Weekly LCL service widens appeal of China-Europe rail route

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German logistics provider Dachser is offering a weekly scheduled less-than-container-load railway service between China and Europe in what will expand the appeal of the overland trade route that has predominantly been a block train operation.

The family-owned forwarder said the new Wuhan-Hamburg service would create greater stability for handling worldwide supply chains when market conditions were often unpredictable. The service is another sign of how containerized rail between China and Europe has evolved from a niche option with infrequent service and a small network, serving major high-value and time-specific shippers, to one attracting suppliers and second-tier companies with more and faster services to a wider array of destinations.

“With capacity constraints becoming the limiting factor, the rail route to Europe became an integral part of the integrated supply chain,” said Edoardo Podestá, Dachser managing director air and sea logistics, Asia-Pacific.

Dachser is using its own consolidation containers for rail transport between Wuhan and Hamburg that will extend its door-to-door offering between the continents. The LCL service will have fixed weekly departures with all upstream and downstream activities following defined standards and schedules, the forwarder said in a statement.

Dedicated operational teams will manage the complete process, from pre-carriage in China to delivery to final destination in Europe, with service desks on both sides assure.

The LCL service will capitalize on increasing shipper interest in a land route that is up to 80 percent cheaper than air freight and three weeks faster than ocean container shipping. Shippers are moving pricier goods with firmer deadlines for delivery on rail, rather than on ocean, and forwarders report that some cargo traditionally traveling by sea has been shifted to the rail route.

The block trains on China-Europe rail networks typically carry around 40 FEU, transferring the cargo first at Kazakhstan’s inland port Khorgos Gateway to the different gauge lines and once again later in the journey. Trains run from Khorgos to Duisburg three times a week, and services are also provided to Madrid and to the United Kingdom. And exporters in Japan, South Korea, Taiwan, Hong Kong, and Vietnam can tap forwarders’ ocean-rail service combos via Chinese ports.

Podestá said the rail route into Europe was becoming part of the integrated supply chain with capacity constraints becoming the limiting factor.

“Our customers have accepted rail and are using it more and more. Last year China-Europe rail was regarded as being special but now they want it included in their transport options,” he said.

Dachser handles more westbound rail cargo out of China, carrying mainly electronics and other higher priced products, but there was rapidly increasing demand for eastbound rail out of Germany by shippers of auto parts and machinery.

“Our customers send us the shipping orders and based on the parameters of lead time and kind of cargo, we look at the different modes, and rail is now one of the regular alternatives to air and ocean. If rail fits the solution better, we will use it.”

Chris Welsh, secretary general of the Global Shippers’ Forum, said many shippers were now sourcing from Eastern Europe and Turkey to have greater control over their costs and their supply chain.

“Many Europe shippers have already carried out trial runs of the China-Europe rail to test the route. For retailers, it is vital to have the supply chain geared up to meet the needs of just-in-time system,” Welsh said.

While exact figures are difficult to find, it is estimated that 500,000 tons of cargo is now being carried per annum on the China-Europe rail services. There are 10 to 15 service providers on the route operating 39 connections, although only 13 of those run on a frequent basis.

By Greg Knowler

JOC.com

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