China-Europe containerized rail shipments gain momentum

China-Europe containerized rail shipments gain momentum

Volumes of containerized cargo travelling between China and Europe by rail are growing as operators increase frequencies and state organizations along the route lend their weight to the development of new services.

Two-way services from Asia’s largest railway hub in the city of Chengdu in southwest China’s Sichuan province to Lodz in Poland will increase from twice weekly to five times per week beginning January 2016, Chengdu city administration officials said this week.

Chengdu is home to more than 260 Fortune 500 companies. Intel, IBM, Siemens, Cisco, Canon and Wipro are among those with significant production operations in the city, as well over 200 core automotive parts makers for German, Japanese and other vehicle lines.

The Chengdu-Europe Express Railway Service, which started in April 2013, carriers IT products, automobile parts and clothes from China to Europe, and food and beverages in the other direction.

German-owned DHL offers temperature controlled container services on the route. In order to be shipped by sea, goods from Chengdu first need to travel a thousand miles in the wrong direction to the port of Shanghai.

Other landbridge services are also expanding. Trans Eurasia Logistics, a joint venture between Germany’s national rail company Deutsche Bahn and Russian Railways, launched a new regular weekly service between Wuhan in central China’s Hubei province and Hamburg earlier this year.

TEL operates one of the largest and most famous landbridge services between China and Europe. The ‘Yuxinou’ service is a 700 yard-long container train that travels between Chongqing in southwestern China and the German port city of Duisburg three times per week and five times in peak season. Last year Yuxinou carried $8 billion worth of goods in more than 4,000 containers.

The journey takes between 14 and 16 days to travel 6,800 miles, making it twice as fast as sea freight and half as expensive as air freight. Chongqing is home to the Foxconn production plant which employs some 30,000 workers making iPhones, iPads and laptops for Apple, as well as computers and servers for HP and Cisco Systems.

China is Germany’s third-largest trading partner. Data from Global Trade Atlas, a sister product of JOC.com within IHS, shows that from January to October this year China, shipped close to $57 billion-worth of exports to Germany while China’s imports from Germany were worth just over $73 billion.

According to Deutsche Bahn, the overland route is appealing to electronics and automotive industry manufacturers because the value lost on goods such as computer components and engines during the longer sea journey is relatively high.

Rail services to Europe are now also offered at several other Chinese cities, including Zhengzhou and Changsha in central China and Shenyang and Harbin in northeast China.

Meanwhile, Minsheng Logistics, the Hong Kong-listed logistics operator that specializes in shipping automobile raw materials, parts and components, has established a consortium with Kazakhstan Railways, Georgian Railways and Azerbaijan State Caspian Shipping Company, to ship cargo from China to Europe via Turkey.

The agreement was reached in Istanbul on November 19 with the parties stating they expect the new service, known as the Nomad Express, to carry several thousand containers next year.

A second Nomad Express pilot train from China’s east coast port of Lianyungang arrived in the Georgia port city of Tiblisi on route to Istanbul on Sunday. According to the Georgia Economy Ministry, the train carried consumer electronics originating in South Korea. It travelled by rail to the Caspian Sea, was ferried to the port of Baku and headed again on rail to Georgia before being shipped by sea to Istanbul. The journey to Tiblisi took 15 days.

Contact Turloch Mooney at turloch.mooney@ihs.com and follow him on Twitter: @TurlochMooney.