Changing trade environment offers new opportunity for rail transportApril 3rd, 2014
As more and more Chinese manufacturers begin to locate to inland facilities costs become increasingly higher to move goods to sea ports. Yet the nature of the goods themselves has changed, a growth in retail ecommerce is putting a strain on logistics solutions providers.
More importantly, inland manufacturers have moved up the value chain, producing high-tech items not suited to slow steaming to Europe and America. These type of goods need to be on retail shelves pronto. This is where manufacturers look to airfreight as a solution, but in fact rail transport is becoming an increasingly useful halfway house.
‘Asia’s transformation’ sees local logistics providers taught in local ways being joined by companies such as DHL, DB Schenker and Geodis Wilson who have introduced road and rail transport connecting Asia to Europe.
China railways are undergoing a cultural revolution themselves, recently abolishing the scandal-ridden Ministry of Railways replacing it with the Railway Corporation. It will now be aggressively pursuing next-day delivery in direct competition with express companies both foreign and domestic.
China-wide, regional railway bureaus have been shaken up and new aggressive services are being provided to accompany announcements of new tracks being laid. This process, established over 10 years ago is now moving at a pace which leave rival India far behind. Importantly, for marketing purposes, the railways have simplified booking procedures.
The advantages of choosing rail as a means of freight transportation can be far outweighed by any of its disadvantages. Rail can cost up to double the amount compared to that of ocean freight but it offers highly competitive solutions to companies with high demands on speed. Their service offers reliability, safety and is the most environmentally friendly mode of transport.
The Chinese Government is encouraging rail service development. Companies who manufacture inland and use rail for the exportation of their goods will be given government subsides such as free collection of goods. In the past rail was largely used for the transportation of coal, steel and agricultural products. Nowadays there is a growing number of electronics, automotive, industrial and consumer goods using this respective service.
At this point in time there are 3 big rail container stations operating regular freight services from China to Europe. Zhengzhou, Chongqing and Chengdu run weekly services with access to major cities such as Kazakhstan, Russia, Belarus, Poland, Germany and the Netherlands, reaching destinations in 13-15 days. Compare this with that of ocean transport which takes up to 40 days to reach such destinations.
As more and more factories and enterprises have either moved or are in the process of relocating from coastal cities to mainland China for whatever reason now have the benefit and access of rail services. This will therefore help to increase transit times of delivery between China and Europe.