On 18 January, the first freight train arrived at London’s Barking terminal, after an 18-day journey originating in Yiwu, on China’s east coast. Today, Barking celebrated a new milestone, sending off the first eastbound train. The 7,500-mile journey will pass through nine countries, and undergo two transfers between standard and broad gauges before arriving in Yiwu in about 18 days.
Improvements to railway infrastructure, and increased collaboration between stakeholders along the old Silk Road as part of China’s “One Belt, One Road” initiative have in recent years made freight trains traveling along China-Europe railways a viable supply chain solution. As an increasing number of trains make the journey, the commodity mix is starting to provide clues as to what the future impact on air freight may be.
Forwarders have been quick to point out how the rail can be a sensible compromise to shippers looking to move goods faster than ocean freight, but at a price below the cost of air freight. What kinds of shippers then, buy into this offer? Hong Kong-based forwarder Kerry Logistics, has been active in westbound freight, and as of today, is booking goods on eastbound trains as well. Kerry said that westbound freight has consisted of mostly low-value clothing, shoes and consumer goods.
While it is true that Yiwu exports mostly low-value goods, other China-Europe trains originating in Chongqing and Chengdu are reportedly carrying a mix of higher value consumer electronics. US-based Information company, Hewlett Packard for one, was instrumental in launching rail service from Chonqing. At present, thrice-weekly trains depart Chongqing for Europe, filled with desktop computers and LCD screens. Railways are also working with automotive parts manufacturers to work rail freight into their supply chains.
Last year, some 40,000 containers moved between China and Europe. By 2020, this figure could more than double to 100,000 containers, as trade flows which were previously one-sided continue to balance out. In the past, rail cars were coming back to Asia nearly empty. These days however, with the Renminbi’s favorable exchange rate against the Euro and the Pound, trains are loaded on the return to Asia as well.
Karl Gheysen, an executive at Kazakhstan Railways told The Loadstar that forwarders had also tested rail-air services in Central Asian cities with underutilized belly capacity. All-cargo carriers meanwhile, have said little about how they are responding to the expanding railway. The impact of the “Belt and Road” initiative on airfreight will be addressed at this month’s Cargo Facts Asia symposium in Shanghai, 25-26 April. Executives from AirBridgeCargo, iTran Cargo Systems, Kuehne + Nagel and Silk Way Group will join a roundtable panel dedicated to the topic. To register, or for more information, visit www.cargofactsasia.com.