Demand for cargo increases since Red Sea attack

And although this is only a small part of the containers moving between the Far East and Europe, there is also growing interest in rail routes through Russia.

Freight forwarders and consolidators (companies that arrange shipments of goods) are reporting a surge in inquiries and bookings for this route. Rail transport is attractive to shippers because it is cheaper than air transport and faster than sea transport.

RailGate Europe is a group of consolidators that transports goods such as furniture, toys, clothing, and auto parts from China through Russia to European countries.

Depending on origin and destination, journeys can take between 14 and 25 days, but according to Julija Sciglaite, chief business development officer at RailGate Europe, this travel time is “significantly less than sea time.” will be shortened.

Sea shipping from China via the Red Sea to the Dutch port of Rotterdam takes approximately 27 days, while an alternative route via South Africa’s Cape of Good Hope takes approximately 10 to 12 days. German shipping company Hapag-Lloyd announced last week that it would continue to reroute ships until further notice.

Sigurite said companies have expressed concerns about shipping goods by rail through Russia. “Since [the] As the Ukraine war began, many companies were afraid to deliver cargo through Russia when the train passed through. [through] It’s part of Russian territory,” she told CNBC via email.

“Since [the] The war began, [the] Although the number of reservations via Russia has decreased significantly, [the] “This route has been picking up in the last year due to good transit times and fares,” she said.

However, since the Houthis began attacking ships in the Red Sea toward the end of 2023, demand for rail has increased, Sigurite said. “rear [the] incident at [the] “The Red Sea…demand has surged,” Sigreit said, adding that the Lunar New Year, which begins on February 10, is also likely to stimulate demand, although the full impact on demand will not be known for several months. He said.

The EU allows sanctioned goods to move through Russia by rail (road transport of sanctioned goods is prohibited), but munitions passing through the country are prohibited by any means of transport.

Igor Tambaca, managing director of Dutch logistics company Rail Bridge Cargo, said bookings for rail routes between China and Europe have increased by 37% in the past four weeks. “Rail demand has skyrocketed,” he said in an email to CNBC, adding that this was due to the Red Sea disruption and Lunar New Year.

Rail Bridge Cargo transports goods ranging from mechanical parts to electronics to food. “Money transfers to Russia will only be refused to customers who have ethical issues in Russia. Most customers will[s] If you need a fast and reliable solution to Europe for your supply chain, you don’t have to worry about ethics,” Tambaca said, adding that the company also offers insurance for this route.

Shippers who don’t want to send their goods by rail through Russia can also take the “intermediate corridor” from China through Kazakhstan and the Caspian Sea to Turkey, which takes about 26 to 29 days. said Tambaca.

Austrian operator OBB Rail Freight Group is focusing on the Central Corridor route due to customer concerns about sanctions, company spokeswoman Maria Magdalena Pavic said.

He told CNBC in an email that the company has seen a “significant” increase in inquiries about the Intermediate Corridor route from customers in Europe and Asia in recent weeks. “One of the reasons for this is that sea freight rates have been rising rapidly and are expected to rise further in the future. [this] This means that prices are approaching the price of rail freight,” Pavic said.

Tambaca said the cost of shipping a single 40-foot container (FEU) from China to Europe by rail is currently about $7,900. This compares to February’s forecast for maritime transport between the Far East and the Mediterranean of $6,507 per FEU, according to Zeneta data.

Sigreit said Chinese train stations such as Xi’an, Chengdu and Yiwu had raised prices “several times”, but the changes were seen during the coronavirus pandemic and when the Suez Canal was blocked by the Ever Given in 2021. He said it was not a price increase like the previous one. she added. For now, trains are running on time, but that could change, Sigleit said. “Overbooking is likely to cause delays, but the question is how fast and at what scale,” she said.

China’s Belt and Road Initiative aims to increase China’s global influence through transport links such as railways linking China with Asia, Europe and Africa, while Russia works with foreign partners to Russia is building a railway line to China, President Vladimir Putin said. The Belt and Road Forum will be held in Beijing in October.

British company Davis Turner began operating a rail freight service between China and the UK in 2018, transporting goods by truck and ferry between the cities of Wuhan or Xi’an in China, via Russia, Belarus and Poland, to Duisburg in Germany. Transport by.

In an online statement in September, the company described the rail link between China and Europe as a “vital bridge for international economic and trade cooperation” and said it had delivered a “staggering” 77,000 freight trains in the decade starting in 2019. pointed out that it operated this route. 2023.

Marco Forgione, director of the Institute for Export and International Trade, told CNBC by phone that he expects the disruption in the Red Sea to last for several months, and possibly throughout 2024. “Fixing the supply chain and getting everything back to normal will take many months,” he told CNBC by phone.

“What we are seeing in the Red Sea will continue to be a disruption to the world’s international trade. We cannot simply replace everything that was in circulation with alternative types of transport,” Forgione added. .

Paul Brasher, vice president of ITS Logistics, said the Red Sea crisis could benefit U.S. exports in the long run.

“In both the short and long term for Europe, [the] The cost of obtaining the product increases. Could it change the trade balance between Europe and Asia and between Europe and the United States? …It’s very, very likely that U.S. exports will gain some traction from this,” he said. he told CNBC via video call.

— CNBC’s Evelyn Cheng, Lori Ann LaRocco and Lee Ying Shan contributed to this report.