TRANSPORTATION providers are confident in the long-term sustainability of Asia-Europe containerised rail given that rail services have been expanding rapidly over the last two years as the rail solution is positioned in the middle of ocean and air freight in terms of transit times and pricing.
Although the costs of containerised rail services vary considerable depending on origin and destination, the speed of service and the extent of subsidising, westbound FEU rates weighing 9,600 kilogrammes are in the US$6,000 to $8,000 range. In comparison, that same shipment would cost $3,000 via ocean transit.
Figures from mainland China rail entities and state media show a doubling in volumes shipped between 2015 and 2017 to 317,000 TEU. A total of 6,300 block trains, westbound and eastbound combined, travelled between the two continents between 2011 and 2017. Of that number, 3,200 trains travelled in 2017, reported IHS Media.
Collectively, local government targets are for 5,000 trains to transit each route in 2018 but operators believe a number between 4,000 and 4,500 is more realistic, which would represent a 25 per cent to 40 per cent year on year increase compared to 2017.
However, transit times have been increasing as the primary rail corridor into Europe via Belarus and Poland struggles to handle the rapid growth in the number of trains. A shipment from Chongqing in western China to Duisburg in Germany now takes an average of 17 days, up from 11 days in 2014.
'We've seen eastbound containers delayed by 11 or 12 days. For many shippers this is not acceptable and it is getting too close to ocean times to remain viable,' said Don Miller of Globe Tracker ApS.
There is uncertainty over what action Beijing may take in relation to the subsidies for the services, which it has already lessened, and there are suggestions the central government is not happy with so many Chinese cities competing to send trains.
Subsidies vary by origin city and can be anywhere between 20 per cent and 80 per cent of the cost of sending a shipment.
The expectation is the subsidies will remain in place for at least the coming two to three years and that improvements in Europe's intermodal network will help to ease some of the congestion.
However, panelists at JOC.com's Contanier Trade Europe conference in Hamburg agreed that the only real solution was investment in a greenfield rail terminal such as the DP World-managed Khorgos rail terminal in Kazakhstan.
'There is no existing rail terminal on the Europe-side that is capable of handling the rapid growth,' said David Smrkovsky of Chinese forwarder JUSDA.
The eastbound/westbound imbalance also remains a challenge for service operators with shipment volumes split roughly one-third eastbound and two-thirds westbound.
Although the costs of containerised rail services vary considerable depending on origin and destination, the speed of service and the extent of subsidising, westbound FEU rates weighing 9,600 kilogrammes are in the US$6,000 to $8,000 range. In comparison, that same shipment would cost $3,000 via ocean transit.
Figures from mainland China rail entities and state media show a doubling in volumes shipped between 2015 and 2017 to 317,000 TEU. A total of 6,300 block trains, westbound and eastbound combined, travelled between the two continents between 2011 and 2017. Of that number, 3,200 trains travelled in 2017, reported IHS Media.
Collectively, local government targets are for 5,000 trains to transit each route in 2018 but operators believe a number between 4,000 and 4,500 is more realistic, which would represent a 25 per cent to 40 per cent year on year increase compared to 2017.
However, transit times have been increasing as the primary rail corridor into Europe via Belarus and Poland struggles to handle the rapid growth in the number of trains. A shipment from Chongqing in western China to Duisburg in Germany now takes an average of 17 days, up from 11 days in 2014.
'We've seen eastbound containers delayed by 11 or 12 days. For many shippers this is not acceptable and it is getting too close to ocean times to remain viable,' said Don Miller of Globe Tracker ApS.
There is uncertainty over what action Beijing may take in relation to the subsidies for the services, which it has already lessened, and there are suggestions the central government is not happy with so many Chinese cities competing to send trains.
Subsidies vary by origin city and can be anywhere between 20 per cent and 80 per cent of the cost of sending a shipment.
The expectation is the subsidies will remain in place for at least the coming two to three years and that improvements in Europe's intermodal network will help to ease some of the congestion.
However, panelists at JOC.com's Contanier Trade Europe conference in Hamburg agreed that the only real solution was investment in a greenfield rail terminal such as the DP World-managed Khorgos rail terminal in Kazakhstan.
'There is no existing rail terminal on the Europe-side that is capable of handling the rapid growth,' said David Smrkovsky of Chinese forwarder JUSDA.
The eastbound/westbound imbalance also remains a challenge for service operators with shipment volumes split roughly one-third eastbound and two-thirds westbound.