Career
The first freight train from China to Europe set off in 2012. A decade of railway cargo volume growth followed. In 2022, that growth ended due to invasion to Ukraine. Geopolitical tensions significantly restricted westward shipments of goods from China, and logistics companies have sought alternative delivery routes.
Sea transport between China and Europe has always been the main alternative to shipping via the New Silk Road. During the Covid-19 crisis, sea transport rates were several thousand US dollars per 40-foot container, with transit times of 30-40 days. Most clients opted for rail delivery, as prices were comparable and the transit time was only 2 weeks. Today, the market for rail services directly depends on geopolitics – in particular "moral sanctions" imposed by importers and transport companies – as well the rates for the competitive options of sea and air freight and the customers’ delivery speed and safety preferences.
"Today, sea freight rates from China to Europe have decreased to $1,000 US dollars per 40-foot container. As a result, importers for whom delivery speed is not a priority choose maritime transport. Despite reduced demand for rail services in Europe, we have seen an increase in the number of orders. However, companies typically place orders for consolidated less-than-container-load (LCL) rather than full container load (FCL) deliveries," shares Jakub Lewczuk, Head of the Railway Department at AsstrA for the EU and China regions.
The Eurozone has entered a period of economic stagnation. The growth in demand for deliveries via the New Silk Road will depend on the availability and regularity of maritime connections as well as EU demand for Chinese goods. Sanctions on Russia and Belarus are the most significant legal barriers imposed by suppliers and recipients on railway shipments. Also, bans on the import/export of goods – even in transit through these countries – are a significant factor.
"With each new round of sanctions, more categories of goods are blocked with regards to transport and transit. Consequently, there are fewer goods we can send from China to Poland. When the geopolitical situation stabilizes, I believe that many importers will return to rail shipments as a faster alternative. Otherwise, we will only service those orders that were initially intended for sea shipment but due to certain circumstances require shorter delivery times. Also, we use the rail option for cargo unable to be transported by air due to weight or volume," continues Jakub Lewczuk.
In search of an alternative to the New Silk Road, the transportation industry has turned its attention to the Trans-Caspian International Transport Route (Middle Corridor), which passes through China, Kazakhstan, the Caspian Sea, and the Caucasus countries into Europe. However, redirecting volume here has proven problematic.
"Shifting the key transport corridor southward requires significant infrastructure investments as well as time to conclude new international agreements on the transit of goods through these countries. This route will be more popular if the infrastructure is improved, customs and formal issues between transit countries are resolved, and there are more available ships on the Caspian Sea. In addition, additional investments will be needed from the European Union to avoid bottlenecks between the Black Sea and the EU. There is an urgent need to expand the port of Constanta in Romania as well as railway and road lines in this region," concludes Jakub Lewczuk.
Author: Kamila Rynkiewicz.
