Global Supply Chain News: Volumes for China to Europe Cargo Trains Continue to See Raid Growth

Freight volumes in terms of the relatively new China to Europe and back again rail service is seeing some strong growth. According to data from state-owned China Railway, a total of 1,232 trains were dispatched from various Chinese cities to European destinations in July. That was the highest monthly figure ever, and an increase of 68% year-over-year.

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Rail shipping is also as much as 50% less expensive than moving containers from China to Europe via ocean carrier, though some of that is the result of Chinese government subsidies for rail movees to Europe.  
Global Supply Chain News: Volumes for China to Europe Cargo Trains Continue to See Raid Growth  

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That makes it five consecutive months of record train volumes, in part because Covid-19 has limited transport by air and sea at the same time there has been a very sharp increase in the demand for Chinese-made medical supplies in Europe.

The trains are getting longer, with 113,000 standard cargo containers shipped last month, an increase of 73% versus the 68% growth in the number of trains.

The South China Morning Post reported this week that Yiwu, an export hub in east China's Zhejiang province, shipped 33,452 containers to central Asian and European countries via rail in the first seven months of 2020, tripling the amount transported a year prior.

In the same seven-month period, the city of Chengdu in Sichuan province dispatched about 1,200 trains on the China-Europe railway - a year-on-year increase of 58.6%.

By way of comparison, in the first half of 2015 there were only 200 trains going from China to Europe.

In 2011, technology giant HP pioneered the use of rail transport to move goods from inland Chinese manufacturing sites to European markets.

The early success by HP eventually led to China's vision to create a Silk Road Economic Belt as part of its broad "One Belt, One Road" initiative, in this case to stimulate rail trade between Chinese inland cities and Europe. Service to Europe from China has now is available from more than a dozen Chinese cities.

Depending on starting point, the trains may take 10-18 days to reach some Euro destinations, versus perhaps 20-30 days via container ship. However, the growth in volumes is said to be straining China rail capacity to Europe, with delays of perhaps 3-5 days on many train routes recently.

Rail shipping is also as much as 50% less expensive than moving containers from China to Europe via ocean carrier, though some of that is the result of Chinese government subsidies for rail moves to Europe.

While rail moves are still a small fraction of ocean container shipping volumes, the strategy is clearly seeing strong growth in popularity.

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Global Supply Chain News: Volumes for China to Europe Cargo Trains Continue to See Raid Growth

As an example of what is happening here, last November DHL Global Forwarding, in partnership with Xi'an International Inland Port Investment & Development Group, launched a China to Europe rail service.

 

Global Supply Chain News: Volumes for China to Europe Cargo Trains Continue to See Raid Growth

At the time, DHL said the service from Xi'an in China to Hamburg and Neuss in Germany would take just 10-12 days.

The new rail express follows a route of about 9,400 kilometer through Kazakhstan, Russia, Belarus and Lithuania to Kaliningrad Oblast, a part of the Russian Federation on the southern coast of the Baltic Sea.

It then enters the European Union via the Mamonovo-Braniewo crossing between Russia and Poland before continuing on to the port of Hamburg and finally to Neuss on the River Rhine.

That's quite a ride.

Consistent with China's New Silk Road initiative, China hopes to use the rail route to deepen its economic ties to European companies - and increase Chinese export as a result.

Do you expect China to Europe rail volumes to continue to grow rapidly?

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