A new price index presented at the trade fair ‘Transpotec Logitec 2019’ in Verona, Italy reveals: the costs for carrying freight containers by train on intercontinental lines connecting
the Far East and Europe have soared substantially in 2018. The findings are the result of surveys conducted by the United Transport and Logistics Company – Eurasian Rail Alliance (UTLC
Members of the UTLC ERA are the national railway companies of Russia, Belarus and Kazakhstan, all representing countries equipped with 1520 mm broad gauge tracks, differing from the standard 1435 mm tracks common in Europe, North America, China and Africa.
According to the alliance member’s evaluation, the rates for container shipments traveling via rail either west- or eastbound on sectors linking China and Europe have increased by about one third in 2018 compared to the year before. Reasons for the price hike were higher costs for technical services such as maintenance provided for the rolling stock or track repairs, higher personnel and administrative costs, and the rise in fuel prices, among others.
Higher price transparency
The new index is based on several factors such as transit fees for each container crossing the borders of the three UTLC ERA member states, charges levied per railcar carrying a 20 TEU steel box, services provided within container terminals, and administrative costs passed on to forwarders or shippers.
Main purpose of the index is price transparency, at least for the 5,430 kilometers block trains are running on the broad gauge stretch.
The Index should help the logistics industry to calculate the accurate costs of container transport by rail through Belarus, Russia and Kazakhstan. It also is a tool to better compare the price difference of ocean and rail freight traveling between Far East and Europe, respectively in the opposite direction from west to east.
An estimated one million containers by 2025
Rail transports across the Eurasian land bridge are becoming increasingly attractive as shown by UTLC ERA figures. In 2018, container shipments increased by about a third compared to the year before. More than 370,000 20-foot standard containers were transported by train on the New Silk Road. And that’s only the beginning, say the alliance members. They forecast that by 2025 a total of one million steel boxes loaded on railcars will cross the land bridge in either direction. However, this will still be less than 5 percent of the maritime transport volume.
Price decrease predicted
"Today, it can be said very frankly that container shipping by rail is the youngest and most promising segment of the rail transport market between east and west," stated Alexey Grom, president of UTLC ERA. He forecasts that in the long run up to ten percent of the maritime volumes moved both ways between East Asia and Europe could travel by train. In 2018, every single day 15 block trains ran on the 1520mm wide gauge railway track across Kazakhstan, Russia and Belarus operated and managed by the Eurasian Railway Alliance UTLC ERA – an increase of nearly 60 percent over the year before.
Final and encouraging prediction by the alliance: Due to the stark increase in rail transport across the Eurasian land bridge in combination with streamlined operational processes prices per container tend to fall again soon.