Air cargo should see China-Europe rail services as added competition

The air cargo industry should see the proliferation of rail services between China and Europe as added competition.

Speaking on the side lines of the Fiata World Congress in Dublin, Ivan Petrov, chief executive of forwarder TransXpress and Fiata senior vice president, said that the number of rail services between Asia and Europe had grown rapidly over recent years.

He said rail services offered lower prices than airfreight and faster transit times, of around two weeks, than the five week ocean journey.

He said the rail services provided more service options for forwarders and therefore air cargo should see them as extra competition.

During a presentation earlier in the session, Petrov said that in 2013 there were 72 block train journeys between Asia and Europe. Last year, this figure grew to 815 and is expected to reach 1,200 by the end of 2016.

Meanwhile, the value of cargo carried on these services stood at $1.1bn in 2013 and this year is projected to reach $19bn.

He added that today, 10 cities in China run block rail services to 11 cities in seven European countries.

While these growth numbers are impressive, the amount of trade carried in 2015 by Asia-Europe rail represented just 2.2% of the total market and there are challenges ahead.

Petrov explained that at the moment competition levels are limited as there are just four rail companies offering services, there are restricted routing options and a restricted number of border terminals for re-loading of cargo between different rail gauges.

He also questioned whether there was a real market for these services as transport by rail is heavily subsidised.

Hans Kersten, director of freight at the International Union of Railways, also identified other challenges for the services.

He said there were infrastructure bottlenecks, different operational rules and legal regimes between the various countries, the amount of time it takes to cross borders was unpredictable and there was a traffic imbalance in favour of the westbound direction.

However he also identified opportunities for the rail services to grow further as production in China shifts from coastal to inland location – although this was mainly a threat to sea transport – longer and heavy trains are developed to increase productivity and the UN is working on global harmonisation of railway laws.

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