The Red Sea is blocked, and the demand for railway and road transport between China and Europe is heating up

Ships chose to sail around the Cape of Good Hope in Africa, resulting in a significant increase in transit times. Taking Ocean Hill Port to Haifa Port in Israel as an example, the original route takes 22 days, and the detour to the Cape of Good Hope takes 35 days, which is expected to be delayed for more than 10 days. Costs have risen. As a result, global shipping prices have risen, especially for Asia-Europe routes, with freight rates rising more than 1.5 times compared with the beginning of December 2023. The SCFI freight index released by the Shanghai Shipping Exchange on January 6, 2024 shows that the freight rate of Shanghai port exports to Europe and the Mediterranean basic port market is 2,871 US dollars /TEU and 3,620 US dollars /TEU, respectively, up 210.38% and 160.99% compared with December 8, 2023. Data released by Drury on January 5, 2024 show that the box WCI index continues to rise. Among them, the Asia-Europe route saw the highest increase, with Shanghai to Rotterdam freight at $3,577 /FEU, up 115% from December 21.

The Red Sea crisis has led to uncertainty and soaring prices for shipping, creating opportunities for China-Europe freight trains and cross-border road transport. Many customers who had previously opted for sea freight began to consider China-Europe freight trains as an alternative. Deng Guoliang, vice-president of rail and road transport for CEVA Logistics in Greater China, said CEVA has seen an increase of about 30 per cent in land shipments to Central Europe since the Red Sea crisis. As sea customers look for alternatives, road and rail products are more flexible and timeliness, so there has been an increase in customers choosing these two modes of transport.

With the growth of demand, the price of China-Europe freight trains has also risen, and it is expected that the price of China-Europe freight trains will continue to rise with the increase of sea freight costs in the future. The price of cross-border roads between China and Europe has remained stable and has not increased significantly at present. At the same time, due to the extension of sea voyages, the return of empty containers has slowed down, and the container market is in short supply, and the price has risen accordingly. At present, some train prices have risen, such as Wuhan to Hamburg from $3,500 to $4,000 to $4,500 to $5,000, Chengdu to Poland from more than $3,000 to more than $5,000. At the same time, the cost of 40HQ container on the Central European line has also risen from $500-600 to $1,000-1,200. As the Red Sea crisis continues, the container shortage is likely to worsen.