Figures show fall in China to Europe rail freight volumes as volumes into Russia increase

In 2023, the volume of goods transported by the Eurasian Railway was 674,000 TEU (20-foot containers), which represented a decrease of 1.1% year-over-year. In 2022, this volume reached 681,000 TEU, according to data from UTLC Eurasian Rail Alliance (ERA), an alliance of national railways of Kazakhstan, Russia, and Belarus, representing 95% of transport between China and Eurasia.

Last year brought about a marked fall in rail freight traffic between China and the European Union. The drop was as much as 49%. In 2022, 410,600 TEU were transported in both directions between China and the EU, a figure that fell to 211,100 TEU last year.

The two most important routes in the relationship between China and the EU were the connection from China to Poland, and from Germany to China. The former transported 117,600 TEU (34% less year-on-year). As for the latter, volumes dropped by over 45% year-on-year, to 58,300 TEU.

Poland’s strong position on the New Silk Road is also emphasised by the fact that three main routes to the EU from China end in Małaszewicze. In 2023, these were routes from Xi’an (44,500 TEU), Chengdu (28,800 TEU), and Chongqing (17,800 TEU), respectively.

As for the structure of goods transported between China and the EU in 2023, 18% of the total volume was electronic. Communication equipment made up 14%, machinery and electromechanical 12%, and automotive and plastic products 8% each. This is very similar to the structure from 2022, with the difference being that the share of the automotive sector has increased significantly from 8% to 12%.

The declines in the direction to Europe were to some extent compensated by a significant increase in trade between China and the countries of the Eurasian Economic Community (EAEU). The jump in volume from China to Russia and Belarus was particularly important here. In the EAEU, 462,900 TEU were transported in 2023, which was an increase of as much as 71% compared to the volume from 2022.

The second significant reason for the decline in the overall volume on the rail route from China was the decline in rates in maritime container transport in 2023. From mid-2020 to mid-2022, rates there were at sky-high levels as a result of the pandemic boom. Railway transport also benefited from this, where rates were much lower. In 2023, the railway was no longer such an attractive alternative to the sea.

Is rail freight benefiting from the Red Sea crisis?

The situation has changed significantly in the last few weeks. The end of 2023 and the beginning of this year brought a significant increase in container rates in maritime transport as a result of the crisis in the Red Sea, caused by attacks from Houthi fighters. UTLC ERA emphasises that rail transport is characterised by much greater stability and cost predictability when it comes to availability.

Data from January shows that the crisis in the Red Sea, ongoing since December, has resulted in an extension of travel times to Europe and an increase in costs, and contributed to renewed interest in rail transport.

In January 2024, the volumes towards the EU were only 0.2% lower than a year earlier and amounted to 20,800 TEU. Improvement in EU volumes is mainly due to trade between China and Poland increasing again. 14,500 came to our country by rail from China, TEU – 36.2% more than a year earlier. This amounted to nearly 70% of total bilateral exchange between China and the EU.

However, there was no rebound in exports from Germany to China. Here, the volumes were as much as 69% lower year-on-year and amounted to barely 2,000 TEU. This is confirmed by the latest PMI readings for the German industry, which indicate a low level of new orders for the German industry (including export orders).

UTLC ERA expects that this year will bring an increase in volumes compared to the previous year. “Tensions in the Red Sea, given its importance for maritime transport, may increase the demand for rail transport in 2024. The Eurasian line may gain more traffic due to destabilisation at sea,” the company predicted in its annual report.