Existing trade routes between Europe and China (authors’ construction, based on Kabashkin, 2012, Tavasszy et al., 2011) 

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... significantly during recent decades. The rapid development of East Asia countries, especially and the East Asia. These positive trends are accompanied by situation that transport costs are expected to increase due to rising oil prices, increased congestion around ports and economic centres, and public policies aimed at internationalizing the external costs related to transport (Tavasszy, Minderhoud, Perrin and Notteboom, 2011). The main route between China and Europe is water way via the Suez Canal. One of the alternative routes that could be developed in the future is the rail land bridge between China and Europe, e.g. rail route from the North-West China to Europe through seaports of Riga in Latvia. The opportunity to develop rail route from the North-West China through seaport in Latvia or other Baltic countries (Estonia and Lithuania) has not been sufficiently studied so far. This option becomes relevant because of rapidly progressing development of economy in the continental Western part of China that appeal to set up some new transportation patterns instead of the traditional sea transportation used usually during the recent decades (Kabashkin, 2012). Kabashkin (20 12, p.37) argues that “Baltic countries (Estonia, Latvia, and Lithuania) due to the external circumstances have an unique opportunity to complete their mission of being an important linking element between two major economic unions (the European Union and the Customs Union of Russia, Kazakhstan and Belarus) in the frameworks of the Trans- continental international logistic chain”. The Baltic countries could provide beneficial international freight transit route between continental China and Europe because it is shorter and faster for transportation of goods from Western China to Europe by rail than to transport goods, firstly, to the seaport in the Eastern part of China and, secondly, then to Europe using the sea transport. The aim of this study is to investigate opportunity to develop trading route from the North-West China to Europe through seaport of Riga in Latvia (the “New Silk Road” N orthern branch). The monographic method, the statistical analysis, expert method and a case study are applied in this study. As a case the first demonstration container block train from China to the European Union (via seaport of Riga) is analyzed. dispatched from Urumqi (the North-West China) station and travelled 6000 kilometers in 8 days to reach the Riga Container Terminal, then containers were trucked to the warehouses in Hamburg (Germany). Focus group discussion with 8 experts was conducted to get in-depth knowledge about East-West rail corridors between China and Europe and development of the “New Silk Road” N orthern branch via seaport of Riga in Latvia. There are numerous studies on container transportation issues between seaports of China (mostly Shanghai) and Europe (mostly Rotterdam, Antwerp, Hamburg), but there are lack of studies where container transportation between Western part of China and Europe are investigated. Nowadays the main route in trade between Europe and China is the Suez Route, but other alternatives are the East-West rail corridors, the Cape Route and the Northern Sea Route, see Fig. 1 (e.g. Lee et al., 2014; Notteboom, 2012; Kabshkin, 2012; Wang and Meng, 2011; Kopytova and Abramov, 2012; Tavasszy et al., 2011; Verny and Grigentin, 2009). Over the last 50 years, the upgrading of the Suez Canal undermined the competitive position of the alternative routes between the Asia and Europe. Due to the increasing congestion in the Suez Canal, changes in climate and energy policy, security threats linked to piracy near Somalia and the Gulf of Aden, the alternative routes, as the East-West rail corridors, the Cape Route and the Northern Sea Route, are developed for transportation of containers between Europe and the East Asia. Notteboom (2012) argues that for container vessels operating on the Europe-Far East trade, vessel for rerouting via the Cape Route is an expensive solution, because more vessels are needed to guarantee weekly call in each port along the loop, as well as additional voyage and bunker costs, additional cargo inventory costs would not outweigh the saving in Suez Canal fees and security costs. The main advantage of the Northern Sea Route is that it reduces the length of voyages from North Asia (e.g. seaports of Japan, South Korea, and China) to the Northwestern Europe (e.g. seaports of Hamburg, Bremen, and Rotterdam) by about 2500 nautical miles; this translates into a gain of approximately 10 days, which is one-third of the time required for maritime transport by the Suez Route (Verny and Grigentin, 2009). There are no regular container lines on the Northern Sea Route yet. Tavasszy et. al. (2011) have identified in their study by applying scenario analysis, firstly, that the costs linked to the routes (e.g. from Shanghai to Hamburg) using the railway link are higher than on the all-water routes, but the transit time is lower, and, secondly, this route is relatively price-sensitive, and the flows are larger in the direction from Asia to Europe. Kopytov and Abramov (2012), applying multiple- criteria analysis and calculating different routes between Shanghai and Moscow, have found that advantage of different sea routes is the lower costs than by rail, but advantage of rail route is significant time savings – approximately two weeks. Verny and Grigentin (2009) conclude in their study that shipping route through the Suez Canal is still by far the least expensive option, the Northern Sea Route and the East-West rail corridors appear to be roughly second-tier alternatives. Significant problems in China are regional imbalance in its economic development and transport congestions (Lu, Chen, Zhu and Xu, 2013). Development of rail route between Europe and China can serve to overcome the congestions to the seaports of China, as well as heterogeneity among regions in China facilitating development of the North-West China (especially the Hinjiang province). The railway route China-Kazakhstan-Russia-Belarus-Poland-Germany is called “New Silk Road”, because this route has similar ideology as an ancient “Silk Road” and its geographi cal origins are similar – significant crossroad is Urumqi city in the Hinjiang province, see Fig. 2. The Silk Road trading route had been opened at least since 130 B.C. and it had been well-established trading corridor (Toniola, D’Amato, Saccenti, Gulotta, and Righetti, 2012). China exported silk fabric, whose production was then a Chinese secret and monopoly, and in return obtained horses and other trade goods (Kotker and Fitzgerald, 1969). Rail freight routes between China and Europe have become a real alternative to the traditional Suez Route in recent years. It has become possible due to the investments in rail infrastructure, growing demand for those freight transportation solutions and development of production in the Central and West China. The two main rail corridors with regular freight traffic operate to connect China and Europe. Firstly, the Trans-Siberian rail is used to connect Northeast China and Europe (China-Russia-Belarus- Poland-Germany). Secondly, existing route China-Kazakhstan-Russia-Belarus-Poland-Germany are used for freight logistics (so calle d “New Silk Road”) . The rail route from the North-West China to Europe through seaports of Riga in Latvia could be called “New Silk Road” N orthern branch (China-Kazakhstan-Russia-Latvia) because this route has similar ideology like ancient “Silk Road” focused on trade relations between China and Europe, it is no rthern branch in existing, so calle d, “New Silk Road” and geographical origins in China are similar – important crossroad is Urumqi city in the Hinjiang province. Alternative seaports in the European Union could be found also in Estonia (seaport of Tallinn) and Lithuania (seaport of Klaipeda) which are neighboring countries of Latvia. The seaport of Riga is analyzed as a case in this study because it is the shortest way from the North-West China to the seaport in the European Union. The seaport of Riga has been the largest seaport in Latvia, and it has been the biggest seaport in ...