Amid the Red Sea Crisis, a growing number of freight forwarders are turning to the China-Europe Rail Express (CRE), which connects China and Europe, as a transport alternative, Asian Media reported.
Yemen’s Houthis have been attacking Israel-linked commercial ships bound for Israel since November. The attacks have raised risks for transport companies moving goods along one of the world’s busiest sea routes, leading to soaring fares and long delays.
According to a recent Fitch Ratings report, CRE’s capacity has grown significantly from pre-crisis levels. Kong Weidong, head of the Zhengzhou branch of T.H.I. Group (Shanghai) Ltd, a freight forwarder, noted a remarkable increase in enquiries about the China-Europe freight train service since the beginning of the year. Kong said:
“Since January, the number of inquiries has soared more than tenfold, and the actual export volume of goods has increased by three to four times.”
Kong said China-Europe rail transport usually takes 12 to 18 days to reach European destinations from Chinese cities, and the cost of a container is about $6,500.
Kang Yingfeng, deputy general manager of China Railway International Multimodal Transportation (CRIMT), the national operator of the China-Europe goods train service, noted a significant increase in the number of enquiries for China-Europe goods train services since January.
Major international logistics companies such as DHL and Kuehne+Nagel have shown great interest in the new China-Europe freight route, which combines rail and sea transport, crossing the Caspian and Black Seas. The network also passes through countries such as Kazakhstan and Georgia before reaching European countries.
Last month, DHL told The Financial Times that requests to ship goods by rail to Russia had risen by about 40 per cent since container ships began diverting on longer routes through the Cape of Good Hope, the southern point of the African continent, in December.
Fu Cong, China’s ambassador to the European Union, said in an article published on the European news website Euractiv that about 60 per cent of Chinese exports to Europe before the crisis depended on the Red Sea route.
Now that 90 per cent of these container ships from China have been forced to change their route via the Cape of Good Hope, delivery delays have increased by at least 12 days. In such circumstances, many businesses have started to consider using CRE. Fu said:
“With the decline of freight volume in the Red Sea, this land route has bucked the trend to see strong growth. Inquiries made to the railway express have almost doubled. Most container service providers predict that railway transport will grow dramatically in the years ahead.”
CRE plays a stabilising role by securing international supply chains in the Red Sea crisis, according to Hannes Fellner, a professor from the University of Vienna.
More than 200 cities in Europe have benefited from the CRE programme. According to China Railway, by the end of February 2024, the CRE network had expanded to 219 cities in 25 European countries.
