The Future of Trans-Eurasian Freight
As air and sea freight costs are rising and slow steaming is affecting lead times these issues are prompting companies to examine alternative routes from Asia to Europe and specifically looking at rail from China to Europe.
The train line from China to Europe, known as the Trans-Siberian Railway, was started in about 1890 and was completed around 1929. The railway has a number of key routes via Moscow, one of which is a northern route through Siberia. It leaves China at the Russian border at a place called Manzhouli/Zabaykalsk and then it makes its way across Siberia to Moscow. There is an alternative route to Moscow via Mongolia and Kazakstan. Other European sections of the route go via Poland the Ukraine and Belarus, depending on which part of Europe they are heading towards.
So which routes have been tested? To date I have seen the following:
- Shanghai China to Duisburg Germany (18 Days)
- Chongqing to Duisburg (16 Days)
- Xiangtang, China, to Hamburg (17 Days)
The freight lead times are very good in comparison to sea freight where the usual shipping time can be 36 days or more depending on the end location in Europe. The scale of the railway is immense as it crosses 11 time zones and more than 11,000 km.
Some of the challenges on the route are as follows:
- The gauge of the track is different in China, Russia and Europe which means containers need to be transhipped or the bogies on the trains need to be changed at the border.
- Public trains or block trains can be utilized for destinations. Block trains are private trains that go the most direct route, cutting times. However, they need a certain number of containers going to a similar destination to make them viable, so this can create issues with the regularity of the trains.
- Due to the number of countries the trains are passing through, there is a higher likelihood of hold ups due to paperwork issues and customs challenges.
- In order for the service to be optimal it is better to be very close to a railway station so that transhipment costs are minimized.
So how does the service compare to more traditional modes?
Rail freight is just under the cost of the air/sea options although still more costly than the sea options. With further volumes and developments in the train networks these costs should reduce over time.
One company that is heavily involved in the development of the routes is Trans Eurasia Logistics which is a company set up by Deutsche Bahn AG and the Russian Railways (RZD) in early 2008.
The key growth driver for trans-Eurasian freight will be the development of inland Chinese cities. As lower wage rates are sought the factories are moving further inland meaning that factories are further from the main sea ports and will rely on the railways for transportation.
If you want to try the route yourself as a passenger see the following website: http://www.seat61.com/Europe-train-travel.htm