October 20, 2020
As part of the 'Coffee with Crane' podcast series, our team spoke to rail freight expert, Marco Reichel, Business Development Director ASPAC.
Marco is based in Shanghai, China and discusses the rail freight cargo option from China to Europe and Europe to China as a reliable transportation method for shipping your goods from Asia to Europe and Europe to Asia.
Rail freight transportation is fast becoming a cost effective solution for cargo movements. Read more...
I think rail freight is a viable option in addition to air freight and ocean freight from China to Europe. Air Freight tends to be costly for shippers and expensive for the consigness, ocean freight has a long lead time and rail freight sits in between.
Since borders have not been closed between Europe and China, we do not see any trends on the rail freight transportation programme. However, we have seen that a lot of PPE and medical supply shipments have moved from Air Freight to Railway freight as the urgency for demand for PPE has slowed down. We therefore see a higher demand in rail freight as an alternative transportation solution from China to Europe. If you compare the figures from May 2019, we are seeing over one thousand trains moving which has almost doubled the volume of freight movements using this transportation option. It can be congested at some times due to this increase in demand.
Actually a bit of both, since the availability and the demand is going up but also is the supply. The railfreight operators have announced more rail connections from China to Europe and what we see based on the current situation whilst ocean freight has announced further blank sailings, we still have availability and space on rail freight services. Russia has also eased restrictions based on the transit of products which can benefit the current situation and leads to cargo choices being directed to rail freight services. We are moving more cargo via the Eastbound route that west bound rate but there are pricing benefits dues to subsidies.
In October 2019, it was announced that Chinese subsidies would decline, however due to the Coronavirus outbreak, we see that subsidies are still in place for railfreight shipments. Rates are relatively stable, slight increases and decreases due to supply and demand but the subsidies are still applicable for now. However, I do foresee that this may come to an end post COVID-19 pandemic. From what I have researched, it is possible that by 2022, the subsidies will come to an end. More volume on rail freight will lessen the impact on rate increases.
Rail freight space is available and is a cost-effective reliable solution for freight transportation needs from China to Europe and Europe to China.
The above is an exert from our Rail freight podcast.
Rail freight is fast becoming an alternative mode of transportation of cargo from China into Europe and vice versa, listen in to the full podcast 'Coffee with Crane' here to learn more about this solution.
UPDATED 4th February
Municipalities such as Shanghai, have announced that Lunar New Year holidays will be extended to the 9th February. Important to note that with the current Coronavirus outbreak, healthcare businesses will also be closed. The current situation for Wuhan is currently not clear and the province is on complete lockdown.
With factories closed and workers being unable to travel back to their workplaces (as many areas have travel bans or restrictions) a backlog of orders is inevitable. Truck drivers may also be unable to travel back from their homes where they have been celebrating Lunar New Year with their families.
Almost all Provinces in China have confirmed cases of the new virus and the count is rising daily. All industries will be impacted due to the travel bans, port closures and the impact of flight cancellations and closed borders from other countries will, without a doubt, impact supply chains around the world.
Cargo delays and pick ups will continue to be a challenge in remote areas due to limited drivers available for example. Workers will also be advised to stay home by families concerned for public health in the big cities.
Wuhan is currently on lockdown, freight services are not available and the only cargo entering Wuhan is relief goods sent by air freight. All other modes are blocked. Wuhan is not only a very important hub on the New Silk Road, it is also the most important transportation hub for China as most Passenger and Cargo Trains go through Wuhan as a central point.
Alternative Rail Terminals are now being looked into such as Xi’An & Chongqing. Currently there is enough capacity on the Xi’An routing but this could be over very soon as we are sure that there will be way more cargo than we are expecting to switch from Ocean freight to Rail mode.
Ocean Freight - An increase of cargo moving to rail from Ocean and from Air Freight is expected. Ocean Freight delays are possible due to limited port operations as well as delays in manufacturing. Blank sailings and an increase in ocean freight rates are foreseen.
Air charter - requests are on the increase, however we are beginning to see charter operators express concerns for their crew landing in China.
Air freight cargo - hit significantly due to the cancellations of major air operators cancelling flights to China. The usual air freight cargo (belly load) that is loaded onto passenger flights will lack availability.
Rail freight - there is the possibility to switch containerised cargo from ocean to rail freight, not only for European destinations but also for Latin America and North America. The cargo moving by rail freight to Rotterdam can be loaded onto ocean freight to continue its journey to the United States. Cargo can be moved out of China by truck, which may be a more efficient option loading cargo onto the rail trains in Kazakhstan, as congestion is expected to increase in Xi'An.
LISTEN IN TO THE WEBINAR featuring Marco Reichel, Regional Business Development Manager – APAC on the current rail freight situation in China on the latest webinar from Railfreight.com
Our advice to clients is to plan and forecast effectively, work closely with transportation partners to review all foreseeable options, please reach out to the Crane Worldwide team in your location for further information or request a quote below and we will be in touch!