
consumption, but the resulting delays have infuriated shippers of high-value
electronics goods like H.P’s. Such delays drive up their costs and make it
harder to respond quickly to changes in consumer demand in distant markets.
Trucking goods from
inland factories to the ports of Shenzhen or Shanghai on the coast and then
sending the goods by ship around India and through the Suez Canal takes five
weeks. The Silk Road train cuts the shipping time from western China to retail
distribution centers in western Europe to three weeks. The sea route is still
about 25 percent cheaper than sending goods by train, but the cost of the added
time by sea is considerable.
By switching from ocean
freight to rail freight, “the inventory costs and lead times will see a lot of
improvement,” said Jonney Shih, the chairman of Asustek, the world’s
third-largest player in the global market for tablet computers, after Apple and
Samsung. His company, too, has begun to experiment with the Silk Road.
Scrambling for Rail
Traffic
Best known in the West
as the Nationalist capital of China during World War II, Chongqing is now a
smoggy metropolis, its city center perched on a bluff wrapped in a bend of the
Yangtze River. The urban population of Chongqing is approaching 13 million,
while an additional 15 million live in nearby rural areas that also lie within
Chongqing’s administrative borders.
Deng Xiaoping began
opening China to foreign investment in the late 1970s, and for the next
quarter-century Chongqing was a place that people fled, seeking better-paying
jobs on the coast. But in the last few years, it has emerged as an industrial
hub of western China, attracting multinationals like the chemical giant BASF
and the Ford Motor Company. H.P. took the first steps to move production west
from Shanghai four years ago. Now its contractors employ 80,000 workers in
Chongqing, making 20 million laptops and 15 million printers a year.
Foxconn, the big
Taiwanese electronics contract manufacturer, has twice as many workers in
nearby Chengdu, mainly making Apple iPads, and has been shifting production
there from Shenzhen.
Tony Prophet, a senior
vice president at H.P., said the company began thinking about a rail route west
almost as soon as it started production in Chongqing. The company, Mr. Prophet
said, was pursuing a strategy of moving products, not people: instead of
encouraging a migration from inland provinces to coastal factories, H.P. would
manufacture in the inland provinces and then ship the products from there.
To attract the company,
the city built an extra runway at its airport long enough to accommodate Boeing
747 cargo jets. Airfreight to Europe takes only one week, including customs
processing.
But persistently high
oil prices made the cost of airfreight daunting — as much as seven times the
cost of rail freight. H.P. was also concerned about the carbon emissions
involved in airfreight, which are 30 times those of the rail or sea routes.
Trucking computers to
the coast and then putting them on ships meant tying up huge sums of money in
the inventory hauled across the South China Sea and the Indian Ocean. That
delay would make it hard to shift sales strategies quickly in Europe if
competitors came up with breakthrough products. So H.P. began looking at going
west by land, across Kazakhstan.
President Nursultan A.
Nazarbayev of Kazakhstan has been encouraging this idea. Last December, he
called for his country to upgrade its rail network as a way to reclaim its
historical role as the crossroads of Asia. “We are reviving a New Silk Road,”
he said, “by setting up a Western Europe-Western China transportation
corridor.”
Kazakhstan, which
already has 8,700 miles of rail, is rapidly building new rail routes to its
borders with China in the east and Turkmenistan to the south. One goal is to
connect China through Turkmenistan to Iran, assuming that the political
situation in Iran improves, said Kanat K. Alpysbayev, the vice president for
logistics at Kazakh National Railways. The Kazakh rail authority is also negotiating
to help fix and manage the rail network in Afghanistan, where Chinese companies
are building a vast copper mine.
The effort to move more
cargo from China to Europe by rail received considerable help from a
development so obscure that few outside the transport sector initially noticed
it. Kazakhstan, Russia and Belarus created a customs union that took full
effect in January 2012, eliminating lengthy inspections at their borders with
one another. The measure saved days of transit time and greatly reduced
pilferage.
The Kazakhstan rail
initiative has spurred regional competition. On June 21, President Vladimir V.
Putin of Russia announced a $43 billion infrastructure plan focused heavily on
improving rail links to China, notably through improvements to the
trans-Siberian railroad. The competition is ultimately a positive for
manufacturers that make goods in China, like H.P.
The journey of H.P.
computers and accessories begins in Chongqing with workers like Zheng Xiaoxue.
A cheerful 18-year-old, she was raised by her grandparents on the outskirts of
Chongqing; her parents had migrated to work at a plastics factory near Hong Kong
in Shenzhen, where wages and benefits now reach $500 a month.
But her parents have now
returned home, complaining that the food in Shenzhen was bland and unappetizing
compared with the fiery Sichuan cuisine they preferred. So instead of
migrating, Ms. Zheng chose a job paying $190 a month, as well as free room and
board, at a Taiwanese-run factory making notebook computers for H.P.
“At work, we speak
Mandarin, but after work, we mostly speak Sichuanese — almost all of us are
from Sichuan,” Ms. Zheng said, while downing a free plate of pork and cabbage
for dinner in the factory cafeteria.
For the train that Mr.
Kulyenov would drive, workers loaded finished laptops into 43 of H.P.’s
specially designed dark blue containers, each 40 feet long, 8 feet wide and 9
feet 6 inches high, and loaded computer monitors into seven more identical
containers. The 50 containers were sealed shut with a series of locks and
loaded onto a train at the Chongqing rail yard, which left the station on June
14.
It would take five days
for the train, carrying nothing but H.P. equipment, to cross 2,000 miles of
western China to reach the eastern border of Kazakhstan.
An Unexpected Delay
The train was punctual
in reaching the Dzungarian Gate, a low, wide valley through the snow-capped mountain
ranges that separates China and Kazakhstan. Chinese customs officers there
opened documents that had been sealed since the shipment left Chongqing. For 49
of the 50 containers, the documents matched the cargo in every detail.
But for one of the laptop
computer containers, the numbers didn’t match. The documents showed that the
total weight of one container was 10,135 kilograms. But the scale showed that
the container weighed 10,153 kilograms — a difference of just two digits,
transposed accidentally.
Hours passed on the
Kazakh side as H.P. and its shipping agents hustled to amend the paperwork,
which was not easy because the error was discovered at the end of a workday.
After thundering across China, through Xi’an, across a corner of the Gobi
Desert and skirting the vast arid wastes of the Taklamakan Desert, where
temperatures can hit 120 degrees, the train simply sat. For 26 hours.
Such extreme delays are
unusual — H.P. managers say the longest previous delay was 10 hours, at the
Belarus-Poland border. Sea shipments have sometimes been delayed up to three
days because of bad weather and other problems.
H.P. has made strenuous
efforts to keep the products moving, sending representatives to remote Central
Asian border crossings to explain its plans, said Ronald Kleijwegt, the
company’s director of logistics for Europe, the Mideast and Africa.
H.P. helped China
overhaul its software for processing customs documents. China’s previous system
allowed clerks to choose only an adjacent country in Asia as the final
destination for rail shipments, Mr. Kleijwegt said, because no one had
envisioned that exports in sealed rail cars might be sent nearly 7,000 miles to
destinations in Europe.
The company also
negotiated special customs clearance, permitting its containers to stay locked
and uninspected at border crossings along the route, although the containers
are X-rayed for contraband. That was mostly to shorten the time needed for the
trip, but also for security. Two years ago, H.P. sent 200 computers in a single,
unsealed container as a test shipment on a general-purpose freight train. The
shipment went through comprehensive customs checks at border crossings. By the
time the train reached Germany, many of the computers had disappeared.
‘Much Respect on the
Track’
Once the problem of the
transposed numbers was cleared up, the train crossed into Kazakhstan. An
overhead crane and two cranes that looked like cottages on wheels lifted the
H.P. containers off the Chinese train, and loaded them onto flat cars with
wider wheel gauges in the rail yard in Dostyk on the Kazakh side of the border.
Kazakhstan, Russia and Belarus, all traversed on the trip, have wide rails
inherited from the Soviet rail system. China and Europe have narrower rails, so
cargo transfers take several hours.
Mr. Kulyenov, a freight
train driver fourth class who dreams of being promoted someday to reach the
rank of passenger train driver first class, considered himself lucky to be
driving the train. Sitting in the cab of a new diesel locomotive, he waited in
the Dostyk rail yard for a messenger in a bright yellow safety jacket to bring
him a computer printout of his cargo. When the printout arrived, he carefully
made notations in the locomotive’s purple velvet-bound log book, a concession
to tradition, then typed many of the same weight details into a dashboard
computer that helps precisely calibrate the engine for pulling each load.
When the signal lights
ahead turned from red to green, Mr. Kulyenov moved the huge train smoothly out
of the yard. “It’s a new engine; it’ll have no problem,” he said.
The locomotive was built
at a new factory in Astana, Kazakhstan’s capital, by a Russian-Kazakh joint
venture that licensed the design from General Electric. The locomotive’s body,
generator, radiator and wheels are made in Kazakhstan, but G.E. exports the
diesel engine from Erie, Pa. — although G.E. and the joint venture are making
plans to start building a diesel engine factory in Astana as well next year.
As the train moved
forward, the lattice of train tracks in the rail yard narrowed to three, then
two and then one that headed off across the flat grasslands of the steppe. Mr.
Kulyenov and the assistant driver next to him, Alexander Nemtzev, 31, glanced
around for the small flock of two-humped Bactrian camels that live near the
rail line. They were nowhere in sight.
A few Kazakh houses lay
long and low against the wind, with whitewashed walls, tile roofs and mastiffs
prowling out front. Herders on horseback, wearing pointy woolen knit caps,
tended flocks of sheep, cattle and horses.
Mr. Kulyenov marveled at
how quickly freight trains headed in the opposite direction moved onto sidings
to make way for his high-priority shipment.
“This is the first time
I’ve driven the H.P. train,” said Mr. Kulyenov, who has been a train driver for
eight years, “and the first time I’ve seen so much respect on the track.”
China’s smog was far
behind, swept away by the crystalline air of the high, barren steppes. Dawns
and sunsets played on the horizon in nearly hourlong shows of pink, mauve and
purple. Kazakhstan looks a bit like North Dakota; both grow a lot of wheat. But
Kazakhstan is slightly larger than the United States east of the Mississippi
River, with fewer people than Florida.
The train was not built
for comfort. There were no bunks for sleeping, or even bathrooms. Just as the
Pony Express of the American West relied on a series of riders to carry the
mail, the H.P. train relies on a new driver, assistant driver and guards to
board the locomotive at stops every three or four hours. Even the locomotives
are replaced with fresh ones every third or fourth stop. At each stop, railway
guards dressed in black or military fatigues hustle up and down the train,
checking the cars for signs of tampering. Over the course of each three-week
journey, more than 100 drivers and guards board the train.
To Mr. Kulyenov and Mr.
Nemtzev, the Silk Road is an abstraction, a little-remembered historical detail
studied in school. Mr. Nemtzev, who grew up in easternmost Kazakhstan,
remembered how he would play with little plastic trains as a boy and yearned to
drive real trains someday. “I’ve never wanted to do anything else,” he said as
the headlights traversed a vast emptiness. We traveled for nearly an hour at
one point without illuminating a single house, car or person anywhere near the
tracks.
An hour after sunset,
Mr. Kulyenov and Mr. Nemtzev were replaced by the next pair of drivers.
Vladimir Kolozorkin, 52, took over as the main driver. With a gray crew cut and
an uncanny ability to distinguish complex patterns of railway signal lights at
enormous distances, he greeted visitors with a gruff warning that rules
strictly prohibited distracting the driver in any way.
But he mellowed as the
hours passed, saying that he remembered from his early boyhood in eastern
Kazakhstan how camel caravans, a fixture on the Silk Road for two millenniums,
had still traveled to mountain villages.
“They were used to go
places you couldn’t reach in a car,” he recalled. “In the old days, people used
them for caravans, but now they’re just kept for the wool, the meat and the
milk.”
China to Holland, in 21
Days
When the train reached
the Belarus-Poland border, the containers had to be moved again to flat cars
with a narrower wheel gauge. While 41 flat cars headed on across Europe right
away, 9 more had to wait for a separate locomotive because the train would otherwise
exceed European regulations for a freight train’s maximum length. The first
train reached Duisburg, Germany, on July 3, or 19 days after the containers
left Chongqing. Trucks then took the containers overnight to their final
destination, H.P.’s European distribution center, in Oostrum, the Netherlands.
All 50 containers,
including the nine that left Poland later, ended up arriving in Oostrum in 21
days, or three weeks. Ask ocean shipping executives about the possible
challenge from the new Central Asian rail route and they say that it will not
take away enough business to affect their bottom lines.
Kazakhstan forecasts
that rail freight will grow to 7.5 million 40-foot containers by 2020, from
just 2,500 transported from western China to Europe last year. That would be a
huge increase that could sorely tax Kazakhstan’s rail network; Mr. Alpysbayev
said plans were under way to build extra tracks to help handle the traffic. But
even at 7.5 million containers, rail freight transiting Kazakhstan would still
be only a tenth of ocean freight between Europe and Asia.
Mr. Prophet, the H.P.
vice president, said that despite the occasional delays — like the 26 hours at
the Kazakh border — the company still planned to shift more shipments from sea
freight, and especially from airfreight, to rail. The journey to Europe can
take as little as 18 or 19 days by rail, but to allow for delays, H.P. doesn’t
plan for the train to arrive in fewer than 22 days, he noted.
Zhengzhou’s and DHL’s
move to offer regularly scheduled rail service across Kazakhstan, not to
mention the lengthening list of industries trying the route, suggests that
despite the occasional customs delay, many companies now share H.P.’s view that
the Silk Road has re-emerged as a viable transport route.
“They were all highly
interested,” Mr. Kleijwegt of H.P. said, “but wanted to see someone else prove
it.”
