China’s small factories fear ‘rail Armageddon’ with orders to ditch trucks

BEIJING (Reuters) – Thousands of small factories in China, making everything from steel to chemicals, are scrambling for access to the country’s clogged rail network as Beijing curbs the use of diesel trucks in an effort to tackle air pollution.

The Ministry of Environmental Protection (MEP) last month gave tens of thousands of companies in 28 cities until Nov 1 to halve their use of diesel trucks over the winter months, when pollution is at its worst.

The ministry, in a policy document, also set more stringent, permanent targets for more than 20 power and steel companies, including Zhengzhou Xinli Power, Xingtai Iron & Steel and Hebei Risun Coke, directing them to send at least half their shipments by rail.

Trucking is a cheaper and preferred mode of transport for heavy industry in China, especially for inland companies moving goods over relatively short distances and those far from railways.

Some provinces have taken even tougher stances on trucks.

In Hebei and central Henan, some steel producers must deliver as much as 90 percent of their products via rail on a permanent basis, up from around 50 to 60 percent currently.

The moves are the latest in Beijing’s years-long battle to tackle the pollution that blankets the north as houses turn up the heat between November and March, drawing on the nation’s power plants, which are mainly fueled with coal.

China is also forcing steel mills and other factories to shut up to 50 percent of capacity across the north to try and prevent toxic air during the winter.

The truck restrictions follow bans earlier this year on transporting coal by diesel trucks in major port cities.

A shift to using more of the country’s 120,000 km of railroads, one of the world’s largest networks, is also a cornerstone of Beijing’s Belt and Road initiative, which aims to revive old trade routes linking Chinese companies with overseas markets.

The scale of the change underway is immense. Highways accounted for 77 percent of more than 43 billion tonnes of freight transported last year, compared with 8 percent for rail.

“It’s another indication of how seriously they’re taking the environmental impact, although it’s a blunt way of doing it and some trips won’t make sense by rail,” said Jonathan Beard, head of transportation and logistics in Asia for Arcadis, a design and consultancy company.

The Ministry of Rail declined to comment. The MEP and the state planner that oversees rail freight prices did not respond to…

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