Rail services now the smartest way to get product from China to Europe
As China’s factories begin to restart production, albeit slowly, desperate shippers are being urged to ...
The first train from the UK to China left London Gateway today, heading for Yiwu, where it is scheduled to arrive on 27 April, with 30 containers carrying whisky, soft drinks, vitamins and pharmaceuticals.
Rail services between Europe and China have seen a surge in volumes as services grow and shippers take advantage of the cost and speed benefits available.
Volumes in March were up 140% on last year, while first-quarter volumes of 30,600 teu nearly matched the fourth-quarter peak, according to United Transport and Logistics Company (UTLC), an intermodal freight operator set up by the national railways of Russia, Belarus and Kazakhstan.
“Despite the Chinese New Year celebrations, which normally cause decline in demand for transport in the first months of a year, first-quarter volumes are close to the 36,600 teu transported in Q4, and exceed the third-quarter result of 29,900 teu”, said Alexey Grom, UTLC president.
The company said much of the growth was due to a launch of regular shipments in partnership with DB Cargo Russia.
There has been considerable growth in interest in the rail freight option. UK forwarder Davies Turner introduced a fixed-day, weekly rail service for LCL shipments from Wuhan and Hefei, into the UK and Ireland.
Chairman Philip Stephenson said: “We had been investigating the practicalities of a rail freight service from China to the UK and Ireland for some time, and conducted trials last year, before officially launching the service in January.
“We knew there were operational difficulties to overcome, such as transitions from standard to broad gauge track and back again, but we are confident that this has been achieved by our partners and the rail companies concerned.
“The big selling point is that the cost is around 70% less than shipping the cargo by air, and 16 days quicker than by sea.”
The service takes 21 days from Wuhan, 23 days from Hefei and 25 days to Dublin.
Meanwhile, on the eastbound leg, Hong Kong-based Kerry Logistics claimed it was the first Asian 3PL to offer backhaul capacity.
William Ma, group managing director of Kerry Logistics, said, “We are extremely excited to be the first Asia-based global 3PL to move eastbound freight from Europe along the One Belt One Road trade route, turning part of the roadmap into reality. We are committed to developing an overland transportation network for road, rail and multimodal freight services in China to Central Asia and Europe.”
There has also been some concern, from the air freight sector in particular, that the rail option would take significant chunks of market share. But Nick Platts, head of Heathrow Cargo, said at last week’s Multimodal event that he didn’t believe air would suffer.
“Rail can’t offer the speed and reach that air can. And if you are worried about security, you have to give the volumes to air. On a train, the cargo has to be handled a number of times when the gauge changes. I think ocean will have more of a problem than air.”
But Karl Gheysen, former chief executive of Kazkhstan’s inland port of Khorgos Gateway and now executive at Kazakhstan Railways, said: “Air freight will be more affected than shipping and the perception of security is much worse than it actually is.”
He said Hewlett-Packard now accounted for 30-40% of total capacity and car makers were testing the service.
There has also been considerable growth in the use of reefer containers and Mr Gheysen said companies were starting to look at certification for carrying temperature-sensitive pharmaceuticals, while Alibaba and postal services were also eyeing rail as an option.
He added that he had also seen some rail-air services.
“We tested it with KLM via Almaty to Amsterdam. KLM had empty bellies, so we did some trial shipments. It’s a good back-up option. There are lots of opportunities and ideas.
“2017 will be the year that China-Europe rail takes off,” he added.