How A Company Called Unit 45 Revolutionized China-Europe 'Silk Road' Rail Transport
Solving one of the Silk Road's biggest problems.
Around 2012 it became clear that "Silk Road" rail transport between China and Europe had a problem. The logistical apparatus was all set up, the political arrangements were in order, the customs protocols were coordinated and streamlined, and demand from customers wanting to use the service was cultivated. Everything was in place for the years of beta testing to come to an end and squadrons of regularly scheduled cargo trains to start traversing the 12,000 kilometer expanse between China and Europe, offering a solid middle ground solution between shipping goods cheaply but slowly by sea and quickly but costly by air, except for one pernicious element: weather.
If you look at a map of the emerging overland trade corridors of the New Silk Road you will see that the northern and central routes go through Siberia and Kazakhstan, respectively — places that have winter seasons that could serve as defacto definitions of cold.
This problem is especially pronounced as the products that are shipped by rail along these routes are typically high-value and temperature-sensitive, such as electronics, sophisticated machinery, and perishable foods. You simply can’t ship computers across the remote expanses of Siberia when it's negative 40°C; you can’t transport fresh meat without adequate temperature control; you can’t send high-end produce across a continent in frigid conditions; and a standard refrigerated or heated container would need to be refueled many times between China and Europe, which is simply not possible on a direct train whose main selling point is speed.
So Ronald Kleijwegt of HP, the mastermind behind the trans-Eurasia rail product, began looking for solutions. In 2012, at a seminar in Europe he crossed paths with Jan Koolen, who ran an innovative, Netherlands-based shipping container manufacturing firm called Unit 45. Ronald told him that he was looking for a container that would allow him to ship HP’s electronics overland between Chonqing in China and Duisburg in Germany a full 12 months a year, without needing to pause for winter.
At that time, Unit 45 had heated diesel/ electric units that were being used for road transport, but these only had 250 liter tanks — inadequate for the two week journey across Eurasia.
“So then I sat together with my technical guy and I said, 'Is there another solution?” Jan Koolen of Unit 45 told me.
A Unit 45 climate controlled shipping container. Image: Unit45.com.
With this question a new type of self-supporting shipping container was born that would spare no amount of technological sophistication.. Far from being mere 45 foot long steel boxes, they would be equipped with 800 liter diesel tanks that could both heat and cool its interior for at least 22 days without refueling — more than enough time to cross the expanse between China and Europe. They would run on a thermostat-like system, where a desired temperature would be programmed in, heating or cooling as necessary and shutting off to conserve fuel when not needed. These containers could also be controlled remotely, allowing operators in control centers or even clients from their laptops to monitor or change the target temperatures, GPS enabled so that their locations are known at all times, have light-triggered alarm systems, and provide real-time diagnostics every step of the way.
Currently, 550 of Unit 45's self-supporting climate controlled containers are in operation, plying the various new trade corridors which span Eurasia, allowing not only temperature-sensitive products to be shipped year-round but also enabling additional types of products to be shipped by rail that wouldn't be possible otherwise. Besides high-value products being shipped from China to Europe, one of the biggest impacts of Unit 45’s new containers is that they also open more possibilities for the high-end European-manufactured products which the new Chinese middle and upper classes are hungry for — like baby power, less-contaminated produce, and higher-quality meat — to be shipped to China.
“For example, there are some people that would like to export fresh meat, let's say veal from the Netherlands to China. Nowadays they do that by boat. They freeze it down, and of course if you freeze veal one of the things that's going to happen is the price will go down, because fresh meat is more expensive than frozen meat,” Koolen explained. “If we are able to transport the meat by rail we are able to do that in 14 days, and if you are able to do it in 14 days then you are able to sell fresh meat over there. Of course, you can also do it by air but the cost will be five or six times more than rail.”
A stack of Unit 45 climate controlled shipping containers in Lodz, Poland, a prime depot for China-Europe trains. Notice the large diesel tank in the foreground. Image: Wade Shepard.
Currently, the cost to operate a Unit 45 climate controlled container is relatively marginal when weighted against the value of the merchandise they often contain and the money they save over expensive air freight. Koolen says that they rent them out on five year contracts for $28 per day. Combining that with the cost for diesel and the $4,000 or so that it currently costs to ship a container by rail between China and Europe, and the bottom line price is remarkably attractive to transport a niche segment of high-value goods.
When I asked Kees Kuijken of New Silk Way Logistics, a joint venture that was formed specifically to ship goods from Europe to China via rail, about the degree to which Unit 45’s self-supporting containers are impacting his business, he replied without hesitation, “Very much.” He then added:
“It's not only for goods that need to be temperature controlled but also in winter time where differences in temperature can be enormous, which would lead to condensation in the containers, that can also be avoided with these containers.”
However, there are obstacles. The biggest impediment in the way of Unit 45's complete revolutionizing of trans-continental rail transport is political, rather than logistical, technological, or economic.
“The big problem that we fact is that there are still sanctions in Russia to move perishables over from Europe to China or Europe to Kazakhstan, through Russia. That's the bottleneck at the moment,” Koolen declared. “We hope that in the future the sanctions will disappear, and if the sanctions disappear then I think we will have a kind of balanced trade between China and Europe, with a lot of perishables to China and a lot of computers and other stuff from China to Europe.”
I’ve come across Unit 45's self-supporting containers on many occasions over the past two years that I’ve been traveling the emerging trade routes between Europe and China. They only look like elongated steel boxes with a cooling unit and a big black diesel tank, but this belies the fact that they are highly-sophisticated pieces of technology that’s opening up new markets and making the transport corridors of the New Silk Road actually amount to something.