Today, a new land route dubbed the ‘New Silk Road’, or probably more accurately the ‘New Silk Rail’, follows a similar path, pieced together by railways in six countries and taking half the time to transport goods between China and Europe than by ocean shipping.
“Transportation in the past between Asia and Europe meant choosing between air or ocean,” said Joost Van Doesburg, air freight policy manager at the European Shippers’ Council during the recent IATA World Cargo Symposium (WCS) in Shanghai. “Sea-air was introduced but never really flourished, but in the last few years there’s a new kid on the block – intercontinental rail freight.”
And so while faster and more expensive than ocean freight, it is also cheaper, but slower than airfreight, it is providing a key third option for shippers moving cargo between China and Europe. The new intercontinental rail route can save about 20 days compared with maritime transport and costs up to 80 per cent less than air freight.
Two principal routes comprise the modern day rail-based Silk Road – the West Corridor departing from Chengdu and the North Corridor along the old Trans-Siberian Railway. Interest in the routes as a means to stimulate economic growth, has been piqued at the highest levels.
Chinese President Xi Jinping proposed in 2013 the idea of a ‘Silk Road Economic Belt’, which has since received agreements from over 20 countries along the proposed route to study and collaborate on such an entity. Importantly, in only a few short years, many of the early problems have been overcome which has increased the attractiveness of this mode.
These include security, track gauge issues, customs issues, temperature extremes and reliability issues – to become a viable option. Freight is carried in doublestacked ocean shipping containers (both 20- and 40-foot) which aside from protecting them from the weather variations, also makes it easy to transfer when the rail gauge changes. This happens as trains exit China which uses narrow one metre gauge to Russianstyle broad gauge line at the Kazakhstan- China border before being transferred back to the standard gauge at the Poland- Belarus border, for instance.
Temperature extremes are taken care of by either active or passive methods in the containers, essentially the same as if the containers were on an ocean-going ship. Tracking and tracing can be done through GPS devices on the containers. “We are seeing that rail can take a more important role then before and we are receiving more and more requests from our customers for an alternative solution between air and ocean at lower cost but also effective. So transport mode shift will be a result of changing production and logistics requirements,” says Nover Jin, product head, air freight, Shanghai and East China at DHL Global Forwarding.
Pharma trials
Even pharmaceuticals have potential on the route, although that is something that is likely bad news for the air freight sector. The ‘Transpharma Express’ project, was set up following the 2011 launch of a trial transcontinental rail service between Antwerp and Chongqing by the Antwerp Port Authority, the province of Antwerp Development Corp. and Belgian Customs.
While there is sufficient demand for rail transport from Asia to Europe, there is a much less market potential in the opposite direction. But there is demand from the Flanders region of Belgium for rail transport of temperature-controlled goods to the Far East, which could create a balanced two-way traffic flow.
The Flanders Institute for Logistics performed risk analyses and carried out a test run from Antwerp to Kazakhstan in collaboration with Pfizer, the US pharmaceuticals company.
The “very positive” results “demonstrate that rail can be a sustainable transport alternative for shippers, compared with the riskier road transport, slower maritime connections and expensive air freight,” the Port of Antwerp said.
Aside from DHL, other forwarders the likes of DB Schenker (a natural considering its parent is German rail giant, Deutsche Bahn), TNT, Geodis, Hellmann, Damco and UPS have launched logistics services to take advantage of this alternate freight transport mode.
Benefits
Among the benefits according to Jin are a single customs clearance at origin stations, the same rail rate for bonded and non-bonded cargo, a solution for bulk cargo that cannot be handled by an airfreight solution, as well as less-than-container-load (LCL) for smaller shipments, fixed schedules and an environmentally friendly mode of transport. These factors do catch the attention of shippers in thinking about this solution, he adds.
He cites the example of a customer shipment of over 1,000 tonnes which may not be affordable by any airfreight solution, whether by charter, or scheduled flight. “Even if we arrange a charter we need at least 10 working days to apply the traffic rights, but imagine if we use the rail solution the total lead time from China to Europe will not be much longer than 10 days.’
But the heart of the matter for the air cargo industry is what impact it will have on them. Is this another case of modal pilfering, or is there something in it for air freight? At this point the jury is out on what impact it will have on air cargo, although for some the impact is inevitable.
“In my opinion it’s a bigger threat for air than ocean, because it’s not that slow 10 or 15 days,” said Van Doesburg. ‘But it’s quite a new option and the railways are improving, the procedures are improving, so probably it will get cheaper and faster so in that way I see a bright future for this option and in that way air cargo and air cargo industry will feel the impact.”
No Trojan Horse
While starting his presentation at the WCS with an image of a Trojan Horse, Lothar Moehle, director air security standardisation global air freight at Schenker AG said he actually sees this new rail option as an opportunity and not a threat to air. “I see using rail as a base to add on to an air leg, which makes not only a lot of sense, but was done because customers of ours were caught in crisis 5-6 years ago.”
That crisis, described by Moehle as a ‘double-whammy’ involved air freight suddenly becoming too expensive resulting in a large shift of cargo from air to sea freight, only to have the ships suddenly start slow steaming. “The customer needed a solution to too slow and too expensive – it opened a wide gap where customers needed a solution,” he says.
The Schenker solution uses both the West and North corridors out of China with the end point being the major German rail hub of Duisburg. After cargo security screening bonded trucks transfer the cargo to an air hub like Frankfurt, Luxembourg, or Amsterdam for instance.
“But if you can imagine the volumes that you can fit on the train you cannot take it all by air. So we have to de-consolidate and split it into several shipments because a B747 freighter cannot carry everything that is coming by rail and you cannot put a 40 ft container on an aircraft,” he says.
The commodities typically carried include: high tech electronics , telecommunications equipment , automotive, consumer goods, etc.
“The temperature aspect is very, very important,” he says and in the winter “we would never use the Tran Siberian, but the southern route through Kazakhstan is still miles and miles of nothing!”
Unlike DHL’s use of active temperature controlled containers, Schenker uses various passive measures as required. The containers are also monitored and should anything unplanned happen the company has a quick reaction plan in place in which security companies across the route, in cooperation with local police, can go to the location where container is, Moehle said.
He also anticipates that while speed is an issue currently, based on the quality of the tracks and trains being used, “we expect that when the Chinese and Kazakhstan rail companies see this is a sustainable business, they will upgrade the rail technology.”
As the acceptance and popularity of the mode grows, Moehle envisions that other hubs along trunk line will develop, enabling cargo to be offloaded and trucked or flown from there. “The possibilities are basically endless,” he says.
