Transporting goods via rail freight is safe, fuel-efficient, and fast. However, recently the rail freight industry has taken a serious knock, with lockdowns in China and the Russia-Ukraine conflict in motion. In this blog, we dive into the state of the market, current challenges in the industry, as well as how to boost resilience during this difficult time.
If you’re in the logistics industry, you’ll know that rail freight is a reliable and convenient way to transport goods via land. Unfortunately, right now, it’s facing a host of challenges and obstacles.
As the war in Ukraine rages on, logistics companies and exporters of electronics, car parts, vehicles, and cell phones are looking to avoid land routes that pass through Russia. Major carrier services, including Maersk, MSC and CMA CGM have completely terminated all dealings with the country. To make matters worse, recent lockdowns in China have halted production, and blocked major logistics routes.
This is putting increasing pressure on the industry, as shippers desperately try to find alternative routes and methods to transport goods. Many companies are switching from rail freight to sea freight, but unfortunately, ports are also becoming congested. Solutions are needed. And fast.
We held a webinar with industry experts to talk about the current climate of rail freight in 3 major markets: Pakistan, Russia, and China. If you missed it, here’s your chance to learn all about the current state of the industry.
Summary of the state of the rail freight market
- More regional trade routes are needed to increase the flow of cargo between Asia and Europe.
- The lockdowns in China are likely to last until June. This means that factories will remain closed and many important logistics paths blocked until then.
- Alternative routes to the main Silk Road are now being explored.
- Currently, there is a shortage of SOCs (Shipper-owned containers) in many regions.
- SOCs are your number one solution during uncertain times, as they increase flexibility and reliability.
Want to get your hands on SOCs? Click below for a free demo of our platform today.
A general overview of the rail freight market
Armand Toubol is the retired Honorary General manager at SNCF and currently teaches Rail Transport at La Sorbonne University. Toubol gave us an overview of the state of rail freight:
- The majority of traffic between China and Europe is handled by sea (between 20-25 million TEUs).
- Rail connections between China and Europe increased from 5,000 trains in 2018 to 15,000 trains in 2021.
- Rail freight demonstrated its resilience during 2020 and 2021, growing by 50% and 22%, respectively.
- The avoidance of Russian railways due to the war in Ukraine is testing the strength of the rail market.
- Toubol emphasized the importance of finding alternatives to the traditional Silk Route.
- Right now, alternative routes are being looked at, including through Kazakhstan, the Caspian Sea, the Caucasian corridor, the Black Sea, and Turkey.
- The price of sea freight is likely to remain high due to the recent surge in the oil price.
To learn more, check out the full session below:
Expansion of rail freight in Pakistan
Aasim Siddiqui, the Managing Director of Marine Group of Companies, has developed and financed transport and logistics projects in Pakistan for over 25 years. He walked us through how the rail freight market in Pakistan is currently faring:
- Pakistan has a strategic influence on rail freight due to its geographical location. The hope is to become a major link between China and Europe in the near future.
- There are plans to build a highway network from Pakistan to Central Asia.
- Countries like Uzbekistan and Kyrgyzstan have recently expressed interest in moving cargo through Pakistan.
- Another recent project looks at the rail connectivity between Turkey, Iran, and Pakistan.
- Changes to customs, including cross-stuffing, are likely to improve cargo flow through areas like Afghanistan.
- Siddiqui says he is expecting a significant rise in container flow due to the opening of regional and inland routes.
- There is currently a lack of SOCs in Pakistan, and the demand is going to keep increasing.
- Siddiqui mentioned the need for organizations like xChange to source SOCs in the region.
Click below to watch the full version:
The current state of the rail freight market in China
Frank Shao, president of Ningbo Westrail Supply Chain Management, explains what’s happening in China.
Key takeaways from Shao’s update:
- Shao emphasized that the rail market has been negatively affected by the recent war, the lockdowns, and the energy crisis.
- On April 12, 2022, there were still 17 high-risk areas and 243 medium-risk areas in China due to Covid-19, resulting in factory closures and important logistics paths being blocked off.
- In the first quarter of 2022, a total of 1,941 trains and 174,000 TEUs were dispatched by China-Europe freight trains.
- Container volumes out of China between the 6th and 15th of April have declined by a staggering 31%.
- Shao commented that it was a very good start to the year, however, numbers have declined drastically since the lockdowns.
- Rail prices have also taken a nosedive since April.
- Shao says they are seeing smaller shipping orders at the moment, due to uncertainty in the market. This needs to be accommodated by quicker and more flexible transport options.
Check out the entire update below:
What’s happening with rail freight in Russia?
Richard Squire is the head of the International Container Department at ADL Group. He helped us better understand what’s going on in the Russian rail market right now.
Here’s a quick rundown:
- Squire stated that the months of April and May always see an increase in demand for containers in Russia.
- In February 2022, 3 key players in the shipping industry; Maersk, MSC, and CMA CGM stopped all dealings with Russia. This has created uncertainty in the industry and could drastically impact transport prices in the near future.
- Due to large carriers leaving the market, pressure on the rail industry has escalated.
- SOCs are the most popular container type in Russia, however, with big companies pulling out, demand for SOCs is increasing.
- This has created an opportunity for container leasing companies who currently have containers in Russia.
- Squire emphasized the importance of increasing awareness of SOCs among shippers during this unstable time.
Watch the full video below:
Boost rail freight resilience with SOC containers
In our final session of the webinar, Thomas Smith from Container xChange explained how you can increase reliability and flexibility by finding SOCs on Container xChange.
Check out the full video below:
You may have noticed SOCs growing in popularity in recent years. This is because they offer many advantages over COCs. With SOCs, you’re in more control of the shipping process, which gives you more freedom as a shipper.
Here are some benefits of using SOCs:
On xChange, it’s easy and convenient to find the perfect containers for your needs in just a few clicks. Getting SOCs is simple. All you need to do is type in the container type you want, your location, and hit ‘search’. You’ll find containers at competitive prices in a matter of seconds.
SOCs also enable you to avoid nasty fees, such as demurrage and detention charges at ports. Learn more about these fees in this separate blog post.
When negotiating deals, you can speak directly to the container owner, without the fuss of going through a middleman. It’s easy to communicate with owners via the chat function or to jump onto a call with them straight from the platform.
Once you’re a member on the xChange platform, you’ll have access to a wide network of reputable companies, all in one place. This makes sourcing SOCs and striking deals a smooth and efficient process.
You’re always able to negotiate prices and terms. So you can make sure you’re happy with the free days, and per diem charges, before signing a deal.
On xChange, you can do everything, from searching for containers and negotiating deals to invoicing and container tracking, all in one place. This means you can avoid the hassle of switching between platforms and accounts.
Get SOC containers on the Container xChange platform
Interested in joining 1000+ xChange members and streamlining your logistics process? Great, we’re excited to have you on board.
Want to know more about what we do? We’re a transparent, neutral marketplace for buying, selling, and leasing shipping containers. We have over 10,000 containers available in 2,500+ locations worldwide, so you’ll be spoilt for choice.
We work with the big names in the industry, and so can you. Once you’re a member, you’ll have instant access to companies like Kuehne + Nagel, Seaco Global, and Conway. And what’s more, you’ll be able to communicate with each partner directly to negotiate deals.
At xChange, we vet and pre-approve all of our members, so you can rest easy they’re trustworthy and professional.
Want to join our large network of reliable and successful companies on xChange? Click below to schedule a free demo, and increase your flexibility and resilience today.
What is rail freight?
Rail freight is the transport of goods via railroads and trains. Rail freight is fast, safe and fuel-efficient. Using rail can also avoid road closures and congestion.
What are the advantages of rail freight?
The advantages of rail freight include fuel efficiency, safety and a high load capacity. With rail freight, arrival and departure times are easier to predict due to lack of congestion and road closures.
