Supply Chain Council of European Union | Scceu.org
Freight

European freight players turn to railways to speed up supplies from China

LONDON/COPENHAGEN (Reuters) – Transporters including Denmark’s Maersk (MAERSKb.CO) are increasingly moving critical medical equipment to Europe from China by rail as air and sea cargoes struggle with lockdowns due to the coronavirus, companies involved say.

FILE PHOTO: A worker is seen next to Maersk shipping containers at a logistics center near Tianjin port, in Tianjin, China December 12, 2019. REUTERS/Yilei Sun/File Photo

Continued restrictions on air travel and delays to port entry have hampered traditional supply lines for freight companies who in the past have relied heavily on flights and shipping to move goods around the world.

In recent weeks, such companies have increased their use of a rail link between China and Europe that was first pioneered three years ago.

Journey time via the rail routes, which run from China through Kazakhstan or Mongolia to Russia and then on to freight centres across Europe, typically take between 16-18 days compared with four weeks by sea and just under a week by air.

Demand for protective clothing, disinfectant, medical devices and healthcare products has surged during the coronavirus pandemic, with many suppliers based in China and South East Asia.

“We have seen an increase in customer engagement for rail services. Customers are increasingly focused on speed to market, lower costs per unit, keeping stocks low, improving coordination and visibility around the value chain,” a Maersk spokeswoman said.

Danish freight forwarder DSV (DSV.CO) said limited air freight capacity and higher costs had prompted an increase in rail traffic.

“It is somewhat more expensive than sea freight, but it is much cheaper than air freight,” DSV’s chief financial officer Jens Lund told Reuters.

Jochen Freese, chief commercial officer at German-headquartered Hellmann Worldwide Logistics, said they had seen a 74% increase in shipment volumes in the first quarter compared with the same period last year and a rise in volumes in April as well.

“Many of these customers are from the healthcare sector or are shipping urgently required products like protective clothing,” Freese said, adding that global air freight capacity was down by 31% compared with last year and shipping was also subject to severe restrictions.

“Rail transport, especially from China to Europe, is experiencing a completely new relevance,” he said.

Reporting by Jonathan Saul in London, Jacob Gronholt-Pedersen and Stine Jacobsen in Copenhagen; Editing by Kirsten Donovan

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