China-Europe Cargo Trains demand surge amidst Red Sea Shipping Suspensions

China-Europe Cargo Trains demand surge amidst Red Sea Shipping Suspensions

Cargo trains connecting China and Europe are facing unprecedented demand this month, with bookings at full capacity as global shipping giants suspend operations through the Red Sea. Following a series of attacks on ships in December, major players such as China Ocean Shipping Group, Maersk, and CMA CGM have halted transport through the critical Red Sea route, prompting international traders to explore alternative modes of transportation.

Chen Kaifeng, Director for Business Development at YXE Trading Service Group, revealed that China Railway Express’ China-Europe freight trains are fully booked for January, with prices soaring between 10 percent and 20 percent higher than in December. However, despite the high demand, European clients are still in their end-of-year vacations, keeping overall demand lower than expected.

In response to the Red Sea crisis, shipping companies are rerouting vessels around the Cape of Good Hope at the southern tip of Africa, adding an additional 9,000 kilometers and six to 14 days to the journey. Maersk attempted to resume operations through the Red Sea last weekend but faced challenges, while CMA CGM expressed its intention to return once the US-led Red Sea Coalition concludes its deployment.

As a consequence of the shipping suspensions, there are now ‘blank sailings’ on routes to Europe and the Middle East, according to Wang Zhicong, Director of the Marketing Department at Shenzhen Baosen Suntop Logistics. Several days from January 8 to January 25 have blank sailings for ships departing from Shenzhen’s Yantian Port to Europe. Ocean freight prices are witnessing a weekly increase, with the cost to ship a 40-feet container to Europe reaching USD 5,200 in the second week of January, marking a significant 23 percent surge from the previous week.

Ding Yandong, General Manager of a trading company, shared the impact on businesses, stating that during the Red Sea crisis in mid to late December, they had to accommodate requests from Rollmax’s North African clients not to raise freight costs, resulting in a 20 percent reduction in net profit.

The shifting dynamics in global shipping routes are reshaping the landscape for cargo transportation, with traders and shipping companies grappling with challenges and seeking alternative solutions to navigate these disruptions.

Sources: Yicaiglobal

Source Yicai Global
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