Higher demand for Backhaul on China – Europe spurs new services

Higher demand for Backhaul on China – Europe spurs new services

Huge investments in rail infrastructure, improved cooperation between the railways, relocation of production facilities to inland locations, growing trade between China and C.I.S. countries, and increased environmental awareness make rail transportation a viable transport option. Rail nowadays offers highly competitive solutions even to companies with very high demands on speed, reliability and safety. Therefore a growing number of electronics, automotive, industrial and consumer goods companies use the respective service.

For shipments between China and Europe rail fills the wide cost and lead time gap between air and ocean transport and is particularly attractive to companies with high value cargo or shipments between inland locations. In addition, it is the environmentally most friendly transport mode. For shipments between China and Russia as well as Central Asia rail often offers by far the best solution in terms of lead time and pricing

Backhaul demand: the game changer

The momentum that has been developing steadily on the rail freight link between China and Europe is spreading to the backhaul route with eastbound volumes rising sharply in the past year, according to DHL Global Forwarding.

DHL Global Forwarding has even opened a China rail competence center in the German city of Stuttgart to handle the increasing demand and now operates seven rail services a week between Germany and China.

“Rail freight volumes between Germany and Asia have increased 10-fold in just one year,” said Volker Oesau, CEO of DHL Global Forwarding Germany and Central Europe. This has required the expansion of its Stuttgart operation to primarily provide support to German customers in the automotive, technology, mechanical engineering, and retail sectors.

The 7,500-mile rail route connects 16 cities in China with 15 cities in Europe with forwarders building the mode into their regular services offered on the Asia-Europe trade and are now starting to do the same on the return journey. Trains of more than 40 wagons follow either the trans-Kazakh western corridor or the trans-Siberian northern corridor, connecting with the dense network of rail hubs in China, and linking with Taiwan, Japan, and South Korea.

DHL’s Stuttgart center will provide the multi-modal solutions required for the end-to-end transport processes such as collection, export, and transit formalities; the Euro-Asian rail service; customs clearance in the land of arrival; and delivery by truck or combined rail transport.

Challenges for the container train services

Challenges for service providers on the route include tracking and tracing the containers and ensuring their security. With such vast distances being traveled through remote areas, and multiple gauge changes en route, maintaining the integrity of the cargo is a key factor. DHL said track and trace and temperature information was available and its team was also developing tailored security concepts for high quality goods.

Simplified Customs Procedures

Customs procedures have been simplified with the introduction of the standardized CIM/SMGS waybill — international conventions that apply in Eastern Europe and Asia to the international carriage of passengers and goods by rail — and has minimized the administrative effort required at border crossing points.

The CIM/SMGS document is recognized by customs authorities and facilitates faster clearance of goods transport. The waybill can be used for wagon load traffic and combined transport, and improves the flow of documents at border crossings between two legal jurisdictions.

Less-than-container-load (LCL) shipments are expanding rapidly on the headhaul and backhaul China-Europe rail trades, opening up the routes to a much wider customer base. DHL Railconnect is an LCL service that the forwarder started in 2016 that uses the German rail hub of Duisburg, and in February, Kuehne + Nagel launched its KN Eurasia Express LCL service for shipments heading westbound and eastbound.

Otto Schacht, member of the management board of Kuehne + Nagel International responsible for sea freight, said with transit times of between 14 and 18 days from departure to destination terminal, delivery times were much faster than maritime transport and at lower costs compared with airfreight.

German logistics provider Dachser has also begun to offer a weekly scheduled LCL service connecting Wuhan with Hamburg with fixed weekly departures.

DB Schenker’s pioneering efforts

A pioneer in the development of block trains between China and Europe was German forwarder DB Schenker that started operating regular block trains eastbound and westbound in 2011 with FCL and LCL shipments.

DB Schenker was involved in bringing the first train from China to London in January, taking charge of the locomotive on the Duisburg to London leg via the Channel Tunnel. In the test run, the train originated in Yiwu in the eastern Chinese province of Zhejiang and reached London in around 18 days, making it twice as fast as transport by sea. The train was loaded mainly with textiles and other consumer goods.

A record number of containers, around 40,000, were transported by train along the legendary Silk Road in 2016, according to DB Schenker, which expects the volume to increase to more than 100,000 containers by 2020. Some estimates put the 2020 prediction as high as 500,000 TEU, with concerns being raised that congestion at key points, such as rail gauge change stops, could become a problem.