Rail may be faster than Cape sailings, but is there enough capacity?

Source: The Loadstar
Date: 5th January 2024

Shippers are increasingly looking for alternative transport modes to avoid cargo being delayed by ships rerouting to avoid attacks in the Red Sea.

Multiple enquiries have been received for bringing goods from China into Europe by rail through Russia.

The insurance underwriters have advised against it, saying ‘do it and you won’t be covered’.

Another source agreed that insurers were unlikely to permit a war-risk clause in any policy “without a massive premium”, but added this was “not really an impediment”.

The source said: “This is the case for most goods moving at the moment, and arguably rail through Russia is much safer than sending goods by sea.

“Ukraine is not going to launch an attack on goods bound for Europe, they would be biting the hand that feeds and given that these services are largely supplied by Chinese operators on Chinese infrastructure, the Russians are not going to attack them either.”

Despite the uptick in enquiries, however, very few appear to be translating into actual volumes being placed on railcars.

The source said this was likely to continue until there was recognition within the market that the situation in the Red Sea “is not going away any time soon” and added that “when that happens, you’ll see the conversion of enquiries into movements”.

One operator already running such a service which has for several years operated an import rail service from Wuhan and Xi’an via Russia into the UK.

Offering space for 42 containers per train, the weekly service is limited in terms of capacity, but averaging 18 to 19-day transit times is decidedly quicker than ocean services rerouting via the Cape of Good Hope.

Across the sources The Loadstar spoke to there appeared to be consensus that a significant increase in demand for rail services was likely, but they stressed this would cause problems, one source suggesting “there simply isn’t sufficient capacity to meet any looming demand crunch”.

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