[170315.EN.BIZ] Shippers Explore China-Europe Rail As Alternative Freight Mode

HIGH-END shippers are asking forwarders to look into the China-Europe rail route as an alternative to expensive and often unreliable air freight and lengthy ocean shipping.

Several of the global forwarders have weekly, and sometimes twice weekly, rail services going both ways between China and Europe, using the northern route through Russia on the Trans-Siberia rail or the southern route through Kazakhstan, reports Newark's Journal of Commerce.

Speaking at the IATA World Cargo Symposium, the director of air freight standardisation for DB Schenker, Lothar Moehle, said: "After the financial crisis, air freight became too expensive and shippers turned to the ocean.

"But then the ships started slow steaming and extended even further the transit between Asia and Europe. This opened a huge gap for rail."

An indication of the rising importance of the rail solution is that despite its direct competition with air freight, IATA decided to include it as a track at its annual air cargo conference and exhibition in Shanghai.

Mr Moehle gave the transit details of each mode of transport from origin in China to destination in Europe, including the first and last mile trucking. Rail would take between 23 and 25 days, ocean 50-55 days and air freight 10 days.

The time advantage offered by air freight is compelling, but this is undercut by the cost differential of sending goods by plane. A freight forwarder with offices in Hong Kong and Shanghai made a quick cost comparison between rail, air and ocean from China to Hamburg.

The chargeable weight in a 40-foot container is 9,600 kilogrammes. The price he charged customers for rail was US$8,000 per FEU. That same FEU would cost $3,000 via ocean freight and by air, at $3.85 per kilogramme, would cost $37,000.

"Customers are driving us to use the rail services to Europe," he said.

While shippers are increasingly factoring rail services into their China-Europe plans, another supply chain solution is fast gaining traction - multimodal rail-air services.

Mr Moehle said DB Schenker railed containers from China to Europe and transported the cargo in bonded trucks from the rail hubs to its air cargo centres at Frankfurt, Amsterdam, Luxembourg or Liege.

"You can't put an FEU on an aircraft so we do the deconsolidation at our facilities and send the cargo in several air freight shipments. From Frankfurt we can reach every continent in the world," he said.

DHL Global Forwarding's product head for air freight in Shanghai and East China, Nover Jin, said the integrator was also seeing rising enquiries for the multimodal solution as manufacturing developed in western China.

Source : HKSG.