China suppliers of high-value IT products have a safer and faster alternative to send their goods to Central Asia and Europe. But high costs make the railway a nonviable option for exporters in other industries.
With the opening of the Chongqing-Duisburg rail freight line in mid-October, manufacturers in China's inland provinces now have a swifter way to deliver goods to Europe.
|Car multimedia systems supplier Chongqing Xinsong Electronic Science and Technology Co. Ltd has started suggesting using the newly opened railway to buyers with FOB transactions.|
The new 11,179km line has a fixed route, schedule, fees, and loading and unloading stations. It also has priority over regular rail lines. All these have made it possible to reduce delivery time from Chongqing to Duisburg, Germany, from 39 to just 13 days.
The line has two segments. The first is a domestic section that starts at Chongqing and stops at Dazhou in Sichuan province, Ankang and Xi'an in Shaanxi province, Lanzhou in Gansu province, and Urumqi and the Alashankou border in Xinjiang. It then transverses Kazakhstan, Russia, Belarus, Poland and ends at Duisburg in Germany.
Before this line was opened, delivery via regular freight train could take as long as 39 days. This is because there were unscheduled stops and goods had to be transferred from one rail car to another, all of which caused delays in delivery.
Shipping by sea takes between 27 and 35 days, depending on weather conditions. Air freight takes only a day but can cost six times more than rail delivery.
To enhance the appeal of the new direct rail link, Chongqing customs officials have signed an agreement with their counterparts in Urumqi to facilitate smooth clearance and transportation. They are also coordinating with customs officials in each country where the line has a designated stop.
China's burgeoning IT industry is expected to take full advantage of the new railway, particularly since several major manufacturers have set up factories in Chongqing. Among these are HP and Foxconn.
Not only does the freight line make it faster to send goods to Europe, it takes less time to import components from the region as well.
Faster delivery time also means both customers and suppliers can reduce their period of exposure to currency exchange fluctuation. Moreover, a dry and stable environment is preferred when transporting IT products to prevent damage to the parts and ensure performance is not affected.
But with the current high cost of using the Chongqing-Duisburg line, most companies intend to take this route only for seasonal and urgent orders.
At present, laptops, IT components, motorcycles, chemicals, steel and agricultural products are sent across the border via railway. More industries could start using the freight line if costs go down. But this could only be possible if the number of trips is increased and more transportation companies open similar freight lines to drum up competition. Even so, this could only reduce the cost difference and not bring down railway charges to a level lower than or even similar to shipping fees.
Note: This article "Railway connects China to Germany" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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