BOLLORÉ HAPPY WITH CHINA-EUROPE RAIL PRODUCT

Bolloré Logistics’ rail offering between China and Europe has been running for about two years now, but it is just the beginning for the company, which is in the process of developing new ideas to improve and expand the product.

 

“We now offer a stable and direct product, with a couple of major rail providers,” says Gert Schwarz, commercial director of Bolloré Logistics Germany. “We’re using about eight different routings, serving all major places in China. On the western side, most of these routings go into and out of Duisburg, which is the major hub for many train operators. Our controlling office for the service, including product management and customer service, is in Dusseldorf, which is pretty close to Duisburg.”

 

He adds that approximately 95% of all the trains going into central and western Europe stop at Duisburg, and that Bolloré’s facility in Duisburg is roughly 200 metres away from where the trains stop, so containers can be loaded and unloaded very quickly. From Duisburg, the company offers regularly scheduled network connections to major cities throughout Europe, including Marseille, Madrid, Barcelona, Rome and Milan.

 

Self Photos / Files - Duisport [2]

 

Rail transport on the China-Europe trade lane has changed dramatically. According to Schwarz, there was almost no demand in central Europe and Germany five years ago, but in the last couple of years there has been an explosion of activity, with more and more logistics providers offering this mode to their customers.

 

“Of course, it’s not a substitute for ocean freight because for many products, the product value cannot stand the higher logistic cost,” he says. “So we’re starting with a certain cargo value where rail becomes an interesting alternative. At the moment, it’s not something for cheap mass consumer products. But the pricing is becoming more and more interesting for new customers, with each province wanting its own train connection because of prestige. So there’s a lot of movement on the market at the moment, with prices and transit times going down.”

 

For Bolloré, the service itself has been running smoothly and hasn’t produced any major difficulties so far. The company is also coming up with ways to expand and improve its product offering, such as investing in its own less-than-container-load boxes and offering more special services.

 

“For example, for the textile industry, we’re building separate compartments inside the containers for partial garment-on-hanger solutions,” says Schwarz. “Healthcare is becoming more and more important for us, so we’re offering temperature-controlled compartments within the LCL boxes, with temperature recording, security measures and GPS trackers.”

 

As part of its growth strategy, Bolloré has invested more than €100 million (US$120 million) into a new business project called GLOBE. One of the three major areas of focus involves a complete transformation of the company’s IT environment, both within the organization and in terms of innovative solutions for customers.

 

“We will soon be offering web-based booking and tracking solutions on an end-to-end platform,” Schwarz says. “This means that customers will be able to request pricing, make bookings, get electronic invoices and manage claims all on this digital platform. It’s scheduled to be launched by the end of 2017 or in early 2018.”

 

To achieve more growth in the volumes being moved via rail, Schwarz says that the primary task is to bring the message about the product into the market.

 

“Many are still not aware because it’s pretty new, so we have to convince people that this is a real alternative,” he says. “Of course, it’s also highly dependent on how the ocean market develops.”

 

While an oversupply of capacity has been plaguing the shipping market, Schwarz says he doesn’t think rail will suffer from the same problem, at least in the short term, since capacity is actually needed at the moment.

 

“After the Hanjin situation, the ocean market hasn’t been able to compensate for these volumes that have been moving out of the supply,” he says. “As we can see from the pricing structure of the rail product, prices have been going down a little bit but they are quite stable compared to ocean freight. We don’t have a massive development where new players are entering the market and prices are in a freefall situation, so I don’t see any danger right now.”

 

One thing which Schwarz does hope will happen relatively soon is a further reduction in the transit times between China and Europe. Even though they have already been going down, Schwarz says he think that technically there is still room for additional improvement.

 

“For some of the shorter routings, they’ve been able to get it down to under 20 days or about 15, but I think cutting away two or three more days could be possible,” he says. “That would depend on the performance of the rail operators. I think there is also some room possibly for higher frequencies.”

 

In the long term, extending the rail service beyond China is a possibility. Bolloré has recently been receiving more enquiries and requests, including from Japan.

 

“But I think this is something very, very new and first of all you have to see whether there really is a market for it and whether it makes sense from a financial perspective,” says Schwarz. “I think this is very niche at the moment.”

 

As the product becomes more widely known and used, Bolloré hopes that the strong performance from China to Europe can be balanced out with more volumes going eastbound.

 

“The good thing is that on the eastbound side, especially coming out of Germany, we’re talking more about higher values, such as machinery and automotive parts,” Schwarz says. “Those higher values might put more pressure on us to deliver, but sometimes a bit of pressure can be positive.”

 

 

By Jeffrey Lee

Asia Cargo News | Munich