The China-Europe Railway Express (CRE) was heavily affected by the war with order cancellations and lowered freight rates. Many freight shipping giants refused or suspended shipments from China to Europe.
According to China National Railway Group Co., Ltd., from 2016 to 2021, the annual number of China-Europe freight train trips increased from 1,702 to 15,183, with an average yearly growth rate of 55%. The annual transport value soared nine times from 8 billion dollars to 74.9 billion dollars.
The categories of transported goods have expanded to more than 50,000 types, ranging from auto parts and vehicles to chemicals and grains.
The latest data from China National Railway shows that more than 50,000 train trips carried 4.55 million TEUs (Twenty-foot Equivalent Units) of goods to 180 cities in 23 European countries as of January, with the cargo value reaching 240 billion dollars.
CRE is the key logistical part of China leader Xi Jinping’s Belt and Road Initiative. It has facilitated the transport of Chinese manufactured goods to Europe via Russia.
However, the Russia-Ukraine war has caused shipment and supply chain disruptions.
In the past, four China-Europe train trips departed from Shanghai every month. The first train of March was postponed to March 17 because it had to recollect the goods.
The cost of a container freight from Chengdu to Istanbul used to be 12,000 dollars, but it is expected to drop 10% in April.
Freight shipping companies specializing in China-Europe freight trains admit the challenges. The Swiss Dexun Group has refused to accept railway goods from China to Europe. Some giants, such as Danish DSV, Maersk, and German DHL, have also suspended the business of China-Europe shuttle trains. Their moves were either on their initiative or due to government pressure.
Russian Railways – the state-owned railway firm – was on the sanctions list of the European Union (EU) and the U.S. Under growing uncertainty, many European customers canceled their bookings and switched to sea freight.
The exclusion of certain Russian banks from the SWIFT system has also raised doubts about freight payments for the Russian section of the route, albeit the actual influence remains unknown.
Passing through dozens of nations is advantageous to the CRE in peacetime. However, compared to air and ocean freight, it appears to be more vulnerable during escalating geopolitical tensions.
Moreover, congestion is a significant issue for all routes due to stringent border check processes. This problem gets even worse as additional covid-19 control measures have been implemented.