Chinese manufacturers, exporters and shipping firms whose vessels and consignments are still stuck in the logjam of the Suez Canal are scrambling to find detours for their wares.
This is despite news on Monday that the Egyptian operator of the waterway has freed the container ship which ran aground and stymied intercontinental trade flow a week ago.
The Ever Given, one of the largest of its kind, was fully laden after making a port call at China’s Shenzhen but became wedged while passing through the canal en route to Rotterdam in the Netherlands.
Chinese papers cite shipping agencies and forwarding firms as saying that the 20,000-plus containers the ship carried were stacked full of goods ranging from Ikea furniture to medical supplies including masks.
The past week saw maritime traffic at both ends of the Suez Canal, a vital, 163-kilometer shortcut linking the Mediterranean and Red Sea, back up in both directions.
In the meantime, China Railway Group’s cargo division has seen inquiries and orders surge.
Space and pallets on the express rail cargo lines between Chinese plants and European nodes are being filled quicker than ever, a new bonanza as China and Europe just celebrated the lines’ ten years in service since March 2011.
New proposals have been made to expand the capacity of the rail link and slash not only time but also cost to lure more goods to flow overland from China to Europe. As much as 80% of the trade between Asia and Europe still flows via the Suez Canal, 2020 data from the canal’s operator shows.
Rail could wrest a bigger share of the traffic, with trunk lines now connecting China’s industrial powerhouses like Zhejiang and Guangdong to Germany’s Hamburg and Duisburg, key rail nodes in the heart of Europe where commodities are forwarded on feeder lines across the continent.
Zhang Ming, chief of the Chinese Mission to the European Union, noted when addressing a virtual event marking the 10th anniversary of the transcontinental rail link that 12,400 trips were made to deliver goods from China to 92 cities scattered across 21 European nations in 2020.
The Chinese State Council’s National Development and Reform Commission also said streamlined customs inspection and clearing procedures and modernization of trains would mean the time needed for going overland from Shanghai to Hamburg would be a fourth shorter than shipping via the Suez Canal.
The State Council and the Foreign Ministry are among the key advocates of rail cargo and reportedly brushed off state-owned shipping firm Cosco’s strong opposition to opening more rail routes.
Johannes Pflug, a municipal government official in Duisburg in charge of foreign business affairs, told China News Service that it would normally take just two weeks for Chinese exports to arrive in his city by rail but they would need to spend as long as a month at sea if key waterways and sea lines of communication became congested or blocked.
He also said trains going back to China would also be full with auto parts, wines and food as Germany ramped up its efforts to sell more to its largest trading partner.
The obvious cost-effectiveness is also attracting Chinese exporters of time-sensitive goods and high-tech products as the average cost per container sent via rail is a fifth of now curtailed air freight services between China and Europe, with many of the flights grounded by the Covid-19 outbreak yet to be reinstated.
China Railway Group added that operators in China and Europe would work together to feed goods back and forth. The Suez Canal, meanwhile, is likely to take weeks to ease the gridlock with shipping firms advised to find other routes to avoid the tailback.
China Central Television revealed this week, however, that the average cost of sending goods by rail to Europe was at least 50% higher than sailing via the Suez Canal and a capacity bottleneck would push the price even higher.
An operator with a port-rail trans-shipment company in eastern China’s Zhejiang province, where a majority of goods for Europe were made, told Asia Times that a cargo train could normally haul 200 containers but the Ever Given ship alone could carry 100 times that amount.
He said Zhejiang’s goods sold to Europe via the multiple rail routes amounted to about a million containers last year, a fraction of the total shipments made. The Ningbo-Zhoushan Port in Zhejiang handled more than 28 million containers in 2020.
Beijing’s new transportation and infrastructure development plan for the next five years recently approved during this month’s parliamentary session sets out projects to extend rail lines further into Central Asia.
But the plan also envisions new container berths to be built at key maritime hubs such as Shanghai, Ningbo, Guangzhou and Shenzhen. Piggybacking on China’s resilient trade ties with the West, Shanghai and Ningbo have been the world’s busiest and third-busiest container ports for several years.