6,000 miles across 7 countries. Why companies are turning to long-haul trains

By Xiaofei Xu, CNN Business

When the freight train appeared, it looked like many others in this suburb of Paris railroad junction. But one thing made the train unusual: Its journey began over 6,000 miles away in western China.

The train was carrying more than three dozen 40-foot containers, each stuffed with goods such as party balloons and auto parts, from Xi’an to Paris. He had traveled through China, Kazakhstan, Russia, Belarus, Poland, Germany and France, making the trip in five and a half weeks.

Formerly unusual, long haul form freight shipments between China and Europe have become much more common during the pandemic, as businesses that need to move goods between huge economies seek alternatives to harassed and expensive air and sea routes.

“Five years ago there were eight trains a day between China and Europe, now there are 18, 20 a day,” said Xavier Wanderpepen, director of China-Europe freight trains at SNCF. .

Rail shipments are especially popular with companies who need to transport perishable or urgent goods and don’t want to pay for air freight. Containers can travel between Europe and China by rail in just 20 days, while travel by sea can take up to 70 days with disruption caused by the pandemic. But rail has its limits: trains cannot carry as many containers as ships, and they are not immune to the logistical pitfalls of the pandemic.

The train CNN Business followed from China to France, for example, was nearly two weeks late arriving in Paris due to track traffic, lengthy customs checks at the Polish border, and a shortage. of train drivers in Germany caused by the pandemic.

However, other trains arrive.

Launched in 2011 as part of Beijing’s Belt and Road infrastructure program, the China-Europe rail service has grown rapidly as the pandemic wreaked havoc on global shipping, making it much more expensive to ship produced by sea.

A record 15,000 freight train journeys were made between China and Europe in 2021, up 82% from the total before the pandemic in 2019, according to Chinese state media. The trains carried 1.46 million containers.

The number of trains between France and China doubled between 2019 and 2021, according to Wanderpepen, even though France entered the market later than other European countries.

The sharp increase in rail traffic is already causing overcrowding on the tracks and putting pressure on infrastructure, meaning that trains between Europe and China offer only a limited alternative to ships – the largest of which carry more. of 20,000 20-foot containers.

Containers moving between Europe and China have to be replaced twice with new wagons, once at the Sino-Kazakh border and once at the Polish-Belarusian border, because the former Soviet countries use a different gauge than the one. from China and Europe.

“You could say that today there are too many trains,” said Wanderpepen.

From crisis to opportunity

The vast network of ports, container ships and trucking companies that move goods around the world remains severely entangled two years after the start of the pandemic, and the cost of transportation has skyrocketed.

“We have traffic jams in seaports; we have a shortage of containers because transport volumes have increased, ”said Felix Papier, professor of supply chain management at ESSEC business school in France. “We are short of logistics staff in different segments of the world. “

The production of 45% of French companies has been limited by supply difficulties, according to data from an October survey released by the country’s National Institute for Statistical and Economic Studies. This is the highest level since the institute started publishing such data in 1991.

The transport of goods by sea has become much more expensive. As of January 6, the average cost of transporting a standard 40-foot sea container on eight major routes was $ 9,408, five times what it was just before the pandemic broke out in early 2020, according to Drewry. Shipping, based in London.

For comparison, moving a container from China to Paris by train costs around $ 8,000, according to Wanderpepen. In the other direction, it drops to around $ 2,000 thanks to Chinese government grants to encourage European companies to use the train to export to China.

It made the trains more attractive.

French luxury furniture maker Ligne Roset is one of the companies driving the increase in demand.

Since the start of the pandemic, Nicolas Mazuir, head of the company’s transportation department, has struggled with rising prices and limited shipping space to deliver sofas and chairs to customers around the world.

“This is the first time I have experienced a situation like this,” he said.

When delivering to customers in China, a market that accounts for around 20% of Ligne Roset’s global business, rail has been a lifeline for Mazuir, which began using it in 2020.

“All of our Chinese customers expect fast delivery from us,” he said, “Rail solutions offer a real advantage, although there is much less. [trains]. This is a real advantage in terms of time.

From the Ligne Roset factory outside of Lyon, Mazuir can ship products on a freight train to China, which typically only takes four to five weeks to reach its destination.

If shipping by sea, the company would first have to transport the containers about 200 miles south of the Mediterranean coast. Delays of up to a month are possible if cargo ships skip the port near Marseille, an increasingly common occurrence during the pandemic.

“I wish there was a comparable solution for the US market,” Mazuir said.

“The trains are back”

As the pandemic enters its third year and cases increase rapidly due to the Omicron variant, experts say the stress in the supply chain will continue for some time.

The transportation sector has yet to rebuild its networks, including hiring port workers and truck drivers, many of whom changed jobs during the closures, according to Papier.

“I think in terms of overall congestion levels, in terms of transport costs, we will always stay at a higher level than before the crisis,” he said.

It could mean a bigger role for trains. Rail only represents 5% of the total transport market between Europe and China. But that could double by 2030, according to Wanderpepen.

Looking at the Xi’an cargo being unloaded for delivery to French companies, the railway executive was optimistic.

“Now the customer knows about this solution and will keep this solution even if the situation of pandemic logistics troubles around the world returns to normal,” he said. “The trains are back.

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