As a new “Silk Road” is forming in Central Asia, rail has become an important and fast-growing mode of transport for international supply chains. In 2017 alone, DSV moved over 5,000 containers from China into Continental Europe.
Just a few years ago, containerised traffics on tracks between Asia, the Middle East and Europe was almost non-existent, but today it’s full steam ahead with an estimated 270,000 – 290,000 TEU transported every year and a projected increase in available trains from approx. 3,600 trains in 2017 to 7,700 trains in 2027.
The increase in rail transports began when the Chinese government unveiled their extensive Belt and Road Initiative in 2013. The initiative aims to increase the trade network and connectivity between China and 60+ countries through direct rail and other measures like highways, ports, terminals, power grids and more. The forecasted infrastructure investment from the government is set to between 4-8 trillion USD.
A lot has happened with rail from a global economic perspective in the last couple of years, for DSV and for our customers as well.
Alexander Korte, Senior Director, Air & Sea, China, explains the global perspective:
“Many remote regions in Western China previously left out of the economic activity, will now be connected to an international transport network. This will likely have a very transformative impact on China’s economy, allowing companies to manufacture goods in Western China, where overall costs will be significantly lower compared to the established economic regions in the East of the country. It’s quite exciting.”
Old history, but a young product
Rail might sound like an antiquated transport solution but in reality, it is still a young product affected by challenges such as various government regulations, capacity bottlenecks and missing industry standards.
“Through the years, DSV has developed an in-depth understanding of rail transport and the necessity of pro-active cargo management,” Michael Hollstein, Senior Director, Air & Sea, Germany, tells and continues:
“DSV started rail activities already in 2014, as we had a couple of large retail customers interested in utilising rail as part of their supply chain. Their evolving product cycles required transport solutions with shorter transit times, and here rail became an interesting new option; it’s more economical than air freight but faster than sea freight.”
A solution for new and changing business models
Alexander Korte concludes:
“We are seeing a massive increase in the request for rail services and we are happy to provide our customers with all the information they need to make the best decision for their company’s transport needs. I can only recommend that companies shipping time-sensitive products from China into Europe and vice versa seriously look into rail as an alternative or complementary solution to their international supply chains.”
About the China – Europe rail services in DSV
In 2006, a journey for a 40-foot container from Shanghai, China, to Hamburg, Germany took 36 days by rail. Today it takes just 16 – 18 days depending on the route taken. DSV uses three main routes between China and Europe, which are backed by solid agreements with rail operators to have access to the capacity needed for our customers.