China-Europe rail delays as borders close and capacity gets ‘super-tight’

Source: The Loadstar
Date: 31st August 2021

In-demand China-Europe rail freight could see a drastic 30% reduction in capacity in September from delays at Kazakhstan border crossings and congested European gateways.

Covid cases in China’s Xinjiang province have caused congestion at the Alashakou border crossing into Kazakhstan, with nearly 50 trains in a queue late last week.

For cross-border trucking through Alashankou, the Khorgos and Buktu borders in Xinjiang province are closed until further notice.

China-Europe rail volumes have been booming amid challenged air and ocean freight markets, clocking a massive 52% increase in first-half volumes, to 707,000 teu. Last month, there were 1,352 silk road trains, according to China Railway, up 8% year on year.

Chengdu-based New Silk Road Intermodal (NSR) said the Kazakhstan delays had been building through August, including at the Khorgos border crossing, caused by Covid disruption and an “explosive” uptick in volumes.

“Trains planned to depart in August will be delayed to September, occupying next month’s slots. It is estimated that 30% of capacity will be cut for China-Europe blocktrains,” NSR said.

And, noting the hamstrung ocean freight market and upcoming Golden Week holiday in China, NSR said rail freight space next month would be “super” tight, due to the reduced capacity and surging demand.

Rail operators have announced general rate increases (GRIs) of between $600 and $1,500 per 40ft container from 1 September, in parallel with rate spikes in the ocean freight market.

Meanwhile, expansion projects at key European rail gateways are also having an impact on available capacity. For example, forwarders have reported two-week delays at Malaszewicze, in Poland, due to infrastructure works. NSR said construction was complete, but there was still “serious congestion” and long transit and waiting times for trains both eastbound and westbound.

The congestion has even caused serious wagon shortages and waiting times at the Altynkol and Dostyk borders [in Kazakhstan]. We expect it to last for a few weeks.

Furthermore, there is also rail construction work in Hamburg until 6 September, NSR said, which would impact trains via Kaliningrad.

On top of the rail hub delays, available containers are also in “extreme” short supply in China.

“Container costs have increased week over week, especially in South China – Yantian, Nansha and Xiamen. Most have to rent SOCs [shipper owned containers], which will increase rail freight rates,” NSR said.

China-Europe rail rates for September were around $18,000 per container, depending on the route.

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