DESPITE historically low ocean freight rates between Asia and Europe, freight transport by rail continues to grow in popularity with DB Cargo signing its second contract to move cargo between Germany and China by rail this month.
The German rail freight operator has signed a memorandum of understanding with the eastern Chinese city of Hefei, 130 kilometres (81 miles) from Nanjing, China's largest inland port, to run a service to Hamburg, Europe's third-largest container port.
The initial plan is for a weekly service starting in early October transporting a range of goods including computers, textiles, and photovoltaic components, according to IHS Media.
The service, operated by Trans Eurasia Logistics, a joint venture between DB Cargo and Russian Railways, will take 15 days to make the 10,600 kilometre journey across Germany, Poland, Russia, Kazakhstan, and China.
"We are thrilled that we can continue to expand rail transport with Hefei along the traditional Silk Road route," said DB Cargo CEO Jurgen Wilder.
"The constantly rising transport volumes of the trans-Eurasian landbridge demonstrate that railway has established itself as a competitive alternative to other modes of freight transport. I firmly believe that more customers will use rail services to transport their goods to and from China in the future."
DB Cargo signed a multiyear contract with BMW earlier in the month to ship auto components by rail from the car manufacturer's German plants in Leipzig and Regensburg to its factory in Shenyang, northern China.
The extension of the original contract signed in 2010 involves two trains per week with an annual traffic of some 2,500 containers.
The route is increasingly popular with industrial shippers despite falling ocean freight rates, with some 400 trains between Germany and China carrying 30,000 containers in 2015. DB Cargo, Europe's largest rail freight operator, has targeted annual traffic of 100,000 containers by 2020.
Meanwhile, Geodis, the logistics arm of the French state railway SNCF, has just completed the first rail shipment of textiles from China to Lyon for Marseille-based designer jeans company Kaporal.
The 11,300 kilometre journey from Wuhan in central China to Lyon, France's second largest city, took 13 days.
Source : HKSG.