Forwarders seek alternatives to China-Europe rail services through Russia
Amid sanctions against Russia, forwarders are scrambling to test alternatives to China-Europe rail freight routes ...
According to the results of 2018, the United Transport and Logistics Company – Eurasian Railway Alliance (UTLC ERA) forecasts the traffic volume in a range from 275 to 280 thous. TEUs, UTLC ERA president Alexey Grom told media representatives. In 2017, the traffic volume totaled to 175.8 thous. TEUs. In 2019, it is scheduled to transport about 350 thousand TEUs.
In recent years, the volume of transit container railway transportation has increased significantly. Along with the increase of the delivery speed, the service cost reduces, which makes this type of cargo transportation even more attractive. Alexey Grom noted that at present, tariff rates for railway transit have become competitive in relation to sea transportation. The difference in tariffs between container transportation by rail and transportation by sea is less than $ 1000 USD per a 40-foot container, and taking into account the additional cargo owner’s cost savings, owing to a shorter delivery time, the railway can be an optimal solution for even greater number of customers.
Since 2015, UTLC ERA reduced the complex rate for clients by 30%. “The balance of East – West and West – East container flows served as one of the main factors of cost reduction and allowed us to reduce the complex rate for the client by almost 30% since 2015, – the speaker noted. – So, the rate was 3800 USD, and has become 2750 USD. And it will be even less, as the number of transit cargos has been increasing.” According to Alexey Grom’s words, in previous years, only 50 containers out of 100 shipped from Asia to Europe returned back, while at present the percentage of return loading is significantly higher. At the end of this year, UTLC ERA expects it at 75% level.”
Alexey Grom also told that the significant changes have taken place in the range of the goods transported by the company. In 2018, cargo owners began shipping less valuable goods regularly, such as cellulose, along transit routes. UTLC ERA president emphasizes, this trend indicates that when choosing a mode of transportation, such an advantage of container rail service as delivery speed becomes fundamental.
UTLC ERA president notes, the container transit market has great growth potential: “Transit service has never been as affordable and competitive as at present. The market is so large that there is enough space for everyone. Annually, only between South-East Asia and Europe, up to 23 million TEUs are transported mainly by sea. If the total rail transit volume by the end of this year makes 500 thous. TEUs, while by joint efforts in future years we bring the transit rate between Europe and China to one million, it will still be less than 5% of the maritime transport volume.”
To ensure the traffic volume growth, the company has considered the possibility of increasing its fitting platforms fleet. Currently UTLC ERA possesses about 4100 platforms. As Alexey Grom said, UTLC ERA strategy does not exclude the formation of assets and the creation of its own fleet of wagons. According to his words, the company considers both a purchasing alternative and a possibility of renting or leasing.
“To ensure the planned traffic volumes for the next year, we will need about a thousand more platforms, – said the company president. – Therefore, we plan to complete the year of 2019 with the matter of 5000 platforms and we will strive to ensure that we have both the volumes and a fully involved fleet of platforms.”
The proposals on the volumes and terms for increasing the platforms fleet will be submitted to the decision of UTLC ERA Board of Directors.