Asia-Europe railway line comes into play

Many Chinese shipping companies have suspended all shipping to and from Israel due to attacks by Yemen’s Houthi rebels in the Red Sea, affecting exports. However, this is also an opportunity for the country to effectively promote the China-Europe Freight Railway (CERE).

A container train on the CERE line. Photo: SCMP

18 Chinese shipping companies including CMA CGM, Maersk, China Ocean Shipping Group, COSCO… have stopped operating in the Red Sea. CMA CGM Group applied new prices, doubled, from January 15 for the Asia - Mediterranean route because it does not go through the Suez Canal. The shipping price for a container increased from 2,000 to 3,500 USD and from 3,000 to 6,000 USD for large containers. Shipping time will be extended by 10-14 days because it has to travel an additional 7,000-10,000 km through the Cape of Good Hope in South Africa.

Lars Jensen, founder of shipping services firm Vespucci Maritime and a former Maersk executive, said avoiding the Red Sea would cost a ship about $2 million more in fuel and other costs, meaning a full round trip between Asia and Europe could cost each ship $4 million more.

However, the Red Sea shipping crisis could turn into an opportunity for Beijing to develop CERE. Some Chinese exporters are turning to CERE, which is seen as a “viable alternative” because the railway was built to transport containers. CERE is part of Chinese President Xi Jinping’s Belt and Road Initiative (BRI) and is now the main freight route from Asia to Russia, after Moscow was sanctioned by the West over the conflict in Ukraine. CERE passes through more than 100 cities in 11 Asian countries and connects to 217 cities in 25 European countries.

Although shipping goods by rail is more expensive than by sea, trains from China to Europe take only about 12 days, compared to the typical 35-45 days by sea. According to data from China State Railway Group, CERE has made a total of 16,145 train trips in the first 11 months of 2023, transporting the equivalent of nearly 1.75 million containers. The total volume of goods transported during this period has already exceeded the total volume recorded in all of 2022.

An official overseeing the development of CERE rail transport in Zhejiang province said that with security threats still looming in the Red Sea, the railway line has shown its strategic value. The road connection is also an alternative to maritime trade and enhances the resilience of intercontinental trade.

According to Professor Song Wei, School of International Relations and Diplomacy at Beijing Foreign Studies University: "This route will play an even more important role in the future, along with the enhancement of economic and trade exchanges between China and Europe."

Tommy Tan, chairman of Shanghai EPU Supply Chain Management, said the number of shipping lines interested in CERE has doubled since the Red Sea security turmoil. China is actively preparing to increase the capacity of round-trip services to meet the growing demand from customers.

KHANH MINH

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