How to balance the demands in the situation of rail capacity shortage?

Over the past ten years, with the support of the state and local governments and the participation of all railway service suppliers, the Eurasian rail transport has achieved rapid development. In the environment of the large-scale outbreak of the epidemic in 2020, the China-Europe freight train and the land corridor have contributed to the normal operation of the global supply chain.

Facing the high demand in the Asia-Europe freight market, the freight rate of China-Europe freight train has been continuously increasing since last year. One of the major benefits of the increase in rates for the development of the industry is that it gradually reduces the dependence on government support policies and subsidies. From this point of view, the marketization process of this branch has indeed taken a big step.

The pandemic is still going on this year, and the shortage of global transportation capacity is continuing. The 6 days blocking of the Suez Canal has pushed more goods and shippers flocking to the railway. It is hard to for the shippers to find a cabin on the westbound route. The capacity is insufficient to meet all demands, so the price has reached a new high. Even in this situation where everyone spends a higher freight rate, there are still many customers who cannot complete their cargo transportation.

So, here comes the question —— Which customers should be preferentially taken care?

Is it the customers who have been using China-Europe freight train for a long time? Or is it a new customer who is transferred from sea to the railway because of the shortage of sea shipping?

From the perspective of market-based competition, the answer is simple, the higher bidder wins.

On the one hand, there are loyal customers who have been using China-Europe freight services during the off-peak and peak seasons after years; on the other hand, there are customers who temporarily moved to the railway during this difficult period. In this case, it is often the “temporary customers” that bid higher and take the lead, squeezing the space. Since the second half of last year, the sea freight rate has experienced high records step by step. The rail freight rates nowadays are almost no difficulty for the sea shippers to accept.

It can be imagined, can customers from sea shipping become long-term railway customers? Or is it that they will eventually return to sea shipping when the market becomes normal?

No one wants to be a disloyal customer. In the market, those smaller customers often don’t have many choices.

Therefore, in the current situation lacking capacity, how to serve the long-term customers and how to balance the needs of long-term customers and temporary shipping customers have become issues worthy of discussion. However, taking measures that could increase the rail capacity should be one of the most important things.