The video above shows entrepreneurial experience of the two founders, Jan Paul Vegt and Liu Yong Gao, which is exactly what entrepreneurs around the world go through when taking a difficult decision. Being part of a budding tech-entrepreneurial ecosystem in Karachi I can feel their pain and how much difficult it was to risk taking a new path.
To briefly explain, these entrepreneurs have Rotterdam (Netherlands) based company that exports organic baby food to China. The air transport is too costly for their business and their orders via sea were delayed by two months due to fog. Considering these challenges, they decided to go with railway. Despite the fact Rotterdam is not fully connected with China through railway and most trains from China stop at Germany, railway still proves cheaper than air transport and one month faster than sea transport. For these entrepreneurs, and any other around the world, the best thing is to find the right balance between cost and benefits while guaranteeing delivery of products and services.
This decision does exactly that. It reduces the logistic cost by half compared to air freight and also prevent delays to delivery of products and services. It is not just limited to Jan and Liu only, there are many other entrepreneurs who are facing the same challenges in logistics. With an active railroad connected to European rail network, a third and reliable route opens up that will solve major logistics issue, bringing down cost of business. It will also allow travel options to and from China, giving a boost to both business travels and tourism.
With just sea and air freight, the trade volume between Europe and China is about half a trillion Euro and has been growing steadily. It is likely to touch 650 billion Euros by year 2020 and to facilitate this growth the additional route of rail will be key component.
The implications of this decision are quite significant. For example, China manufactures products for entrepreneurs and businesses from around the world. Innovative startups from incubators like Startup Chile/Y-Combinator and those who run campaigns on Kickstarter/Indiegogo get manufacturing done from China and deliver the products globally. There will be major cost saving benefits with the use of rail network and many other locations will also open up from where the train passes through. By extending the network into South Asia and South-East Asia, through the upcoming CPEC and BCIM corridors, the trade volume will increase even more significantly. The South Asian and South-East Asian markets will further open up to European trade and entrepreneurs and small scale businesses stand to benefit with this connectivity. This will allow innovators from Asia to take advantage of a more connected route and a much more reliable logistics system.
Which means an innovator from Pakistan can get products made in China and have them delivered in Europe and Asia at lower cost and much more convenience. It will also bypass some of the trade barriers that make it difficult to do business between Asian countries and with Europe.
The benefits of this are immense and with growing global trade, the opportunities for innovators, entrepreneurs and global businesses will only get better.