The ongoing Red Sea crisis has significantly elevated the prominence of the China-Europe Railway Express (CRE), offering a crucial alternative for freight forwarders amid disrupted international shipping routes.
Since November, Houthis in Yemen have targeted commercial ships affiliated with and bound for Israel, heightening the dangers for transportation companies navigating one of the world's busiest shipping lanes. This has led to increased shipping rates and prolonged delays, prompting many to seek safer and more reliable alternatives.
Experts highlight the CRE's vital role in stabilizing global supply chains during this turbulent period. According to a recent Fitch Ratings report, the CRE's capacity has expanded markedly from pre-crisis levels. Kong Weidong, head of the Zhengzhou branch of T.H.I. Group (Shanghai) Ltd., noted a tenfold surge in inquiries and a three to fourfold increase in export volumes since the beginning of the year.
Typically taking between 12 and 18 days to transport goods from Chinese cities to Europe at an approximate cost of $6,500 per container, the CRE has become increasingly attractive. Kang Yingfeng, deputy general manager of China Railway International Multimodal Transportation (CRIMT), observed a significant uptick in interest from major logistics firms like DHL and Kuehne+Nagel, who are exploring new routes that combine rail and ocean transportation through the Caspian and Black Seas.
Fu Cong, China's ambassador to the European Union, highlighted that before the crisis, around 60 percent of China's exports to Europe relied on the Red Sea route. With 90 percent of container ships now rerouting via the Cape of Good Hope, resulting in a minimum 12-day shipping delay, many businesses are turning to the CRE. He added that inquiries have almost doubled and that railway transportation is expected to grow dramatically in the coming years.
Academics also recognize the CRE's importance. Hannes Fellner from the University of Vienna referred to it as a \"stabilizer\" for international supply chains, while Fabio Massimo Parenti of the International Institute Lorenzo de' Medici in Florence called it a complementary alternative to maritime routes and an example of collaborative Chinese investment. By February 2024, the CRE network had expanded to cover 219 cities across 25 European countries, benefiting over 200 European cities.
Reference(s):
cgtn.com
