Shipping from China to Europe by Railway Is Now Cheaper by Sea

The rates for container shipments between Asia and Europe by railway have dopped below the shipping costs by sea.

Freight rate forecasting is usually based on two indices – ERAI (Eurasian Rail Alliance Index) and WCI Drewry (World Container Index). The ERAI index reflects the weighted average cost of 1 FEU transportation along all routes of PR China – EU border transport corridor. Drewry, the international analytical agency and the creator of the WCI, calculates the index from the average rates of 7-9 shipping companies.

The ERAI became lower than the WCI Drewry for the first time in November 2020. The gap between the indices has been stable in the past four months since then. The highest rate for sea transportation in January this year was $5.26 thousand with the ERAI index of $2.67 thousand.

The traditional role of railway transport in addition to maritime transport in global supply chains has changed against the rising sea transportation rates and steady railway prices. The Suez Canal blockage at the end of March was an additional argument in favor of railway transit.

In the first quarter of 2021, container traffic between China and Europe via Russian railways increased 2.2 times against the same period in the previous year totaling 162.6 thousand TEU. Besides, transportation of loaded containers grew by 2.1 times up to 151.5 thousand TEU (about 1.2 million tons were transported making a 2.7 increase). At the same time, transit from China to Europe has increased 2.1 times since the beginning of the year totaling 105.8 thousand TEU, and from Europe to China - 2.3 times totaling 56.8 thousand TEU.

Flexible schemes according to cargo owner’s needs

The increase in the volume of transportations by express container trains for TELS Group customers goes along with the market trends. Ekaterina Vojtova, Head of the Multimodal Transportation Department, explains the peculiarities of work in this direction:

“The range of our capabilities, flexible schemes and expertise are growing rapidly. When we get a request for transportation from China, our experts work out several delivery schemes by different modes at once taking into account all the specifics of customer’s business and their priorities – we must consider all the aspects. We aim to understand the specifics of customer’s business and offer the scheme that suits them best based on their geography, product price, manufacturing or warehouse needs, delivery conditions, etc.”