China Europe freight train rail rates have leaped five-fold on the back of “extreme” demand and lack of equipment.
Furthermore, a container backlog on China’s border with Khazakstan (Alashankou and Khorgos) has prompted a temporary suspension of some westbound services.
Westbound trains from China to Europe have been suspended. The eastbound rail route from Europe to China is running as usual, but we expect certain delays in stretch from the CIS and China border crossing. Space on the westbound service is extremely tight, shipments are being accepted based on firm bookings, depending on the availability of space and equipment.
Rail volumes were approaching full capacity on the back of space constraints in air and ocean, while delays caused by military movements at the Kazakh-China border were adding to the congestion. A dispute over quarantine measures led to both China and Khazakstan limiting the number of trains crossing the border.
Rob Foster, business development manager for central and north China at Norman Global Logistics, said: “There’s a huge backlog on the border, with the carriers unable to cope with the volume of rail wagons.”
“We are seeing westbound rates of anything from $6,000 to $10,000 per 40ft high-cube in the last week, which is four or five times the rate this time last year. And carriers won’t even guarantee the space at those prices.”
Mr Foster said a “significant lack” of equipment was also a key issue, especially out of China.
“The shipping lines have had a substantial part in causing this issue by manipulating the ocean freight market, which has affected all services. Carriers have been loading smaller vessels for months now and throw blank sailings into the mix, slowly building the pressure. Rail carriers have some containers, but lots are shared and leased still.”
He pointed out that rail services had “exploded” in recent years from a few services a week to hundreds a month, putting considerable pressure on the network.
For example, the latest figures for Alashankou, show a 42% increase, to 4,500 train journeys this year, while services across the entire China-Europe network have exceeded 10,000.