News / RZD losing out as demand for China-Europe rail freight capacity grows

© Christopher Rawlins

Further opportunities are opening up for shippers seeking rail freight links between China and Europe via the Caucuses, amid a deteriorating situation for Russian operators.

In recent weeks, a slew of quotes from forwarders in China offering capacity on what has been one of the few beneficiaries of Russia’s invasion of Ukraine, the China-Caucasus-Europe rail network, have been received by The Loadstar.

The most recent, a 13-to-17-day Xian-Baku transit via Khorgos and Aktau offers box collection from Shenzhen, Ningbo, Guangzhou, Xiamen, Shanghai, Qingdao and Tianjin.

Chinese rail freight operators gained a substantial boost from the invasion, with China-Caucus-Europe services experiencing a notable uptick in demand for capacity from western shippers keen to avoid goods going through Russia.

China State Railway Group indicated China-Europe rail freight volumes continued 2023’s upward trajectory, recording a 13% year-on-year jump between January and September.

For Russia’s largest rail freight operator, Russian Railways (RZD), lost China-Europe volumes has been compounded by track chaos, with Railfreight reporting that RZD CEO Oleg Belozerov is demanding idle wagons be removed.

Citing audio leaked by a Russian anti-corruption organisation on Telegram, it claims Mr Belozerov has requested the country’s working fleet of wagons be reduced by 100,000.

Suggesting the Central Direction for Transport Management determine how to enact this, the RZD chief claimed bringing the active fleet down to 1.1m would remove some of the obstructions that caused RZD to miss out on close to a purported 200,000 teu every day.

But, even with the removal of idle wagons, the carrier is contending with locomotive shortages, compounded by western sanctions that have hobbled maintenance work.

Earlier in the year, The Loadstar reported how sanctions were biting into Russia’s ability to keep its railways running, as lubricants, bearings and electronic components are among imports western sanctions block. The lack of lubricants alone had meant some 50,000 train services had not run or been delayed.

And by May, RZD was reported to have lost as much as €500m in revenue, as it struggled to find the demand it once had, with no indications of the situation improving.