Freight Forwarders Embrace China-Europe Rail Alternatives Amid Red Sea Crisis

Amid ongoing disruptions in international shipping due to attacks in the Red Sea and heightened risks on key maritime routes, freight forwarders are increasingly turning to rail services linking China and Europe, propelled by the Belt and Road Initiative. This strategic shift underscores the rail route’s crucial role in stabilizing global supply chains amidst challenging times.

In response to attacks targeting commercial ships bound for Israel by Houthi rebels in Yemen since November, transport companies are facing escalated risks and delays in one of the world’s busiest shipping lanes. The resultant surge in shipping rates and prolonged delays have prompted a shift of some smaller-volume goods towards rail transportation, notably along the China-Europe railway line.

According to a recent report by Fitch Ratings, the capacity of this rail route has seen a significant expansion from pre-crisis levels. Kong Weidong, head of the Zhengzhou branch of T.H.I. Group (Shanghai) Ltd., a freight forwarder, noted a remarkable increase in inquiries about the China-Europe freight train service since January. “Since January, the number of inquiries has soared by more than tenfold, and the actual export volume of goods has increased by three to four times,” Kong stated.

The China-Europe cross-border rail freight service typically takes between 12 and 18 days to reach European destinations from Chinese cities, at a cost of approximately $6,500 per container, as explained by Kong Weidong.

Kang Yingfeng, deputy general manager of China Railway International Multimodal Transportation (CRIMT), the national operator of the China-Europe freight train service and a subsidiary of China Railway Container Transport, highlighted a surge in interest in this service since the start of the year. Moreover, a new China-Europe freight route, combining rail and ocean transportation via the Caspian and Black Seas, has garnered strong attention. This route traverses countries such as Kazakhstan and Georgia before reaching European destinations.

Kang Yingfeng noted significant interest from Chinese, European, and American customers, along with major international logistics firms like DHL and Kuehne+Nagel, in the new route passing through transcontinental maritime routes to Georgia, Turkey, and Central and Eastern Europe, as well as Southern Europe.

DHL, citing a report from The Financial Times, stated that requests for goods transportation via the rail service to Russia had risen by about 40 percent since container ships began diverting via longer routes in December. This shift underscores the growing reliance on alternative transportation modes amidst the evolving challenges in global shipping.

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