From Air to Rail – the latest trend? 05/12/21




From Air to Rail – the latest trend?

For several months now, like a number of other European cities already, Frankfurt has become part of the new terrestrial Silk Road and welcomed scheduled freight trains. This raises the question as to whether this climate-friendly transport option will become a serious alternative to air services, challenging cargo carriers? Perhaps in the standard cargo segment to some degree, as indicated by the latest market trends. They show that there are increasing opportunities for railway companies to capture parts of air and ocean transports, although at a still marginal level.

In passenger traffic, the trend is obvious. Particularly on routes of distances less than 500 km, travelers are increasingly choosing trains over planes. The driving force behind this is, above all, their awareness that without changing their personal habits, greenhouse gas reductions to stop global warming will not work, despite many appeals and warnings by renowned scientists. The increasingly observable turn in the tides is driven by the Paris Climate Agreement, the Fridays for Future movement, and warnings from scientists to stop global warming now. Meanwhile, an increasing number of enterprises are joining the (green) bandwagon by taking steps towards the CO2-neutral production and distribution of their goods. Their roadmap to reduce or even completely eliminate harmful carbon dioxide emissions is often ahead of the government commitments trumpeted by delegates at congresses such as Paris, Dublin, or others. This goes hand in hand with the change in consumers’ habits, the growing demand for organic products, and an agriculture that puts environmental concerns first.

Viable alternative
What does all this have to do with cargo trains running across the Eurasian land bridge between China and Europe? A lot. It stimulates the demand for railing large quantities of goods over longer distances, which is less harmful in comparison to air, and much faster than via the ocean.
Accordingly, last April, a first cargo train from the Chinese metropolis of Jinan reached the Frankfurt West rail terminal run by Contargo, a trimodal logistics company. Meanwhile, the frequencies have gone up to 2 runs per month on average, with the journey taking a little less than 3 weeks. These runs add to the ongoing revival of the legendary trade route between the Far East and Europe, with the New Silk Road being one of the world's largest infrastructure projects. Its main driver is the Chinese government that wants to utilize the 10,000-plus kilometers long route to secure the flow of its goods to Europe, to strengthen the economic and political ties between the countries along the route, and to establish a modal alternative to traditional maritime links.  
This basic concept is partially in line with European interests, as far as transports are concerned, as seen by DB Cargo, the freight subsidiary of Deutsche Bahn. The rail operator recently considerably expanded its China connection by incepting a subsidiary called DB Cargo Transasia. The newcomer, which serves more than 20 destinations in the Far East, emphasizes that freight trains emit roughly 95% less greenhouse gas emissions compared to aircraft.

Contargo borders the Main River. This enables the fast transfer of shipments from freight train to barge – company courtesyContargo borders the Main River. This enables the fast transfer of shipments from freight train to barge – company courtesy

Advantage: Contargo
In the case of Contargo, Chinese shipments arriving at the company’s facility can easily be transshipped to inland waterway vessels, because the company’s Frankfurt West freight terminal borders to the Main River. This facilitates reloading and allows the use of navigable intra-European rivers and canals. On this occasion, Kawus Khederzadeh, Managing Director of Contargo's Frankfurt West terminal, emphasizes that, thanks to cargo train options, air freight is now complemented by rail transports, allowing his company to choose the best transport solution to suit the individual needs of his company’s customers.  

Single train instead of many planes
The train is not an all-in-one solution. For time-sensitive items such as express goods, e-commerce, or pharmaceuticals, for instance, it is not a viable alternative to airfreighting them. “Nevertheless, for high-tech products like smartphones or electronic components, freight trains are a serious and far more climate-friendly option that manufacturers and suppliers can use to significantly improve their carbon footprint,” Mr. Khederzadeh explains.
Besides their positive eco balance, freight trains have a main volume advantage compared to Boeing or Airbus freighters. On average, 45 to 50 single 40 ft containers fit on a cargo train. It is not much when compared to shipping lines like Maersk, CMA CGM, Cosco, MSC, or Hapag-Lloyd, which operate vessels capable of loading up to 22,000 TEU, but these need 4 to 6 weeks for a journey from – say – Shanghai to Rotterdam or Hamburg. Hence, the capital lockup is thus significantly higher in shipping than in rail transport.

Borders as bottlenecks
However, even cargo trains running across the Eurasian land bridge face challenges. They are hit by new, politically caused bottlenecks at the border between Poland and Belarus, leading to jams and delays. For example, the currently congested border-crossing in Malaszewice, Poland, has led to idle freight trains blocking tracks, causing jams along the entire Silk Road. This is partly due to the massive demand for rail transports that faces new heights, day after day. Compared to 2020, the number of cargo trains operating both ways between China and Europe, increased by 26% between January and September this year, China's state rail operator, China Railway reports. Safety precautions due to the Covid-19 pandemic are also delaying rail traffic. So, cargo trains are an alternative to air or ocean transports, but they also have their pitfalls.

New routes, new options
As a reaction to the growing number of cargo trains operating on the Silk Road, new tracks are increasingly becoming part of the terrestrial pathway linking the West and East. For example, railway companies are rerouting their cargo trains via the Ukraine or Turkey. This is complemented by the opening of new warehouses and distribution centers at border crossings.
Conclusion: As it stands, the volume of cargo trains traveling both ways between the Far East and Central Europe, will continue to increase significantly in the future.
Despite the corona pandemic, the railroad community meets in Amsterdam next week (07-09DEC21) for discussing latest developments related to the iron Silk Road. CargoForwarder Global will cover the event.

Heiner Siegmund