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RAIL FREIGHT INCREASING AS OTHER CAPACITY REMAINS TIGHT
September 23, 2020
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Logistics firms are seeing an uptick in the volume of goods being transported via rail as the coronavirus pandemic continues to restrict capacity through air and sea.

Logistics firms are seeing an uptick in the volume of goods being transported via rail as the coronavirus pandemic continues to restrict capacity through air and sea.

 

Davies Turner saw its container volumes double year-on-year on its weekly rail import service from China to the UK at the peak of the Covid-19 pandemic, and the international freight forwarder is expecting rail usage to continue increasing post-pandemic as many shippers rethink their supply chains.

 

“There has been an uptick in demand as the air and ocean freight alternatives continue to suffer from price and capacity issues,” Tony Cole, head of supply chain services at Davies Turner, told Asia Cargo News.

 

Cole added that the increased transit times resulting from the decision by several container shipping lines in the Asia to Europe trade to re-route sailings via the Cape of Good Hope rather than the Suez Canal is making rail freight “even more appealing,” such as is the case for Davies Turner’s fixed-day, direct Express China Rail service.

 

“Davies Turner believes that the impact of Covid-19 will push many shippers to rethink their supply chains, and that could well see a lot more Asia-Europe air and ocean freight traffic moving permanently to the rail freight option,” Cole further said.

 

Last month, Davies Turner reported that its express China rail freight service recorded double-digit growth year-on-year in April as shippers turned to rail with the aviation sector still on standstill.

 

The British freight forwarder noted that since the first train was launched in 2011, numerous departure points have been added to the options between China and Europe. Rail freight in the region gained renewed momentum when China’s President Xi Jinping launched the Belt and Road initiative in 2013, with rail transport encouraged as an alternative to shipping.

 

“As the Covid-19 pandemic has brought aviation to a standstill, shippers are seeing freight trains as a faster alternative to shipping. As liner operators have blanked sailings to reduce capacity and maintain utilization levels, shippers are presented both with cost and time constraints,” Cole added.

 

Most of Davies Turner’s customers, he noted, have upgraded from ocean freight although about “10% to 15%” have switched from air freight.

 

“It’s a mix of air and sea customers. The majority are ocean shippers upgrading,” he said.

 

Simon Yam, executive director, international freight forwarding, at Kerry Logistics also noted growing preference for rail freight as capacity restrictions drive air cargo rates up.

 

We are diverting our customers to look into our rail products. We are also active on the rail and the rate for rail is a good option. If the air freight becomes too expensive, or when they have very large volumes to go, then rail would become a time-definite product,” Yam told Asia Cargo News.

 

Yam noted, however, that despite this, there are also restrictions on the use of rail, which is limited mainly to China-Europe traffic.

 

“In terms of China to Europe people are using more rail – the major market is there. That’s where the trend of using more rail is,” he added, noting that the Chinese government is also very supportive of this product.

 

Usage of the China-Europe rail services have been increasing in recent years, but the coronavirus pandemic and subsequent capacity crunch in air freight have sent volumes through the roof since March, making rail a viable option.

 

According to China Railway, there were 5,122 China-Europe freight trains in the first half of 2020, up 36% year on year. Last month alone there were 1,169 trains in the route, setting a new record.

 

Road and rail service across Asia

 

Aside from purely moving goods via rail, logistics companies are also doing a mix of road and rail to keep cargo moving across Asia.

 

CEVA Logistics, for example, has launched a Truck-Rail-Truck (TRT) service, a multi-modal solution across Laos, Malaysia, Singapore and Thailand, sourcing goods from China amidst the ongoing coronavirus crisis.

 

“China and Southeast Asia are facing flight suspensions and reductions, space limits and operational restrictions in addition to long waits at border crossings due to the Covid-19 pandemic. CEVA Logistics introduced TRT as a practical and innovative multi-modal transport solution to remedy these issues,” the logistics company said in an earlier statement.

 

CEVA said the service can save up to four days waiting time as jams increase at national borders due to the Covid-19 pandemic.

 

“With our TRT solution, serious traffic jams at the border crossings can be avoided. During the Covid-19 pandemic, it really is the best solution for customers wishing to move urgent shipments between China and Southeast Asia,” said Guillaume Col, CEVA Logistics’ chief operating officer. “[We will] keep exploring our road and rail network between China and Southeast Asia to further develop these services.”

 

By Charlee C. Delavin

Asia Cargo News | Hong Kong

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