The return of railways in the China-Europe transport market

Once 'underdog', but now long-distance freight trains between China and Europe have become much more popular during the COVID-19 pandemic.

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A China-Europe freight train leaves Chengdu International Railway Port, Southwest China. Artwork:

Once 'underdog', but now long-distance freight trains between China and Europe have become much more popular during the COVID-19 pandemic, when companies need to transport goods. globalization among major economies looking for alternatives to expensive and in short supply sea lanes.

Alternatives to sea freight

"Five years ago, there were only eight trains a day running between China and Europe," said Xavier Wanderpepen, head of freight trains between China and Europe for the French national railway company SNCF. , but now there are 18, 20 ships a day'.

Rail freight is especially popular with companies that need to transport perishable or time-intensive goods, but don't want to choose air freight. no high cost.

Trains can transport containers between Europe and China in 20 days, while an ocean shipment can take up to 70 days amid COVID-19 disruptions.

But trains also have limitations. That is, trains cannot carry as many containers as ships, and they are not "immune" to logistics problems related to the COVID-19 epidemic.

However, this form is still increasingly popular. Launched in 2011 as part of China's Belt and Road infrastructure investment program, China-Europe railway service has grown rapidly as the pandemic cast a shadow over its operations. moving around the globe, making shipping by sea more expensive than ever.

The number of freight trains between China and Europe has reached a record 15,000 in 2021, with 1.46 million containers transported, an increase of 82% compared to the number of trips before the pandemic in 2019. Particularly for France- In China, the number of trains running this route has doubled between 2019 and 2021, although France entered the market later than other European countries.

The sharp increase in rail traffic is causing overload on the rail system and putting the related infrastructure under high pressure. This makes trains between China and Europe only a limited alternative to ocean liner. The largest ocean liner can carry more than 20,000 20-foot containers.

From Crisis to Opportunity

The vast network of ports, container ships and shipping companies around the world is still deeply embroiled in a two-year crisis caused by the COVID-19 pandemic.

According to Felix Papier, a professor of supply chain management at the French business school ESSEC, said that seaports are suffering from congestion, while the shortage of containers is still ongoing because of the volume of goods transported. strong increase. Meanwhile, many activities in the logistics industry are also facing labor shortage.

According to the results of a recent survey by the French Institute of Statistics and Economic Research, production activity at 45% of French companies has been constrained by supply difficulties. This is the highest level since the agency began publishing the data in 1991.

Facing that situation, transportation costs have increased rapidly. As of January 6, the average cost to ship a standard 40-foot container on eight major routes was $9,408, more than five times the pre-pandemic price in early 2020, according to the shipping company. Drewry Shipping in London.

Meanwhile, Mr. Xavier Wanderpepen said transporting a container from China to Paris (France) by rail only costs about 8,000 USD. In the opposite direction, the above fee is reduced to about $ 2,000 thanks to the subsidy policy of the Chinese government to encourage European companies to use trains to export to China. This has made railways more attractive.

As the COVID-19 pandemic enters its third year and the number of infections is increasing rapidly due to the Omicron variant, experts say that the strain in the supply chain will continue for some time.

Mr. Papier said the transport industry still needs to rebuild its network. This could contribute to increasing the market share of railways in the transport industry. Railways currently account for only 5% of the total transport market between Europe and China. But Mr. Wanderpepen predicts that between now and 2030, this share could double.