Red sea crisis highlights vital role of China-Europe rail freight

Interest in cross-border services increases due to concerns over shipping delays, costs

By LUO WANGSHU | CHINA DAILY | Updated: 2024-04-08 07:00
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Gantry cranes hoist China-Europe freight train containers in Xiliin Gol League in the Inner Mongolia autonomous region, on Oct 18, 2023. YANG JINYE/FOR CHINA DAILY

Freight forwarders have turned to rail services between China and Europe, backed by the Belt and Road Initiative, as a transportation alternative in light of disruption to international shipping caused by the Red Sea attacks, emphasizing the rail route's strategic importance in stabilizing global supply chains.

Houthis in Yemen have been attacking commercial ships "affiliated with and bound for Israel "since November in what they described as an act of solidarity with Palestinians in the Gaza Strip. Their actions have raised the risks for transportation companies moving cargo through one of the world's busiest shipping lanes, resulting in a surge in rates and lengthy delays.

Some smaller-volume goods have shifted to rail transportation, notably on the China-Europe railway line, where the capacity to transport goods from China to the continent has increased significantly from the pre-crisis level, according to a recent report by Fitch Ratings.

"Since January, the number of inquiries (about the China-Europe freight train service) has soared by more than tenfold, and the actual export volume of goods has increased by three to four times," said Kong Weidong, head of the Zhengzhou branch of the T.H.I. Group (Shanghai) Ltd, a freight forwarder.

The cross-border rail freight service takes about 12 to 18 days to reach European destinations from Chinese cities at a cost of about $6,500 per container, Kong said.

Kang Yingfeng, deputy general manager of China Railway International Multimodal Transportation, said there had been a significant increase in inquiries about the China-Europe freight train service since the beginning of this year. CRIMT is the national operator of the China-Europe freight train service and a subsidiary of China Railway Container Transport.

A new China-Europe freight route combining rail and ocean transportation that crosses the Caspian and Black seas has attracted strong interest, he said. The service also passes through countries such as Kazakhstan and Georgia before reaching European countries.

"Chinese, European, and American customers, as well as large international logistics companies such as DHL and Kuehne+Nagel, have shown strong interest in the new route passing the transcontinental maritime routes, attracting freight from China to Georgia, Turkiye, and Central and Eastern Europe, as well as Southern Europe," he said.

DHL said requests to move goods on the rail service to Russia had increased by about 40 percent since container ships began diverting via a longer route in December, The Financial Times reported last month.

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