The threat to air
So, to recap, we have a transport mode that is 30 times slower than air, needs two trans-shipments to get to its destination and faces some of the harshest weather in some of the most remote places on earth. How, again, can rail be considered serious competition to airfreight?
Van Doesburg says is comes down to giving shippers another viable option. In the last few years, a lot of commodities shifted from air to ocean to save money, but then the big box carriers began the practice of slow-steaming to save fuel. So, when oceanfreight became too slow, shippers had little choice but to go back to airplane main decks and bellies. But now that rail is emerging, shippers are gravitating toward an affordable third option with a reliable transit time. “Because of this, we predict this will be a much bigger competitor to the air industry than to ocean,” he said.
There is also a question of scale to consider, van Doesburg said. The typical 40-foot intermodal container can carry about 30 tonnes of goods. That one rail container, then, is roughly the same as a belly load for a 777. “When you have 75 wagons tied together in a train, that’s like towing seventy-five 777s,” he said. “For an air carrier, that’s a really significant amount. But for oceanfreight, where one ship can carry 22,000 FEUs, that’s really not a big threat.”
“When we started rolling trains out of Chongqing in 2011, we were acquiring a lot of volume from goods that had been shipped by air,” agreed Wieland. This largely included various electronics that were destined for Europe.
One enthusiastic rail client has been BMW, which used to ship in-demand spare parts by air, but now sends most of its parts to Asia on the Silk Road lines. “At HP, there are no longer any printers sent by air,” van Doesburg said. “Laptops would be too sophisticated to be sent by train, but printers are much simpler and cheaper, so they are also going by rail.”
Michael Hollstein, managing director of UTi’s German, Austrian, Swiss and Nordic operations, said the mode shift to rail is not solely based on financial aspects. “More enterprises are considering the environmental impact as one component of their logistics strategy,” he said. The carbon emissions of rail are up to 90 percent less than that of airfreight because the majority of the route used by UTi is operated by electric locomotives. “In this regard, the train is unbeatable compared to air and ocean.”