By Alex Lennane

The first train from the UK to China left London Gateway on April 10, heading for Yiwu, where it arrived on 27 April, with 30 containers carrying whisky, soft drinks, vitamins and pharmaceuticals. Rail services between Europe and China have seen a surge in volumes as services grow and shippers take advantage of the cost and speed benefits available.

Volumes in March were up 140 per cent on last year, while first-quarter volumes of 30,600 TEUs nearly matched the fourth-quarter peak, according to United Transport and Logistics Company (UTLC), an intermodal freight operator set up by the national railways of Russia, Belarus and Kazakhstan. “Despite the Chinese New Year celebrations, which normally cause decline in demand for transport in the first months of a year, first-quarter volumes are close to the 36,600 TEUs transported in Q4, and exceed the third-quarter result of 29,900 TEUs”, said Alexey Grom, UTLC President. The company said much of the growth was due to a launch of regular shipments in partnership with DB Cargo Russia.

There has been considerable growth in interest in the rail freight option. UK forwarder Davies Turner introduced a fixed-day, weekly rail service for LCL shipments from Wuhan and Hefei, into the UK and Ireland. Chairman Philip Stephenson said: “We had been investigating the practicalities of a rail freight service from China to the UK and Ireland for some time, and conducted trials last year, before officially launching the service in January.

“We knew there were operational difficulties to overcome, such as transitions from standard to broad gauge track and back again, but we are confident that this has been achieved by our partners and the rail companies concerned. “The big selling point is that the cost is around 70 per cent less than shipping the cargo by air, and 16 days quicker than by sea.” The service takes 21 days from Wuhan, 23 days from Hefei and 25 days to Dublin.

Meanwhile, on the eastbound leg, Hong Kong-based Kerry Logistics claimed it was the first Asian 3PL to offer backhaul capacity.

William Ma, group managing director of Kerry Logistics, said, “We are extremely excited to be the first Asia-based global 3PL to move eastbound freight from Europe along the One Belt One Road trade route, turning part of the roadmap into reality. We are committed to developing an overland transportation network for road, rail and multimodal freight services in China to Central Asia and Europe.”

There has also been some concern, from the air freight sector in particular, that the rail option would take significant chunks of market share. But Nick Platts, head of Heathrow Cargo, said at April’s Multimodal event that he didn’t believe air would suffer. “Rail can’t offer the speed and reach that air can. And if you are worried about security, you have to give the volumes to air. On a train, the cargo has to be handled a number of times when the gauge changes. I think ocean will have more of a problem than air.”

But Karl Gheysen, former Chief Executive of Kazkhstan’s inland port of Khorgos Gateway and now executive at Kazakhstan Railways, said: “Air freight will be more affected than shipping and the perception of security is much worse than it actually is.” He said Hewlett-Packard now accounted for 30-40 per cent of total capacity and car makers were testing the service.

There has also been considerable growth in the use of reefer containers and Mr. Gheysen said companies were starting to look at certification for carrying temperature-sensitive pharmaceuticals, while Alibaba and postal services were also eyeing rail as an option.

He added that he had also seen some rail-air services. “We tested it with KLM via Almaty to Amsterdam. KLM had empty bellies, so we did some trial shipments. It’s a good back-up option. There are lots of opportunities and ideas.

“2017 will be the year that China-Europe rail takes off,” he added.

China-Europe rail services are set to triple within three years as demand grows and shippers “catch on” to the advantages. Asian media reports that during the recent ‘Belt and Road’ conference, China plans to increase the annual number of trains from 1,800 last year to 5,000 in 2020.

Meanwhile, three forwarders developed their services on the route and another city was added. Shenzhen is now connected to Minsk, with the first train arriving in the Belarusian capital by early June, with 41 FEUs on board, including mobile phones and automotive parts. The route is managed by DHL Global Forwarding in conjunction with logistics provider China Brilliant, and offers both full-container-load (FCL) and less-than-container load (LCL) services. It offers real-time GPS tracking of containers and customs clearance.

Demand from Eastern Europe is accelerating, according to the forwarder, as economies in the region grow. Panalpina said it is to open a second consolidation point in Shenzhen in July. The forwarder currently consolidates cargo in Shanghai for a weekly train service. “More than 150 customers have used the service so far, moving over 5,000 cubic metres of cargo, such as automotive parts for tier-2 and -3 providers, tablets, equipment for manufacturing lines as well as clothes and shoes,” said Antonio Pacciolla, regional head of overland Europe at Panalpina.

“We expect these volumes to grow further as more of our customers in Germany, the Czech Republic, Slovakia, Hungary, Romania, Sweden the Netherlands and Belgium are now considering this transport option.” Nippon Express also launched new services: six westbound FCL destinations in China and 18 LCL and eight eastbound services from Europe.

The rise in rail has divided opinion in the freight business on whether it will most affect air or sea. One shipper believed “hundreds of tonnes a month” were being stripped from air routes. He said his company was looking at the services as a viable alternative to air freight into China, as well as air-sea into Dubai-Singapore-China.

Marie-Christine Lombard, CEO of Geodis, told The Loadstar: “Rail is an attractive option to ocean.” But she also noted that for shippers and forwarders, modal competition is irrelevant. “Clients want the most competitive costs in the supply chain. So you take into account your customers’ needs. On any tradelanes they want the best solution. “Rail for some flows is very appropriate. If you have regular volumes which need speed, and you have the right flows, you add rail into that solution. And it’s also very competitive against air. We see an opportunity there. “Geodis is a logistics company operating a network, but we are not focused on one mode. We can design a multimodal solution that fits the underlying flows of the customer. You always look at how to build a robust solution which is cost-effective.”

And rail appears to be. Mr. Pacciolla added: “The rail service is one-third the cost of air freight and twice as fast as ocean freight. It’s an interesting proposition that is catching on.”

Reprinted courtesy of The Loadstar (