China-Europe rail freight gets boost from Suez crisis
A snarled Suez route has made rail transport from China into Europe look all the more attractive
A once completely dominant Suez Canal route from China into Europe is now being reappraised by supply chain planners looking to get urgent goods between the two continents, with intermodal rail continuing a sharp upward trajectory in 2021, following on from a strong 2020.
Although the first China-Europe freight train left Chongqing Municipality, located in southwest China, in March 2011, it has taken some time for the route to become an established part of logistics networks. China’s government has invested heavily into infrastructure and promoted the route as part of its Belt and Road initiative but in the first year, just 17 freight trains left from Chongqing.
However, by November 2020, more than 60 Chinese cities were linked with 92 cities across 21 European countries, helping to boost viability. Alongside the increased connectivity, the COVID pandemic and its associated disruptions pushed the route to much heavier usage, with that usage climbing again this year and getting additional traffic as a result of the recent blockage of the Suez Canal.
Through 2020 there were 12,400 rail trips between China and Europe, an increase of 50% on 2019, and a sevenfold increase on 2016. In the first two months of 2021, more than 2,000 freight trains services ran from China to Europe. This represents a 100% increase on the same timeframe in 2020. Ten trains now depart and arrive at Chongqing daily, way above the initial target for the route of one departure per day stated when the route first began.
Authorities also say that inquiries about the service have nearly doubled since late March.
Recently, a paperless system has been installed to further improve efficiency.
Freight trains cannot carry anything like the volume of a major cargo ship, but the high cost of airfreight, emerging crises, such as the Suez blockage, container shortages on several major maritime routes, increased sea freight costs and shorter transit times are changing the calculation for supply chain planners. The route is therefore increasingly viable for those shipping between Europe and China. This is especially so for value-added products like electronic devices, when meeting heightened demand, or for time-sensitive items, such as those required for just-in-time production lines.
For example, Chinese automaker, Changan Ford, switched to the freight train service during the pandemic and realised it could save about 50 days of transport time and avoid potential supply chain breakdowns.