Iran’s railways play a modest role in China-Europe rail freight traffic, serving as an alternative route to operations through Russia and along the Middle Corridor. At the same time, Iran’s railways serve as a key part of the International North-South Transport Corridor. It connects Russia to the Indian Ocean, offering quicker access to some export markets, particularly India.

International rail operations through Iran have already been disrupted due to the ongoing war, but targeted attacks on the rail network could have a more lasting impact. Following the B1 bridge strike, Israel and the United States could target the Ghotour or the Veresk rail bridges. The former links up to Türkiye, the latter is a vital part of the INSTC’s eastern branch.

Growth on the China-Europe route stands in relatively stark contrast to the developments seen in 2025. During that year, the total number of train trips grew by only 3.2% to approximately 20,000. At the same time, the volume transported fell by 1.3% to 2.1 million TEU. China saw fewer outbound trips (9,898 trips, -6.1%) and more inbound operations (10,100, +14.4%).

Chinese railway authorities have strengthened coordination and operations on the China-Europe route since the start of 2026, according to the state rail operator China Railway. Moreover, the company optimised scheduling to align with market demand. In addition, China has sought to optimise the digital port system to make customs clearance more efficient.

Impact of the Iran war

It is important to note that the China-Europe rail freight volume in January and February 2025 fell by 11% year-on-year. The current early-year increase is therefore a partial rebound of last year’s losses.

Meanwhile, it is useful to bear in mind that the data from January and February 2026 relate to the period preceding the Iran war. The ongoing hostilities in the Middle East have caused fuel prices to surge, which could push maritime rates up. Simultaneously, the conflict is exerting pressure on air freight operations.

This could bode well for China-Europe rail freight, which could bypass high-risk areas and is less sensitive to changes in energy prices. In other words, the early-year growth could continue in the coming months.

When logistics follows industry again – this time from China

In 1984, six years after China launched economic reform, Volkswagen established its first joint ventures in China. That marked the beginning of decades of successful European industrial engagement with the Chinese market.

Two years later, in December 1986, DHL Express followed the same path, forming a joint venture with Sinotrans. CEVA Logistics started active operation in China around the same period.

Logistics followed industry. As European multinationals sourced from China and sold into the Chinese market, European forwarders followed their customers. They built networks, navigated regulation and became deeply embedded in their customers’ global supply chains. Over time, China has became one of the most strategically important logistics markets.

A similar dynamic is emerging again. This time, the direction runs from east to west.

Industrial upgrading and the export shift

China’s exports surplus surpassed one trillion US dollars in 2025, underlining its continued central role in global trade. Europe remains a key destination, alongside Southeast Asia, Central Asia, the Middle East and Türkiye.

The structure of exports has changed. Electric vehicles, batteries, renewable energy equipment and advanced machinery now account for a growing share of export value. These sectors were explicitly prioritised in the 2015 “Made in China 2025” strategy. The objective was clear: move up the value chain and reduce reliance on imported core technologies.

A decade later, the shift has become visible, mostly in the automotive sector. China has been the world’s largest car exporter in volume since 2023. In parallel, German carmakers’ combined sales in China have declined markedly from their 2021 peak, with total volumes down by double digits by 2025. BMW was particularly affected, with China sales falling roughly 25–27% over the same period.

In fact, according to Merics, a think-tank Berlin, the number of product categories primarily sourced from the US and EU has halved over the past two decades. This structural transformation has direct implications for logistics.

Outbound freight volumes are reinforced by higher-value industrial exports. On the China–Europe rail corridor, for instance, the imbalance between westbound and eastbound flows has widened since 2023. That year, for every eastbound container to China, roughly 1.8 containers moved westbound. In early 2024, the ratio rose to 4.8. By 2025, it approached 7.

Similar trends can be observed across multiple modes and lanes. Such asymmetry affects pricing dynamics, equipment reposition and corridor economics. If Chinese manufacturing continues to expand in Europe-facing sectors, this imbalance is unlikely to reverse in the near term.

Chinese companies expanding into Europe

Chinese products are not the only ones moving westward. Their producers are expanding into Europe as well. Trade tensions with the United States, EU anti-subsidy measures and intense domestic price competition have accelerated Chinese overseas investment.

CATL and BYD are building factories in Hungary. JD.com has moved to acquire control of Ceconomy, the parent of MediaMarkt and Saturn in Germany. Consumer brands such as Pop Mart have opened retail stores in London, Rome, Berlin and Amsterdam.

As Chinese industries expand into Europe, logistics providers follow. Just as DHL, Kuehne+Nagel and Schenker followed European manufacturers into China decades ago.

Major players such as state-owned COSCO Shipping and Sinotrans, together with Cainiao and JD Logistics, are expanding their European presence. Investments and long-term leases are visible in port terminals, warehousing facilities, distribution centres and last-mile networks. These moves support both market entry and manufacturing setups.

Implications for European rail and forwarding

For European forwarders, this represents a structural shift rather than a temporary market cycle.

In the past, a significant share of freight volumes were controlled by European manufacturers and buyers, particularly in industrial and automotive supply chains. Procurement decisions were made in European headquarters, and European forwarders benefited from established customer relations and alignment.

Today, Chinese companies increasingly drive logistics demand. Procurement power is gradually shifting from European to Chinese headquarters.

In the short term, international forwarders with established pan-European networks remain essential. Regulatory complexity, customs procedures and labour frameworks require local expertise.

Over the medium term, competitive dynamics may evolve. Chinese exporters may prefer logistics partners aligned with their language, digital systems and decision-making speed, particularly when service quality and pricing are comparable.

At the same time, Europe’s fragmented and highly regulated logistics environment creates natural barriers to rapid market capture. This opens space for both competition and cooperation.

Invest early – secure your position

When DHL entered China, it relied on Sinotrans to navigate regulation and build local networks. Chinese logistics companies expanding into Europe now face a similar reality. They bring volume, capital and close ties to headquarters in China. They will need local partners who can provide regulatory depth, network density and established customer relationships.

Those who invest early in understanding China’s industrial strategy, corporate expansion patterns and business culture may secure long-term positioning on both ends of the trade lanes.

Not every European logistics company had the opportunity to enter China in the 1980s. This time, the strategic engagement may happen at home.

Last week, Iran reported that rail freight transit had grown by 7% to heights never seen before – exceeding five million tonnes. This is a result of traffic originating from China, but also from Russia on the North-South Corridor.

Growth despite sanctions

“The importance of this achievement is that it was achieved under the most severe sanctions and political pressures, which have certainly affected international rail transport”, a representative of Iran Railways, Shahriar Naghizadeh, told Iranian media earlier.

“Countries that transit their goods through Iran are in the crosshairs of US sanctions and European Union sanctions, and this has made our work very difficult. However, we have also multiplied our efforts to neutralise these sanctions”, Naghizadeh continued.

“This year, with the efforts made, by signing bilateral and multilateral memorandums of understanding with neighboring countries as well as with countries along the route of these corridors, and with extensive railway diplomacy, we succeeded in extracting this performance from international memorandums of understanding.

Now that sanctions and pressures have turned kinetic – we have all read the news – this success almost certainly won’t be repeated in 2026. Iran suddenly does not seem like an option for rail transit at all. The most important takeaway is perhaps not the achievement of a modest five million tonnes in transit, but rather that the development of rail corridors through Iran will face delays or become impossible altogether.

Iran was on board with transit plans

Policymakers in Tehran were ready to accommodate more rail transit through the country. In November, RailFreight.com reported that Iran was considering building a new 200-kilometre railway to Kars, Türkiye, to facilitate traffic to Europe.

Türkiye, Iran and Pakistan also pursued reopening the Istanbul-Islamabad railway, which should have been launched by the start of the year. The aim was to provide a more economical and faster alternative to sea routes. Iran’s ability to revive these plans depends on a new status quo, whenever that may emerge.

However, they can also be sent southwest to the Kazakh ports of Aktau and Kuryk on the Caspian Sea, along the so-called Middle Corridor. Goods are then moved by ship to Baku, in Azerbaijan and continue their rail journey to Georgia. Once in this country, goods can be continued to be moved by rail through Türkiye or again by ship across the Black Sea and enter Europe via Romania, Bulgaria or Ukraine.

Steady growth since 2017

Since 2017, both routes have experienced significant growth in rail freight traffic, both in terms of TEUs and total tonnes moved. A first glance at the numbers already shows how the two routes have been used for different transport needs. The route to Małaszewicze has seen a much higher number of TEUs but proportionally lower figures for the total tonnes, compared to the Middle Corridor route.

For the China-Kazakhstan-Poland connection, TEUs handled have more than doubled over the past 7 years. From 175,102 in 2017 to 380,434, with the highest spikes during the years of the COVID-19 pandemic, especially 2021. With the still ongoing Russian invasion of Ukraine of 2022, however, TEUs have declined and are still below 2020 levels. Total tonnes moved between the China-Kazakh border crossings and Małaszewicze followed a similar trend, more than tripling over the time span analysed.

The Middle Corridor, on the other hand, deals with much fewer TEUs but a higher weight load than the route to Poland. Still, the pace of growth along this line is just as impressive. Between 2017 and 2024, TEUs have grown more than sixfold (despite remaining much lower than its counterpart), while total tonnes have risen more than two and a half times, for a total of more than 3,3 million last year.

Another index of the Middle Corridor’s growth is the number of container block trains, which went from 11 in 2023 to 358 last year and expectations to go over 400 trains in 2025. Surprise, surprise, Kazakhstan is partly behind this too. One of the main drivers behind the increase of container traffic along this route is the Xi’an Dry Port, located in the heart of China and co-managed by Kazakhstan.

More trains = more bottlenecks

Kazakhstan is actively pursuing a role as a key transit country for Asia-Europe trade flows, and therefore wants to eliminate bottlenecks that hinder freight flows. After all, infrastructure capacity constraints are the primary limitation along the Middle Corridor. In 2024 and 2025, Kazakh border crossing points (BCPs), especially Dostyk and Altynkol, struggled with increased traffic. For instance, China-Europe traffic through Altynkol surged by 28.3% in Q1 2025, partly due to the Red Sea crisis diverting more freight to rail.

This led to chaotic situations, with shipments stuck for up to a month. Kazakhstan attempted to alleviate pressure by moving freight from Dostyk to Altynkol, but Altynkol also faced backlogs. Ultimately, Kazakhstan resorted to banning certain wagon types at BCPs to ease the situation.

In other words, more trains means more congestion. As a result, the average time to clear a border crossing point has gone up substantially in recent years. Since 2018, there has been a clear trend of Kazakh BCPs operating slower and slower. At the same time, the cost of crossing BCPs has remained largely unchanged.

Kazakhstan is now working to future-proof itself: it is working on a third border crossing, it plans to modernise the Altynkol border crossing and has doubled the maximum allowed amount of passing trains at Dostyk (from 14 to 28) and Altynkol (from 8 to 15).

Slower and more expensive

The success of the Middle Corridor, and of Kazakhstan as a transit country, also depends on its ability to remain competitive and offer speed. Here too, there are obstacles to be overcome.

The average cost to move 20 tonnes of freight via rail over a distance of 500 kilometres in Kazakhstan has also increased since 2019. Despite reaching a new peak in 2023 (more recent data is not available), it had not yet surpassed all-time peak year 2014. Between 2011 and 2014, the cost of rail freight in Kazakhstan skyrocketed. According to monitoring organisation CAREC, that was a result of a number of tariff increases.

In 2025, we saw another such increase. Infrastructure manager KTZ slapped an additional 35% on freight tariffs in April. As a result, say private Kazakh companies, the tariffs doubled between 2021 and 2024.

With more congestion and lower average speeds, those added costs are not providing a better quality of service. Perhaps the sector will just need to wait for key improvements in BCPs, port terminals and along vital railways to complete.

The geopolitical factors contributing to the gloomy picture drawn between 2022 and today are well known and require no further introduction or analysis. Despite some brief upticks in rail traffic and volumes resulting from disruptions in sea shipping, Eurasian rail remained flat in terms of development and growth. Flat remained also the sentiment regarding the industry’s future, to say the least.

Nevertheless, the patience and agility shown by operators and forwarders during this time, and the not-so-loud but gradual, methodical and targeted evolution of the corridor, are now becoming visible, all the more after some recent developments in late November.

Commitment as strong as ever

During the European Silk Road Summit 2025, organised by RailFreight.com in Milan, several things stood out from the fruitful discussions and exchanges. To avoid an extensive list, let’s focus on two highlights and see how they correlate with the latest news from China.

Highlight number one concerned the competition with maritime transport. Decreasing rates and overcapacity could mean Eurasian rail’s market share shrinks in the coming decade. However, this might not be the case if things are put into perspective. China-Europe rail was never intended to compete directly with maritime transport. Instead, as many conference participants underlined, its competitive advantage lies in serving niche, high-value markets that require fast transit times and safety rather than competitive prices.

Highlight number two, and probably the most important, is that no matter the competition, China’s political commitment to developing Eurasian rail is as strong as ever. That was underscored by Yingnan Yao, China-Europe business analyst, who explained that China will not simply give up on its Belt and Road Initiative goals due to a series of hiccups. On the contrary, Chinese policy is fully focused on developing Eurasian rail routes and trade, and since this commitment is in place, Silk Road rail will continue to flourish.

Full timetables prove commitment

While those discussions were taking place in a conference centre in Milan, the second China Railway Express Cooperation Forum was held in Xi’an, and this forum brought forward some news. To put it simply, for some time now, China has been moving away from dispatching westbound freight trains at random and has implemented a fixed, full timetable with predictable booking, departure, and transit times.

The critical development in this case is that the timetable was just enriched with seven new routes, as seen below. These updates bring the total to seventeen scheduled China–Europe freight services. Each year, over a thousand trains operate on set timetables, connecting nine cities in China with six destinations in Europe.

New timetable routes:

• Zhengzhou – Hamburg
• Xi’an – Prague
• Jinan – Budapest
• Chongqing – Budapest
• Xi’an – Budapest
• Changsha – Poznań
• Shijiazhuang – Warsaw

Full-schedule train links Xi’an to Česká Třebová

Does this development indicate a shrinking or growing market? In moderate terms, it might not indicate an aggressively growing market, but it could signal a market that is here to stay and will provide stability and more options for its customers.

Forget maritime competition

During the second China Railway Express Cooperation Forum, Nguyen Chinh Nam, deputy general director of Vietnam Railways Corporation, commented that “the rapid development of China-Europe freight trains expands international logistics capacity, offering diversified transport options and reducing reliance on maritime routes”.

At the same time, Guo Zhuxue, chairman of China State Railway Group, underlined that operating with full timetables has reduced travel time by over 30% on average, while also cutting rail rates by over 40% since the service’s inception. And customers are happy because of that, as voiced by Yuan Gen, vice general manager of Shaanxi Konka Smart Home Appliance Co., Ltd., a regular China-Europe rail customer who has seen rail slashing shipping time from 45 days by sea to just one or two weeks, accounting currently for over 60% of the company’s export volume.

Other industries benefiting similarly include new energy vehicles and machinery, for example, and, in general, high-value cargo. All in all, the message in this case is quite clear. Forget maritime competition and focus on critical industries that are here to stay and benefit from premium rail service.

Rail will not overtake maritime transport, and as mentioned before, this is not the aim. The aim is to function as a constantly developing transport and trade backbone, a great alternative, but most importantly, the first option for industries that really matter. And if everything goes according to plan, it will eventually become the first choice for more customers.

Iran currently has one rail corridor to Türkiye. It runs from Marand to the Turkish city Van, but that is where rail infrastructure ends. The Marand-Cheshmeh Sorayya railway would also not directly link to Turkish rail, since there is none on the other side of the border. However, officials from both countries met in April to discuss an extended connection to Kars.

Türkiye is working on a railway from Kars to the Azerbaijani exclave Nakhchivan, which borders Iran. It is possible that this new Iranian railway will, in due time, link up to that corridor. That would secure a rail-only corridor from Iran to Europe, facilitating China-Europe traffic along the southern overland route.

“We are already observing growing international interest in the Middle Corridor for its strategic role as the land bridge between Asia and Europe and interest goes beyond on the infrastructure”, explains Nussupov. That includes policy coordination and trade facilitation, and yes, not just with China.

“So, from our side, trade reforms, infrastructure upgrades and digital innovation will help to attract more European and Chinese stakeholders that will hopefully position our country as the central player in future Eurasian trade”, adds Nussupov.

International interest creates Kazakh wins

Players from both east and west are taking an interest in the Central Asian country. The Chinese, for example, are involved in developing the Khorgos Eastern Gate port logistic terminal on the Kazakhstan-China border, a key node on Asia-Europe transport routes.

The Europeans help Kazakhstan and other Central Asian countries simplify trade documentation, harmonise customs procedures, and train officials and SMEs in a digital trade environment through the EU-funded Ready4Trade programme.

Those efforts, as well as hard infrastructure investments, not only contribute to streamlining logistics along the China-Europe route, but have another impact as well. “Better infrastructure along the Middle Corridor is creating new business opportunities for Kazakhstan’s companies and investors abroad, so we are becoming not just a transit country but also a growing trade partner and production hub.

Geoeconomic transformation

In that way, the investments in infrastructure pursue a “strategic geoeconomic transformation of trade flows and supply chain connectivity”, in the words of Nussupov, who identifies three key ‘wins’ for Kazakhstan: lower logistics costs and faster capital turnover can boost agricultural exports, enhance transit and stimulate domestic growth.

“These new developments enable Kazakh producers to access European and Chinese markets more easily”, says Nussupov. To illustrate, the investments help facilitate imports of high-tech and industrial equipment from Europe to support Kazakh domestic production and strengthen the country’s supply chains. In other words, the corridor is becoming a two-way channel for trade and investment, rather than just a transit route.

As for agricultural exports, Kazakhstan sees many European officials visiting the country to talk business, especially regarding the alignment of regulations. After all, when it comes to Europe, “we have to be at very high standards”, explains Nussupov.

Lastly, the investments, which also include upgrades at the Caspian Sea ports of Kuryk and Aktau, key railways like Dostyk-Moyynty and border crossings, boost the performance of rail transit.

Good old transit

That brings the discussion back to what the Middle Corridor is known for: transit on the China-Europe route. Regardless of the skepticism of Europeans, Kazakhstan sees a positive trend and expects even more in the future.

Previously, shipping freight along this route took 38 to 53 days, depending on border delays and congestion. As of October 2025, that time has been slashed to just 19 to 33 days, with plans to further reduce it to 14 to 18 days. In one notable instance, says Vice Minister Nussupov citing the World Bank, a shipment even completed the journey in just 13 days. The Kazakh segment of the route, from the border crossing at Dostyk to the Aktau port, now takes only five days.

Trade volumes are also on the rise. In 2020, the corridor handled around 1 million tonnes of freight. For 2025, the target is 5 million tonnes, with expectations to reach 11 million tonnes annually by 2030.

More money in exchange for certainty

This perhaps unlikely success comes amid a changing global logistics landscape. Nussupov points to a paradigm shift that began after the covid pandemic. “The first significant event was the Suez canal blockage which showed how easily global trade can be disrupted and how important it is to have alternative and reliable routes.”

“I remember the Baltic Dry Index rising up to the 5,000s. Reliability has now become the new currency of logistics.” The consequence is that companies now prefer to pay a bit more for a guarantee that goods will arrive on time, without unexpected delays or political risks along the route.

Many companies prefer to pay a bit more for the guarantee that their goods will arrive on time, without unexpected delays or political risks along the route. In this environment, the Middle Corridor is not just an alternative, but a strategic route that combines speed, safety, and sustainability. So I think that in this environment the Middle Corridor is not just an alternative, but a strategic route that combines speed, safety and sustainability.”

Kazakhstan sees digital transformation as a key driver of economic growth, technology and global integration in the coming years, explains Vice Minister Nussupov. “Digitalisation is considered the cornerstone for modernising trade procedures and enhancing global competitiveness. For a landlocked country like ours, efficiency, transparency and predictability are crucial for successful trade and transit”, says Nussupov.

Officials from various ministries are working together to improve trade, including transport and logistics operations, through digital initiatives. Kazakhstan is looking to build “a national digital ecosystem for trade, allowing exporters, importers, and logistics companies to interact through a unified digital environment.”

Smart Cargo Platform

A case in point is the new “Smart Cargo Platform”, a system to integrate all rail customs, logistics, transport services, and companies into one digital ecosystem that was launched in September. “This single portal allows exporters, importers, and carriers worldwide to submit documents electronically, benefit from automated risk management, and track cargo in real time”, says Nussupov.

The Smart Cargo project connects customs, ports, and railways in one digital system to track goods in real time, cut paperwork, and make logistics faster and more predictable, the Vice Minister explains. By 2026, it should facilitate a complete transition to paperless technology, integrate with the systems of neighbouring countries and offer a host of business services.

That could be a big improvement for rail operations in Kazakhstan. It is too early to draw conclusions, since the platform has been online for just a couple of weeks. However, it is no secret that paperwork and regulatory complexity are big obstacles for companies operating on the China-Europe route. The platform could ease the administrative burden and help comply with regulations.

Cooperation with the EU

Beyond the Smart Cargo Platform, Kazakhstan participates in various international digitalisation initiatives. For example, the EU-funded Ready4Trade Central Asia programme helps Kazakhstan and neighbouring countries to simplify trade documentation, harmonise customs procedures, and train officials and SMEs in a digital trade environment, says Nussupov. “This initiative facilitates the adoption of electronic certificates of origin and digital customs forms, significantly reducing time and cost for businesses.”

Kazakhstan is also involved with the UN Centre for Trade Facilitation and Electronic Business and the Central Asia Regional Trade Information System (CARTIS). The latter is an inter-agency initiative to harmonise trade data flows across institutions. It is still under development, but it is very promising and will further support Kazakhstan’s digitalisation roadmap, adds Nussupov.

The country’s transformation policies are a serious effort. The country now ranks 8th in the world on the digitalisation of government services. When it comes to trade and logistics, there is still some way to go. “I think that major changes don’t happen overnight”, says Nussupov, “so we started this process and we hope our efforts will make us stronger and better prepared to face challenges together with our partners.”

Recent years have been more challenging for rail service to the east. Following the Russian invasion of Ukraine, many shippers no longer wanted to transport their goods via Russia or were prohibited from doing so due to sanctions, even though a large portion of the route runs through that country.

Acquiring company Claassen Logistics believes the forwarding service to and from China “fits in perfectly with its existing logistics service offering.” The operations will be transferred to Coastlink, the international division of Claassen Logistics, which operates in sea, air, and rail freight, including customs clearance and forwarding.

European Silk Road Summit

China-Europe rail traffic will be a key topic for discussion at the European Silk Road Summit. Join us in Milan on 19 and 20 November to talk Middle Corridor developments, Eurasia market trends, important digitalisation projects and much more. Check out the programme here and get your ticket here.

This article was originally published by our sister publication NT.nl.