Consultant Insight: Growth in China-Europe rail gives multimodal options

Introduced in 2013, China’s Belt and Road initiative is aimed at connecting more than 70 countries across Asia, Europe and Africa via a “New Silk Road” of railways, highways and ports. The latest country to join is Turkey, which recently saw its first freight train from the country carry 42 containers of major appliances destined to China. Originating in Prague, Czech Republic, the route connects Turkey to Xi'an in central China. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Turkey’s first freight train to China was operated in collaboration with the General Directorate of Turkish State Railways’ (TCDD) official forwarder firm TCDD Tasımacılık A.S. and Pasifik Eurasia. According to Chinese news agency Xinhuanet , Xi'an launched its first China-Europe freight train in 2013, and has made 3,400 journeys and carried 2.6 million tonnes of goods in the first 11 months of this year, almost double from the same period last year according to the Xi'an International Trade & Logistics Park. As of Nov. 5, the number of total China-Europe freight trains hit a record high of 10,180 this year, according to data from the China State Railway Group Co. The trains shipped 927,000 TEUs of cargo, up 54% year over year. To create more supply chain flexibility in Asia/Europe routing options in response to COVID-19’s impact, ocean carrier Maersk announced in November it would increase weekly departures to two per week in its AE19 service. The AE19 service is a combination of a short-sea and intercontinental rail product between ports in Korea, China and Japan, and Northern European ports in Finland, Poland, Germany and Scandinavia. “The pandemic has triggered some trade bottlenecks in Europe that we can help solve by offering to our customers higher levels of supply chain management: e.g., further developing rail into a cost-efficient, reliable and scalable mode of transport between continents, creating fall back options which seems to be crucial in crisis situations,” explained Zsolt Katona, Maersk managing director for Eastern Europe. However, according to a Journal of Commerce Container Trade Europe webinar on Nov. 30, Markus Panhauser, DHL Global Forwarding’s head of ocean freight Europe, said that with China-Europe rail services near full capacity, shippers should consider using overland trucking instead, which was proving faster than trains. Marketed as an alternative to the more expensive air and quicker than the ocean freight transportation service, China-Europe rail services are witnessing capacity constraints similar to air and ocean primarily because of container shortages and European demand for Chinese goods. Indeed, trade between Europe and China has increased this year, primarily due to COVID-19-related demand for personal protective equipment (PPE) goods and inventory replenishment impacted by the pandemic. According to European Union trade data for the first nine months of this year, Chinese-EU trade was 425.5 billion euros, or about $516.8 billion, overtaking the U.S. as the EU’s main trade partner. Chinese imports to the EU increased by 4.5% while exports remained unchanged from January to September. EU trade with the US noted an 11.4% decline in imports and a 10% decline in exports.

Consultant Insight: Growth in China-Europe rail gives multimodal options

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