Red Sea Crisis —— China-Europe Railway May Be a Better Choice

Red Sea Crisis —— China-Europe Railway May Be a Better Choice

    Due to the impact of the Red Sea channel crisis, global shipping giants Maersk, Haberrod, and Mediterranean Shipping Company have adjusted their routes to avoid the Red Sea, resulting in extended sailing times and reduced shipping capacity, which has led to a sharp increase in shipping prices.

    In Europe, the fallout from the Red Sea crisis has already had a significant impact on interest rates. A European freight forwarder told Container News that freight rates may rise from the current US$4-5,000/FEU to US$12,000/FEU by February because space on ships from Asia to Europe has been restricted in January and is currently only available. Accepting new orders for departure in February. 

    CMA CGM announced that starting from January 1, some peak season surcharges on its Asia to Northern Europe routes will be US$500/TEU, while the surcharges on the Mediterranean route will be US$3,650/20-foot dry box and US$6,300/FEU or refrigerated cargo. All surcharges are effective from January 15th. 

    There are signs these prices will remain unchanged as the fallout from the Houthi campaign is expected to persist, while European retailers have warned prices will rise again.

    As a result, analysts are predicting longer supply chains, longer delivery times, higher freight rates and port congestion that appear to be a repeat of COVID-19 disruptions. Faced with this situation, some cargo owners have begun to consider China-Europe freight trains or China-Europe cross-border road transportation as alternatives. In 2023, the freight volume of China-Europe freight trains entering and exiting through the Erenhot Port in Inner Mongolia exceeded 3 million tons, reaching 3.35 million tons, a year-on-year increase of 30.29%; the cargo value was 51.3 billion yuan, a year-on-year increase of 37.39%.

    Ships choose to sail around Africa's Cape of Good Hope, resulting in a significant increase in transit time. Taking Yangyangshan Port to Haifa Port in Israel as an example, the original route takes 22 days to detour around the Cape of Good Hope, but it takes 35 days. It is expected to be delayed by more than 10 days. Costs also rise. As a result, global shipping prices have increased, especially the freight rates on the Asia-Europe route have increased by more than 1.5 times compared with early December 2023.

    SCFI freight index data released by the Shanghai Shipping Exchange on January 6, 2024 shows that the freight rates for exports from Shanghai Port to European and Mediterranean basic port markets are US$2,871/TEU and US$3,620/TEU, respectively, higher than on December 8, 2023. 210.38% and 160.99%. 

    Drewry released data on January 5, 2024, showing that the WCI index continued to rise. Among them, the Asia-Europe route has the highest increase in freight rate from Shanghai to Rotterdam, which is US$3,577/FEU, an increase of 115% from December 21.

    The Red Sea crisis has led to shipping uncertainty and price surges, creating opportunities for China-Europe freight trains and cross-border road transport. Many customers who originally chose sea shipping began to consider China-Europe freight trains as an alternative. Deng Guoliang, Vice President of Railway and Road Transport of CEVA Logistics Greater China, said that CEVA’s China-Europe land freight volume has increased by approximately 30% since the Red Sea crisis. There has been an increase in the number of customers choosing road and rail as shipping customers seek alternatives to road and rail products for greater flexibility and timeliness.

    As demand grows, the price of China-Europe freight trains has also increased. It is expected that the price of China-Europe freight trains will continue to rise in the future as shipping costs increase. China-Europe cross-border highway prices remain stable and there is currently no significant growth. At the same time, due to the extended shipping voyage, the return of empty containers has slowed down, and the container market has been in short supply and prices have risen accordingly.

    At present, the price of some trains has increased. For example, the price of the train from Wuhan to Hamburg has increased from US$3,500-4,000 to US$4,500-5,000, and the price of the train from Chengdu to Mara, Poland has increased from more than US$3,000 to more than US$5,000. At the same time, the cost of 40HQ containers on the China-Europe route has also increased from the original 500-600 US dollars to 1000-1200 US dollars. The container shortage is likely to intensify as the Red Sea crisis continues. Compared with the continuously rising shipping costs and unstable transportation time, it is more recommended to choose the China-Europe Express to transport goods. The transportation time is saved in half even though the price is similar.

Common routes of China-Europe trains are as follows:

1.China Europe Railway Express Urumqi-Duisburg

Port of Exit and Entry: Alashankou Port

Countries on the Route: Kazakhstan, Russia, Belarus, Poland and Germany

2.Yuxinou Chongqing-Duisburg

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus, Poland and Germany

3.Rongxinou Chengdu-Lodz

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus and Poland

4.Zhengxinou Zhengzhou-Warsaw

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus and Poland

5.Zhengxinou Zhengzhou-Hamburg

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus, Poland and Germany

6.China Europe Railway Express Wuhan-The Czech Republic

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus, Poland and The Czech Republic

7.China Europe Railway Express Suzhou-Warsaw

Port of Exit and Entry: Manzhouli Port

Countries on the Route: China, Belarus and Poland

8.China Europe Railway Express Changsha-Duisburg

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus, Poland and Germany

9.Yixinou Yiwu-Madrid

Port of Exit and Entry: Alashankou Port

Countries on the Route: China, Kazakhstan, Russia, Belarus, Poland, Germany, France and Spain

10.China Europe Railway Express Harbin-Russia

Port of Exit and Entry: Manzhouli Port

Countries on the Route: China and Russia

11.China Europe Railway Express Harbin-Hamburg

Port of Exit and Entry: Manzhouli Port

Countries on the Route: China ,Russia and Germany

12.China Europe Railway Express Lanzhou-Hamburg

Port of Exit and Entry: Alashankou Port

Countries on the Route: Kazakhstan, Russia, Belarus, Poland and Germany

If you have any shipping needs from china to Europe please feel free to consult Viputrans  Lora Yang E-mail: sales02@viputrans.com

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