According to rail and logistics operators, the demand for goods to be transported from Asia to Europe via Russia has increased since the Red Sea Crisis began. This is boosting the finances of Russia’s state-owned railway monopoly.
DHL, a German company, said that requests for goods to be transported on the Russian rail route had increased by about 40% since December when container ships began diverting along a longer route. RailGate Europe reported a 25-35 per cent increase in demand, while Rail Bridge Cargo of the Netherlands said that cargo rail traffic through Russia was 31 percent higher this year than it was last year.
After the majority of large container shippers decided to divert Asia-Europe sailings, which would normally travel through the Suez Canal, to travel via Cape of Good Hope. The move came after the Houthis, backed by Iran in Yemen, launched a campaign to attack commercial ships.
Diversions have increased the door-to-door travel times between China, Northern Europe and Canada by 7 to 10 days. The new journey time is between 50 and55 days. DHL reported that the rail journey time between Chengdu, China and Duisburg, Germany is currently between 25-30 days.
DHL reported that customer requests for rail have increased by 40 percent since the start of the Red Sea situation. The majority of the cargo is being shipped through Russia.
The company has stated that they do not carry any traffic that originates in Russia or travels to Russia, in accordance with the western export restrictions imposed against Russia because of its war in Ukraine.
DHL said that it was strict in its export control, and that they were following the applicable sanctions.
Kuehne & Nagel, a Swiss logistics provider, and Maersk, a Danish logistics provider said that they avoided rail routes in Russia after Vladimir Putin’s invasion of Ukraine on February 20, 2022. After the invasion, the monthly volumes along the route dropped and are still less than what can be carried on a large modern container vessel.
RZD is owned by Russia and operates the vast rail network in the country. It has been closely associated with the Kremlin for many years. When it imposed sanctions against Oleg Belozyorov in April 2022, the UK government referred to him as having “close links with Putin”.
EU sanctions have led to a ban on road freight movements into and out of Russia and Belarus. RZD is also restricted in its access to certain financial services. Rail transport of goods is not banned in the country.
According to figures from Eurasian Rail Alliance (a Russian company which organises rail freight movements using the 1,520mm gauge rail tracks in Russia, wider than European rails), container rail movement from China into Poland was 14,532 Twenty-foot Equivalent Units (TEUs) during January.
The figure is 36 percent higher than that of January 2023 but it wouldn’t fill up one of the largest modern containers ships, which can carry 24000 TEU each.
Michael Aldwell of Kuehne & Nagel’s sea logistics department said that there is “more demand” for goods to be transported from Asia to Europe via rail in the current climate.
Aldwell said that “high-value cargo [on this route] has always been popular.”
Aldwell did not deny that Kuehne & Nagel had closed down its rail service, KN Asia Express after the Ukraine attack.
DHL refers to the “west-corridor” as the route that most goods from Asia travel by rail, via Kazakhstan and Russia into Belarus. Some traffic is sent via the “north-corridor”, which crosses directly from China to Russia east of Mongolia.
Some logistics companies provide a “southern” route that bypasses Russia by going through Kazakhstan, Azerbaijan, and Turkey. This route involves a ferry crossing the Caspian Sea and takes longer than shipping containers from China to Europe. This route is mainly used for transporting goods to and from countries in central Asia, such as Uzbekistan.
Maersk began offering its customers in September the option of sending goods by sea via the Georgian port Poti to Central Asia through the southern route.
RailGate Europe’s Head of Business Development, Julija Sciglaite said that her company has no business dealings with RZD. Instead, it booked traffic through operators like Germany’s Deutsche Bahn.
Deutsche Bahn confirmed, however, that it is currently only acting as a “travel agency” for goods traveling via Russia. RZD is owned by Russia and retains an almost monopoly on the haulage of trains across Russia’s vast railway network. RZD is paid for both hauling goods through Russia as well as for access to the network.
Rail Bridge Cargo stated that “most” of its goods are hauled by RZD.