Strong and stable demand, a slight drop in post-holiday freight rates, many well-known freight forwarding and logistics giants launched new services for China-Europe Railway

In the past few months, due to soaring air and sea freight rates and tight capacity, freight forwarders have launched many new China-Europe rail transport services to meet the needs of shippers.

Facing strong customer demand, many freight forwarding and logistics giants have launched new rail services from China to Europe in the past six months.

▶ In the past few months, DHL Global Forwarding has launched 5 new direct trains, as well as dedicated customer trains from China's railway hub to Europe. At the same time, 6 new LCL services were launched in Italy, Belgium, France, Germany, Sweden, Baltic countries and Poland. These services meet the needs of China's railways for more concentrated cargo, enabling DHL to fill entire trains or LCL cargo at the same time.

▶ Nippon Express opened a weekly service from Suzhou in early February. The service uses the northern route via Moscow and Malaszewicze to Hamburg and Duisburg. In addition, Nippon Express has begun to provide regular train services in Xi'an.

▶ DB Cargo Eurasia opened a rail-sea service from Xi'an to Oslo via the port of Kaliningrad in Russia in November last year, canceling the stopover previously required in Rostock. The Deutsche Bahn subsidiary said it would take about 17 days to ship the goods from Kaliningrad to Oslo. Currently, DB runs 9 trains from China to Europe every week.

▶ CEVA Logistics opened a new railway service from Xi'an to Durges, France, via Kazakhstan, Russia, Belarus and Germany in November last year. The transit time is 18 days. And has already operated the FCL and LCL train service from Xi'an to Duisburg.

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▶ At the end of December last year, Dachser deployed a westbound train from China to Ludwigshafen, Germany, carrying a train of 50 FEU, passing through Mongolia, Russia, Belarus and Erenhot in Poland. This logistics company operates regular chemical trains from Europe to China, but this is the first train on the head-haul route.

▶ Davies Turner launched a weekly fixed-day direct rail import service from China to the UK in November 2018. Initially there were only two containers per week, but in the past year, the service has grown to 7 40' per week container.

▶ As the demand for Russia’s Trans-Siberian railway network has risen sharply, Maersk doubled its AE19 short sea and intercontinental rail service between Asia and Northern Europe in November last year to twice a week, and is planning to expand the scale to Daily service.

▶ DSV operates multiple railway services for FCL and LCL freight from China to multiple destinations in Europe, and has been operating FCL trains since February last year.

In addition to providing a large number of new railway services, a large amount of demand has also brought road transport into the Central European market. DHL operates 50 trucks a week, and daily road services from China take 15 to 20 days, while the express line Silkway Express launched by DSV last year provides 14 to 18 days of transportation time, but the cost is lower than air transportation.

Denmark became the latest Scandinavia country to connect to the network on March 6, which enabled China to reach Kaliningrad via Russia and establish a short sea connection with Copenhagen. Finland is already connected to China by rail.

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Despite the strong and stable demand from cargo owners, the China-Northern Europe intercontinental rail freight rate has declined in the weeks after the Spring Festival.

In 2020, the China-Europe Railway Express will become the new "cargo king" of China-EU trade. According to data from China Railway Group, in 2020, the number of China-Europe freight trains increased by 50% year-on-year to 12,400. Compared with 2019, the volume increased by 56% to 1.13 million TEU.

According to British freight forwarder Davies Turner's Tony Cole, who is in charge of marine operations, Davies Turner's freight has been US$300 per 500 kilograms since mid-March, a reduction of US$70 from the previous price. The price per kilogram is also nearly eight times cheaper than the current air freight price from China to Northern Europe.

Thomas Kowitzki, vice president of DHL Global Forwarding and head of China Railway and European Multimodal Transport, did not disclose DHL's freight rates, but said that prices have fallen slightly in the past few weeks. "We still believe that railway demand is good," he said, although a series of factors are complicating the railway outlook, such as the uncertainty of Chinese government subsidies, the continuing shortage of containers in Asia, the disruption of shipping, and the COVID-19 measures and blockades that make forecasts Demand becomes difficult.

He suggested that shippers or shippers book railway cargo as soon as possible, otherwise they may have to bear the risk of accidents in capacity. "We recommend that customers plan for railway needs, rather than wait and see."
Marco Reichel, Asia-Pacific Business Development Director of Crane Worldwide Logistics, a logistics company, said that rail freight in Asia and Europe does not have the traditional off-season after the Spring Festival, which maintains the demand for railways.

He said: "The off-season has not yet arrived, and major shipping companies have announced a new round of price increases. Therefore, we believe that westbound railway prices will remain stable, but there will be a slight decline."

Stijn Rubens, a senior consultant at Drewry Supply Chain Advisors, said that as there are still many uncertainties in ocean shipping, bulk commodities will continue to enter rail freight to maintain demand pressure.

"In other words, since the Spring Festival, the sea freight rate has dropped by about US$500. Therefore, the inflationary pressure faced by the railway freight rate is likely to be eased."

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But not everyone is so optimistic. The Port of Duisburg is the world's largest inland port and is located in the German riverside city of Duisport. Erich Staake, the port's chief executive, said the area is still "susceptible to major uncertainties." "Container handling accounts for 55% of the total freight at the Rhine Port. In addition to inland river trade, Duis Port is also a China-Europe railway hub. One-third of China-Europe railway trade also passes through this city.

Staake said in a recent statement: "Since the EU is implementing a vaccination strategy much slower than the United States or the United Kingdom, we will have to anticipate that demand will decrease and our domestic market will be further restricted and blocked." "In particular, the logistics industry, which is characterized by small and medium-sized enterprises, may be negatively affected by the continued uncertainty of consumers."

In 2020, Duisport’s railway traffic in China has increased by 70% year-on-year. On average, as many as 60 trains travel between China and Europe every week, while in the same period of 2019, there were 35 trains every week. The port has expanded its connections with new destinations in Europe.

"The growth of the container business is not just due to the catch-up effect related to the epidemic," Staake said. "We expanded access to more Chinese destinations during the first blockade in April last year. This strategy has already achieved results, especially in the second half of the year. At the same time, all important logistics centers in Europe and Asia It has become an indispensable part of our hub."

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At the same time, freight forwarders are constantly looking for new cross-border routes into Europe to avoid congestion in the railway transfer stations in Poland and Belarus.

Europe and China use the standard 1,435mm size, while Russia, Kazakhstan and other former Soviet Union countries use 1,524mm size. This means that containers must be transferred to new trains at the Chinese border, as well as when entering Europe, and the Malaszewicze-Brest loading area on the Polish-Belarusian border is the busiest border crossing point.

But the increase in numbers has expanded other Polish border crossings to Europe, as well as entry points for Hungary, Slovakia and Bulgaria. Freight forwarders distribute their services on three trade corridors between China and Europe, namely the northern corridor through Russia, the intermediate corridor through Kazakhstan and Russia, and the southern corridor through Uzbekistan and Turkey.

Tony Cole, the British freight forwarder Davies Turner in charge of marine operations, said that despite the high demand for rail services, he did not see any congestion. He said: "Currently, there are very limited delays in shipping containers from China by rail, either due to border blockage or due to continuous demand."

He added: “For a long period of time, we have experienced 18-day transit from Wuhan to Duisburg, which gave us 6 days to transport the container from Duisburg to Purfleet via Rotterdam, which reached us. Announced timetable."

Thomas Kowitzki, vice president of DHL Global Forwarding and head of China Railway and European Multimodal Transport, said, “The development of new train connections and different routes is necessary to overcome border congestion. This is the expansion of many new services around FCL and LCL. Driving factors.” “With more direct trains, fewer transshipments are required, which makes delivery times faster and lower costs.”