When a block train set off from Amsterdam on March 7, 2018, bound for Yiwu, China, it established yet another rail link between China and Europe. Since 2011, over 6,000 such trains have been quietly criss-crossing the Eurasian continent, carrying a range of products—from electronics and sporting goods to fresh food and car parts, among others.

The rise of this overland Eurasian freight corridor signals an important shift in the direction of trade. It used to be that, compared with their ocean-facing peers, landlocked countries in Asia struggled to create the kind of rapid industrialization that boosts living standards. Thanks to a host of infrastructure upgrades and technological improvements, however, that is changing: trains can now make an 11,000-km journey in a mere 16 days, almost twice as fast as by sea and more than 70 percent cheaper than by air. The Belt and Road Initiative (BRI) through Central Asia has also contributed to this evolution.

This article examines the old Silk Road countries in Central Asia to argue that their relative isolation is no longer an impediment to greater integration into global trade networks, thanks to improvements in rail infrastructure. The future of trade in Asia may thus be as much a dry-land story as a water-logged one.

Among the most isolated areas in the world, Central Asia has only recently started to connect with wider Eurasian trade corridors. Its geographic distance to export markets has always been a drawback but the “economic distance,” as measured by costs and ease of doing business, has been exacerbated by a number of transport-related issues since countries in the region gained independence in 1991.

Infrastructure and equipment, although extensive, have been poorly maintained due to persistent under-investment. Customs procedures and standards in many Central Asian nations are not harmonized, while clearance times, which take less than an hour on average in EU nations, can take days. The need for unofficial payments or extra security increases costs. The result is that transport prices in the region are on average three times higher than in developed countries.

And yet, given its natural resource endowments, relatively numerate and literate populations and proximity to huge markets, the region should be prospering. Many of the region’s exports are generally high-value, hard-currency-earning commodities that could be easily transported by pipeline and rail: oil, iron, steel and copper in Kazakhstan; gold, cotton and oil in Uzbekistan and gas, oil and cotton in Turkmenistan. Following in the footsteps of Southeast Asian countries in particular, they should be able to use the capital gained from the sale of these exports to develop scale-driven resource-processing and assembly-based manufacturing. However, they will need better transport and logistics infrastructure, both hard and soft, to improve trade openness and support industrial upgrading, as suggested by trade intensity data in Table 1.

The GMS’s success has been supported by wider ASEAN efforts to foster regional cooperation and integration among member nations. It also has benefited from its member countries’ proximity to trade routes, deep-water ports and a prolonged period of peace, which encourages long-term infrastructure development and an expansion in trade flows between countries.

In SASEC, meanwhile, India—by far the most dominant country in the bloc—has not traditionally had the same success in developing overland trade with its neighbors. India’s trade is mainly with other countries, with about 95 percent of India’s trade flowing via one of its many ports so overland border areas have not been a focus.

Yet there are signs this is changing. Since Narendra Modi became prime minister in 2014, India has rebooted its “Look East” policy—now called Act East—to improve connectivity with ASEAN nations. “India is playing catch-up on this but it’s now coming to the party,” says Mark Moseley, COO of the Global Infrastructure Hub, a G20-sponsored think-tank specializing in infrastructure development. “The new government is focused on infrastructure more than previous governments have been.” It will probably need to be in order to increase SASEC’s overall trade as a share of GDP, which at 30 percent is the lowest of the three regional cooperation initiatives.

The northern corridors have seen investment in railway infrastructure and terminals, an expansion in the number of destinations in China and the EU—about 35 each at the time of writing—and train service, although that still runs largely on an ad-hoc basis. Journey times have shortened by two days since 2011. As a result, cargo movements have increased—from 25,000 TEU in 2014 to 240,000 TEU in 2017. They are expected to grow further, to 636,000 TEU in the next 10 years.

According to Howard Rosen, chairman of the Rail Working Group, a non-profit organization representing the railway industry, “I think east-west trade on the rail silk routes is growing faster than a lot of people expected. It’s a cascade—as you begin to get the system working, more people know about it and more business opportunities arise. The implications are even greater for west-east trade.”

In theory, any European city can be connected with China, though trains will still need to travel via hubs like Vienna, where work is being done to lay 1,520-mm gauge track (an old Soviet standard, which has traditionally stopped at the borders of Central Asian states). This would make it possible for the trains coming from the northern corridors, which follow the trans-Siberian route, to go all the way to Austria. Right now, they have to stop at Brest, on the Poland-Belarus border, and switch back to standard 1,435-mm gauge. Variable gauge wagons also could become more common and resolve incompatibility issues.

The regional initiatives are also becoming more connected. In addition to an expansion of the northern routes, such as a project linking Mongolia into a spur that joins the trans-Siberian corridor, a number of southern routes are planned that will connect CAREC countries. These will create corridors, and expand on nascent ones, that link China to Türkiye through Kazakhstan, Uzbekistan, Turkmenistan, Azerbaijan and Georgia, as well as routes that travel through Afghanistan to connect to ports in Iran and onto Europe by rail. Eventually, rail networks in Central Asia may even link with those in SASEC countries.

It is unlikely that rail freight will soon compete with container shipping on price or on volume. It is still around three to four times the cost of ocean freight, it still represents only 1.2 percent of cargo flows between Europe and Asia by volume and just over two percent by value. But for higher-value electronics, car parts or perishable food items, the faster times and improved reliability might justify a modal shift. “Rail offers a huge amount of flexibility,” says Mr. Rosen. “Unlike with ships, you can choreograph where cargo ends up. One part of a freight train from China may stop at a distribution point, such as Duisburg, while another part of it carries on to another city, say, Antwerp. Differentiated transport is far better suited as economies become more sophisticated.”