News / Supply chain relief as rail service turns land-locked Laos into a land-linked hub

The massive road freight congestion on the Vietnam-China border is causing major headaches for intra-Asia cargo flows, with planes, and now trains, helping pick up the slack.

On Tuesday, Alibaba logistics unit Cainiao said it had launched a daily charter flight between Ho Chi Minh City and Nanning to “safeguard” the cross-border logistics of e-commerce customers.

This was necessary, it said, due to the congestion on Vietnam’s border with China, where up to 6,000 trucks have been waiting over the past month, due to China’s strict Covid rules.

According to DHL Global forwarding, there are still some 2,000 trucks waiting on both sides of the main border crossing of Pingxiang-Lang S’on, causing delays of between 20 and 30 days. Furthermore, the alternative border at Dongxin-Mong Cai was also still experiencing backlogs.

However, the forwarder said, the newly launched China-Laos railway was providing some much-needed extra capacity for China-Asean trade.

Running between Kunming, China and Laos capital Vientiane, the 414km railway shortens cargo transit times to just 20-24 hours, compared with the near month-long delays on the Vietnam border, DHL said.

Steve Huang, CEO of DHL Global Forwarding Greater China, added: “We launched the China-Laos railway service in December and it was just in time. The backlogs on the road borders between China and Vietnam are not likely to clear before Chinese New Year, and it is really critical during this peak season to have the rail alternative.”

Indeed, overland routes within South-east Asia have become increasingly popular since the Covid-crisis began, and air cargo capacity was greatly reduced. Likewise, container shipping routes within the region are suffering from a lack of capacity and rising costs.

DHL said the railway had turned land-locked Laos into a land-linked hub, offering a “strong and viable” alternative to intra-Asia air and ocean freight routes, at a time when logistics costs are “at an all time high”.

For example, the forwarder said using the Laos railway for Chengdu-Bangkok cargo would be 78% cheaper and two days faster than air, Kuala Lumpur-Chengdu would be 70% cheaper with the same transit time, and Shanghai–Singapore would be 38% cheaper, but four days longer.

The railway carried 170,000 tons of goods in its first month of operating, according to China State Railway Group.