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High hopes for rail freight services in China

25 October 2012
The southern Chinese port of Shenzhen is to strengthen its rail freight connections with western cities by setting up containerised cargo services to Chengdu, Chongqing and Kunming, a senior Shekou port official was reported as saying by South China Morning Post.

Erik Yim, managing director of Shekou Container Terminal, said the new services could start next year and would augment an existing three-times-a-week service between Changsha and the Shenzhen terminals of Shekou and Chiwan.

“If railway conditions can be improved, we hope that we can have a daily service from Changsha within two years,” Mr Yim said.

There is significant growth potential in the rail freight sector. Frederic Campagnac, general manager of rail transport consultant Clevy China, said around 4m TEU a year are moved by rail, a figure that has remained static for about five years. He added that just 1 per cent of containers moved from Chinese ports are transported by rail, compared with 85 per cent by road.

“Personally, I think rail makes a lot of sense, including between China and Russia and China and central Asia,” he told a Journal of Commerce conference in Hong Kong.

Other companies active in this sector include China United International Rail Containers, whose shareholders include New World Services, which has so far opened eight container rail terminals in China.

DHL Global Forwarding, part of the Deutsche Post, will start dedicated weekly container rail services next month from Shanghai to Poland in conjunction with China Shipping Container Lines, which is providing the containers.

Ambrose Linn, the company’s senior regional director for road freight and intermodal strategic accounts, said the service would be 90 per cent cheaper than shipping cargo by air and less than 10 per cent more expensive than ocean freight. The transit time would be 19 days from Shanghai to Warsaw, compared with 30-32 days by sea. A second service would start next year.

The service is being targeted at hi-tech industrial companies and manufacturers of FMCGs. However, the imbalance in trade between China and Europe means freight trains returning to China are likely to be less than 30 per cent full.

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