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In the wake of the recent attacks on the Red Sea, disrupting major ocean routes and causing a ripple effect on global shipping, shippers are increasingly exploring alternative transportation methods. Air cargo volumes between Vietnam and Europe have surged by 65%, while a notable uptick in interest has been observed in rail routes via Russia.
RailGate Europe, a group of consolidators specializing in transporting goods such as furniture, toys, clothes, and automotive parts from China through Russia to European countries, has reported a significant increase in enquiries and bookings for their services. The journey, taking between 14 and 25 days, is deemed “significantly better” than traditional ocean routes.
The disruption in the Red Sea, caused by attacks on vessels, has accelerated the demand for rail transport via Russia. Despite initial concerns related to the war in Ukraine, shippers are increasingly turning to this option due to its competitive transit times and cost-effectiveness.
Igor Tambaca, managing director of Rail Bridge Cargo, a Dutch logistics company, revealed that China-Europe rail route bookings have surged by 37% over the past four weeks. He attributes this spike to the Red Sea disruption and the upcoming Lunar New Year, a period expected to stimulate further demand.
While some firms express reservations about sending goods via rail through Russia, the European Union permits sanctioned goods to be moved through this route. However, military goods through the country are banned via any mode of transport.
The “middle corridor,” an alternative route from China through Kazakhstan to Turkey via the Caspian Sea, has also seen increased inquiries. This route takes longer, ranging from 26 to 29 days, but is considered by some shippers as an option to avoid Russia.
Shippers who opt for rail transport via Russia are benefitting from lower costs, with the current price for sending a forty-foot container standing at around $7,900. In comparison, ocean freight costs were forecasted at $6,507 per container for the same route in February, according to Xeneta data.
However, concerns have been raised about potential delays and rising prices, as Chinese railway stations increase their rates. The industry is closely monitoring the situation, with the possibility of overbooking causing delays in the future.
This surge in demand for rail transport highlights the resilience of alternative routes and the strategic importance of diversified transportation options in the face of global disruptions. As shippers navigate challenges in traditional shipping lanes, rail routes via Russia are emerging as a vital component of international trade and supply chain resilience.