Exclusive – Hellmann Expects Trans-Eurasian Cargo Trains to Take a Large Chunk of the Transport Cake

Hellmann Worldwide Logistics has just signed an agreement with China’s Henan Province for offering the market an additional rail connection between Zhengzhou and Hanover in northern Germany. It’s the agent’s fourth trans-Eurasian route since introducing these services in 2012. What exactly motivates shippers and forwarders to use cargo trains for getting their goods railed from China to Europe and vice versa instead of sending them by vessel or plane as done over decades? This we have asked Mrs Chen Si Hellmann, Head of Rail Eurasia. Here is what she told us:

Zhengzhou > Hanover is Hellmann’s fourth transcontinental rail link  /  image: Hellmann
Zhengzhou > Hanover is Hellmann’s fourth transcontinental rail link / image: Hellmann

A: We are convinced that rail transportation will establish itself as an offering with significantly fast lead times than sea freight but at the same time lower costs than air freight.
In a nutshell: Rail is the new and third pillar of intercontinental transportation.
Our customers consciously choose Hellmann Rail solutions because:
1.) It is fast. With a lead time of 17 days terminal to terminal or 22 days door-to-door it is significantly faster than sea freight with a lead time of around 42 days.
2.) It is economical. Capital expenditure is reduced by a quick leadtime. Also, freight costs are at only a quarter of the comparable air freigth rates.
3.) It is precise. We do not have port congestions or changes in sailing schedules. The standard deviation in lead time is 1 day only!
4.) It is easy and convenient to use. Hellmann offers a complete door-to-door service including pre- and on-carriage, documentation, customs clearance, and, obviously, the rail transport itself.
So, I think there are good reasons to be most enthusiastic about this new service offering.

Q: The route linking the central Chinese city of Chongqing with Duisburg in western Germany seems to have become your flagship project? What are the decisive factors?

A: Chongqing is at the very heart of Western China. The Chinese "Go West Policy" has shifted production facilities from the coastal regions to Western China. Chongqing is at the very heart of this movement and has benefitted significantly from this economic shift. But still, Chongqing is conveniently located to organize pre-carriage from production units in the Hong Kong and Shanghai region.
Furthermore, Chongqing is in the province of Sichuan. As I was born and raised in Sichuan I have very strong personal, emotional and also business ties with Chongquing and the Sichuan province.

Q: Are these transports balanced volume-wise or are imports into Europe dominant?

A: At the moment transports are not balanced and the majority of transports are West-bound. This is a real pitty as the trade between China and Europe (and especially Germany) is very much balanced in terms of value.
So, we are also encouraging more customers to use the service for East-bound traffics.

Q: Have your rail transports across the Eurasian land bridge had any impact or did they even cannibalize your air freight volumes on routes between China and central Europe?

Rail is the third pillar of intercontinental transportation across the Eurasian land bridge, notes Chen Si Hellmann  /  company courtesy
Rail is the third pillar of intercontinental transportation across the Eurasian land bridge, notes Chen Si Hellmann / company courtesy

A: This is an argument that is raised often - also within our own organization. However, I am fully convinced that any new mode of transporation and any new service offering will not cannibalize existing solutions. Rather, we will see that demand will develop and grow at the same rate as new solutions are offered.

Q: It seems that these trans-Eurasian trains are increasingly challenging traditional Sea-Air solutions with shipments transiting in Dubai or other Gulf harbors from vessel to plane. What’s Hellmann’s view on this?

A: This remains to be seen. However, if a solutions offers better services at low prices it may have an impact on other services. But as I mentioned before, I am convinced that the Hellmann Rail Eurasia will find its own customer base without canibalizing other services.

Q: The range of products railed from Far East to Europe or in the opposite direction is immense. The Siberian weather conditions, particularly in winter are extreme. Doesn’t this exclude transporting a number of temperature sensitive items by train?

A: Weather conditions on a vessel can be extreme as well - in terms of g-force, humidity and corrosion.
For our "Rail Solutions" we monitor conditions of the containers with a device called "Hellmann Smart Visibility." Any atmospheric and climatic changes within the container are logged and can be tracked.
To offer controlled atmospheric conditions we are currently evaluating the introduction of reefer-containers - but this is still in a test phase.

Q: Shippers might want to know which trans-Eurasian rail link you will introduce next. What’s your answer to this?

A: I would highly recommend reading CargoForwarder Global frequently. We will announce any new routes well in advance.

We go along with this recommendation. Thank you for this interview.

Heiner Siegmund

DHL Adds Japan to its Eurasian Rail Service
DHL Global Forwarding of Deutsche Post AG has launched a multimodal service linking Japan to its existing rail solution from China to Europe. Using a combination of trucking, sea and rail solutions the scheduled service offers customers in Japan access to DGF China's rail transports. This reduces the delivery time by up to half to between 10 and 21 days compared to solely using ocean freight. Furthermore, it lowers costs by up to 85 percent compared to air freight. In addition, customers seeking environmentally friendly solutions can also expect a fall of greenhouse gas emissions of up to 90 percent compared to air freight.

Japan-Europe Multimodal Service
Japan-Europe Multimodal Service

Japan-Europe Multimodal Service
States Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific: "Our new service linking Japan to our existing China rail network presents a truly innovative solution which offers cost and time benefits to customers across the region."
Businesses in Japan with goods to be transported to Europe can be picked up from anywhere across Japan by truck. Using 40-foot containers, cargo is then transported to any of four ports across Japan - Tokyo, Nagoya, Osaka, and Hakata. Upon arrival at the ports, cargo is transported by sea across the East China Sea to Shanghai. This enables goods from just about anywhere in Japan to reach any part of China via DHL's multimodal sea-rail service.


Within China, DHL Global Forwarding currently operates two routes: The first along the trans-Siberian North Corridor - the service taps the bustling production and commercial centers of Shanghai , Suzhou and its surrounding areas. The second, the trans-Kazakh West Corridor rail service originates from Chengdu -- one of the most important distribution centers in Western China and a hub for high tech goods, automotive and other industries.

 

Heiner Siegmund

Write a comment

Comments: 0