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            february 18, 2019

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China-Europe rail freight link proves serious concern for air cargo sector


China's 12,500 miles of high-speed rail lines - more than the rest of the world combined and designed for speeds of up to 220 mph - are becoming a serious concern for the air cargo sector.
China's highly subsidied overland rail route to Europe is now used by online giants Alibaba and JD.com to deliver high-value and time-sensitive products because it cuts out congested airport hubs, reports IHS Media.
Officially, by 2027, total rail potential is reckoned to be 636,000 TEU, or 21 trains a day, according to China Railway Corp.
Costing six times less than airfreight, that difference widens in peak season when air cargo space is tight. What's more China-Europe rail is also beginning to add new connections to ease congested hubs on both ends of the network, trimming transit times futher.
Asia-Europe air rates would be US$27,000 per FEU, by rail it would be $4,000, and $3,000 by sea.
Vladimir Zubkov, secretary general of The International Air Cargo Association (TIACA), said he was concerned with the threat the rail link with Europe posed.
"With the investment of $143 billion in the ground infrastructure, the chances for the diversion of air cargo to the modern, faster than present, and probably cheaper railroads are becoming quite real," he said.
Much of the threat, Mr Zubkov said, was contained in the Chinese Belt and Road initiative. He highlighted the threat to airfreight posed by China's rail link with Europe in a recent message to members.
Mr Zubkov said the overall volume of goods being transported between China and other economies was growing steadily, and air cargo's strategy should be to, at a minimum, retain its 35 per cent share of overall trade by value through deploying new technology and expanding the use of electronic documentation.
"It's apparent that we will be able to compete with the modernised ground transport more successfully if we keep the pace of modernisation of the air cargo processes at least at the level of other transport modes," he said.
Container shipping has completely shrugged off the competitive threat posed by China-Europe rail and for good reason. If an average train carries 80 FEU, it would require 112 trains to fill one 18,000 TEU ship.
But the competition for air cargo is far more acute. Going by weight, one freight train from China to Europe carries enough cargo to fill at least 20 Boeing 777 freighters.

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