Slow Steaming has Created a "Huge Gap" in the Market

Rail freight is seen as quicker and more reliable than sea freight

Slow steaming by shipping companies has opened a gap in the market for rail transport, which although more expensive is seen as quicker and more reliable, JOC reports.

"After the financial crisis, air freight became too expensive and shippers turned to the ocean," said Lothar Moehle, Air Freight Standardisation Director for DB Schenker, at the International Air Transport Association (IATA) World Cargo Symposium.

"But then the ships started slow steaming and extended even further the transit between Asia and Europe.

"This opened a huge gap for rail."

End-to-end transport times between China and Europe, including the first and last mile trucking takes between 23 and 25 days by rail, 50 and 55 days by sea, and around 10 days by air.

According to an estimate by one freight forwarder, based on a chargeable weight of 9,600 kilograms per forty-foot equivalent unit (FFE) container, the cost per FFE to send goods from China to Hamburg would be $3,000 per FFE by sea, $8,000 per FFE by rail, and $37,000 per FFE by air.

Customers are driving us to use the rail services to Europe, said the forwarder, adding "ocean is cheap, but it takes too long and the reliability is poor."

Huge Gap

Additional transport costs may be offset by the reduced cost of stock in transit, said European electronics manufacturer Ericsson.

"Every day that we can reduce our stock in transit is a huge amount of money".

A speaker for DHL Global Forwarding added that growing manufacturing activity in Western China was increasing enquiries for multi modal transport solutions.

Several commentators have suggested a fall in bunker prices may spur shipping companies to speed up on some routes.

However, large box shippers such as Maersk Line have said shipping networks had been designed around slow steaming over recent years, suggesting faster sailings would not happen unless oil prices remained depressed for a long period.