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Growing demand for railway transportation due to the Suez Canal incident
Terms of railway cargo delivery: factors of influence and causes of delays in transit
Incoterms usage in the implementation of rail transport: features in practice
In connection with the incident that occurred in the Suez Canal, there has been a surge in demand for rail freight in the direction of China-Europe.
Despite the fact that rail transportation is the most versatile and reliable in comparison with other modes of transport, such transportation also has the risk of delaying cargo on the way, as a result, increasing the delivery time of cargo to the final destination.
Краткий экскурс в историю
The International Chamber of Commerce (ICC) was created in 1919. It took up the study of trade terms in international transactions for the first time and created a set of Incoterms rules based on the study data.
In the edition of Incoterms of 1953, were approved the terms of delivery that do not apply to maritime transport: FOR and FOT.
18.04.2021
14.04.2021
18.03.2021
Prohibitions and restrictions in the implementation of cargo transportation by rail
There are international norms and rules governing the transportation of goods by all possible modes of transport. These norms regulate the list of goods prohibited for transportation by rail, and goods that have specific features in the course of their transportation.
17.05.2021
Deadlock decrease and demand reduce for China-Europe railway services
Georgia, Azerbaijan, Turkey and Kazakhstan will establish a joint venture (JV) to enhance the capacity of the China-Europe Southern Corridor.
At present, the New Silk Road may face turbulent times, but instability also has a positive effect on the corridor. Deadlock on the New Silk Road has been significantly reduced and delay rates on all routes are much lower than at the beginning of the year.
Georgia, Azerbaijan, Turkey and Kazakhstan are going to establish a joint venture to build the capacity of the China-Europe Southern Corridor
"Transit along the Silk Road will continue under any circumstances." How the military conflict between Russia and Ukraine will affect logistics and cargo transportation
Military operations in Ukraine continue. The conflict has also affected Belarus: it is already known that Kyiv has closed all checkpoints on the border with Belarus. How will the current situation affect the international transport and logistics system in general and Belarusian business in particular? What do the ones who directly transport cargo say? "Pro-Business" collected comments from representatives of this market.
10.04.2022
11.03.2022
25.04.2022
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Deadlock decrease and demand reduce for China-Europe railway services
At present, the New Silk Road may face turbulent times, but instability also has a positive effect on the corridor. Deadlock on the New Silk Road has been significantly reduced and delay rates on all routes are much lower than at the beginning of the year.
It should be recalled that Oleg Yanulevich, the founder of PRO-LOG logistics company, informed INFOTRANS.BY: “Economic sanctions against Russia and Belarus have not stopped the movement of trains along the New Silk Road. However, the situation in Ukraine and its consequences will cause further disruptions in maritime transport and lower prices for rail transport. Unfortunately, we are in for a quite difficult period, which may have more serious consequences than the problems during COVID.”
While official data has yet to be released, the logistics industry as a whole is reporting a decline in demand for services on the main route between China and Europe. This route passes through Russia and Belarus, and although sanctions do not in principle interfere with this railway freight route, there is a growing list of customers and transport companies that are not yet willing to use this route.
But, as noted by the Chinese firm New Silk Road Intermodal, this also has a positive effect. In its ten-week report, the company writes: “Due to the Russian-Ukrainian conflict, the number of new orders for China-Europe freight trains has dropped sharply this week. A lot of shippers are careful with railway shipment. Meanwhile, the total transit time has been significantly reduced as the best transportation efficiency has been recorded in recent months.”
The company confirms this with data on the average number of days of delays for trains from several Chinese hubs to Europe from 3 to 10 weeks. In the 8th week, the conflict between Russia and Ukraine began, and the first sanctions were already introduced in the weekend. More sanctions followed in the 9th week and the market started to react.
It should be recalled that Oleg Yanulevich, the founder of PRO-LOG logistics company, informed INFOTRANS.BY: “Economic sanctions against Russia and Belarus have not stopped the movement of trains along the New Silk Road. However, the situation in Ukraine and its consequences will cause further disruptions in maritime transport and lower prices for rail transport. Unfortunately, we are in for a quite difficult period, which may have more serious consequences than the problems during COVID.”
While official data has yet to be released, the logistics industry as a whole is reporting a decline in demand for services on the main route between China and Europe. This route passes through Russia and Belarus, and although sanctions do not in principle interfere with this railway freight route, there is a growing list of customers and transport companies that are not yet willing to use this route.
But, as noted by the Chinese firm New Silk Road Intermodal, this also has a positive effect. In its ten-week report, the company writes: “Due to the Russian-Ukrainian conflict, the number of new orders for China-Europe freight trains has dropped sharply this week. A lot of shippers are careful with railway shipment. Meanwhile, the total transit time has been significantly reduced as the best transportation efficiency has been recorded in recent months.”
The company confirms this with data on the average number of days of delays for trains from several Chinese hubs to Europe from 3 to 10 weeks. In the 8th week, the conflict between Russia and Ukraine began, and the first sanctions were already introduced in the weekend. More sanctions followed in the 9th week and the market started to react.
Цифры предоставлены New Silk Road Intermodal за неделю 10
It could have been less days of delay if not for the current delay at the Khorgos border crossing. According to New Silk Road Intermodal, the shortage of license plates has led to poor container handling efficiency. This has been going on for over a week and still hasn't been resolved.
Deadlock on the New Silk Road was a real problem in 2021, but already in the first weeks of 2022 it eased due to the Chinese New Year celebrations. At this time, production in China slows down, and the number of westbound trains becomes less than usual. During this period, backlogs are often processed and minimized.
In mid-February, positive signals began to appear. Currently, transport to Poland is less than 20 days for several weeks, and last week we recorded the first two trains arriving in Malaszewiczy within 14 days, said Jakub Walczak from C.H. Robinson in the seventh week, shortly before the start of the war in Ukraine.
Transit times between continents of over 30 days have been reported for a long time, and some have even argued that shipping will be faster as long as there is deadlock in the corridor. Rising demand was cited as the main reason, while popular border areas were unable to cope with the sudden increase in numbers.
Deadlock on the New Silk Road was a real problem in 2021, but already in the first weeks of 2022 it eased due to the Chinese New Year celebrations. At this time, production in China slows down, and the number of westbound trains becomes less than usual. During this period, backlogs are often processed and minimized.
In mid-February, positive signals began to appear. Currently, transport to Poland is less than 20 days for several weeks, and last week we recorded the first two trains arriving in Malaszewiczy within 14 days, said Jakub Walczak from C.H. Robinson in the seventh week, shortly before the start of the war in Ukraine.
Transit times between continents of over 30 days have been reported for a long time, and some have even argued that shipping will be faster as long as there is deadlock in the corridor. Rising demand was cited as the main reason, while popular border areas were unable to cope with the sudden increase in numbers.
Terms of railway cargo delivery: factors of influence and causes of delays in transit
Despite the fact that rail transportation is the most versatile and reliable in comparison with other modes of transport, such transportation also has the risk of delaying cargo on the way, as a result, increasing the delivery time of cargo to the final destination.
In general, the following factors influence the total delivery time of cargo by rail:
1. Availability of empty containers at the loading points, in which the cargo will be delivered.
2. Schedule of train departures and its shifting for relevant reasons (full train not completed, delay in customs clearance, lack of free platforms, etc.)
3. The cargo delivery scheme used (only by rail, combined transport on different sections of the route): the more transport links in the cargo transportation chain, the greater the risk of delays in transit when changing transport.
4. The congestion degree of border crossings.
5. The specifics of the goods that do not allow them to be transported by rail or the subsequent change of transport modes: the presence of batteries in the mechanism, dangerous type of cargo, etc.
6. Errors in documenting cargo transportation: as a result of such errors, the cargo may fall under customs inspection. Also, if there are claims in the groupage cargo for one of the goods, the delay will affect all the cargo in the container.
7. Force majeure circumstances (natural disasters, military operations, etc.).
Let's consider two cases reflecting the influence of some of the above factors on the cargo delay in transit during the implementation of rail freight.
Case No. 1. Force majeure caused by government measures to prevent the spread of the COVID-19 virus infection, congestion at border crossings, shifts in train departure schedules, and equipment shortages.
The volume of rail freight has increased dramatically in recent years, putting significant pressure on the network with limited resources (equipment, workers, etc.).
Due to quarantine measures taken by China and Kazakhstan in 2020, the number of freight trains between the two countries has been limited. At the end of 2020, cargo traffic on the border between China and Kazakhstan deteriorated sharply, which led to the temporary suspension of some regular trains from China to Europe.
At the same time, the shortage of empty containers and the growth in demand for rail transportation led to the actions of operators to increase rates for cargo delivery by about 5 times.
Since the beginning of December 2020, cargo transportation from China to Europe has been limited by the available capacities of operators, as a result of which the shipment of goods was carried out by advance booking and subject to the availability of space and equipment.
The situation with the imbalance of empty containers at the railway stations of cargo departure, according to experts, was caused by the lack of efficiency on the part of the shipping lines, since the containers are shared.
All this at the end of 2020 led to a delay in the planned and ongoing cargo transportation by rail.
Case No. 2. Force majeure caused by government measures to prevent the spread of the COVID-19 virus infection, lack of equipment and the use of combined cargo transportation schemes.
In the spring of 2021, due to a disproportionate demand for transport capacity, a shortage of empty containers and changing consumer preferences, there were serious problems in delaying ships on major world routes, which led to delays and additional costs for rail freight.
In particular, railway operators warned of delays and additional costs of cargo transportation using the seaport of Hamburg due to delays in shipping lines and congestion in the port infrastructure.
Such delays in the port have led to problems of various kinds, from overloaded storage facilities to difficulties with the departure of trains connecting the port with the hinterland.
High traffic at the sea terminal resulted in delays and restrictions in the loading and unloading of trains, and customers were charged additional fees for storing and loading/unloading containers.
In general, the following factors influence the total delivery time of cargo by rail:
1. Availability of empty containers at the loading points, in which the cargo will be delivered.
2. Schedule of train departures and its shifting for relevant reasons (full train not completed, delay in customs clearance, lack of free platforms, etc.)
3. The cargo delivery scheme used (only by rail, combined transport on different sections of the route): the more transport links in the cargo transportation chain, the greater the risk of delays in transit when changing transport.
4. The congestion degree of border crossings.
5. The specifics of the goods that do not allow them to be transported by rail or the subsequent change of transport modes: the presence of batteries in the mechanism, dangerous type of cargo, etc.
6. Errors in documenting cargo transportation: as a result of such errors, the cargo may fall under customs inspection. Also, if there are claims in the groupage cargo for one of the goods, the delay will affect all the cargo in the container.
7. Force majeure circumstances (natural disasters, military operations, etc.).
Let's consider two cases reflecting the influence of some of the above factors on the cargo delay in transit during the implementation of rail freight.
Case No. 1. Force majeure caused by government measures to prevent the spread of the COVID-19 virus infection, congestion at border crossings, shifts in train departure schedules, and equipment shortages.
The volume of rail freight has increased dramatically in recent years, putting significant pressure on the network with limited resources (equipment, workers, etc.).
Due to quarantine measures taken by China and Kazakhstan in 2020, the number of freight trains between the two countries has been limited. At the end of 2020, cargo traffic on the border between China and Kazakhstan deteriorated sharply, which led to the temporary suspension of some regular trains from China to Europe.
At the same time, the shortage of empty containers and the growth in demand for rail transportation led to the actions of operators to increase rates for cargo delivery by about 5 times.
Since the beginning of December 2020, cargo transportation from China to Europe has been limited by the available capacities of operators, as a result of which the shipment of goods was carried out by advance booking and subject to the availability of space and equipment.
The situation with the imbalance of empty containers at the railway stations of cargo departure, according to experts, was caused by the lack of efficiency on the part of the shipping lines, since the containers are shared.
All this at the end of 2020 led to a delay in the planned and ongoing cargo transportation by rail.
Case No. 2. Force majeure caused by government measures to prevent the spread of the COVID-19 virus infection, lack of equipment and the use of combined cargo transportation schemes.
In the spring of 2021, due to a disproportionate demand for transport capacity, a shortage of empty containers and changing consumer preferences, there were serious problems in delaying ships on major world routes, which led to delays and additional costs for rail freight.
In particular, railway operators warned of delays and additional costs of cargo transportation using the seaport of Hamburg due to delays in shipping lines and congestion in the port infrastructure.
Such delays in the port have led to problems of various kinds, from overloaded storage facilities to difficulties with the departure of trains connecting the port with the hinterland.
High traffic at the sea terminal resulted in delays and restrictions in the loading and unloading of trains, and customers were charged additional fees for storing and loading/unloading containers.
Incoterms usage in the implementation of rail transport: features in practice
A brief excursion into history
The International Chamber of Commerce (ICC) was created in 1919. It took up the study of trade terms in international transactions for the first time and created a set of Incoterms rules based on the study data.
In the edition of Incoterms of 1953, were approved the terms of delivery that do not apply to maritime transport: FOR and FOT.
FOR (“Free on the railway”) as a delivery basis means that the seller bears all costs associated with the delivery of cargo to the railway station and its loading into a wagon (container, platform). In the future, all risks, responsibility for the goods, as well as subsequent transportation costs, are covered by the buyer.
FOT (“Free on truck”) as a delivery basis means that the seller bears all costs associated with the delivery and loading of goods into a truck. In the future, all risks, responsibility for the goods, as well as subsequent transportation costs, are covered by the buyer.
At the same time, it should be remembered that the costs associated with the payment of customs duties when exporting goods abroad, as well as the execution of an export transaction, in FOR / FOT bases, are borne by the seller.
Currently, the terms of delivery FOR and FOT are not so widespread, despite the fact that the International Chamber of Commerce does not prohibit the use of old versions of Incoterms, and according to international practice, the buyer and seller have the opportunity to carry out transactions according to the schemes that are most acceptable to them.
On the territory of the countries of the Customs Union, the Decision of the Commission of the Customs Union No. 257 and the Classifier of delivery terms in the version of Incoterms 2010 are in force, in which there are no delivery bases FOR and FOT. However, FOR and FOT can easily be replaced by FCA as the most universal terms of delivery.
FCA (“Free carrier”) was introduced as a term in connection with the emergence of variability in the methods of cargo transportation by mode of transport (railway, road, air, etc.). It covers more types of transport, since there is no direct indication of the airport, truck, etc.
The FCA terms of delivery provide for the transfer of risks and responsibility for the goods from the seller to the buyer not on board the transport, but at a certain point (at the port, at the terminal). The costs of delivery and loading operations, as well as the responsibility for the goods and all risks associated with them, are borne by the seller until the cargo is delivered at the point to the named carrier.
As a result, at present, when executing international transactions, instead of the FOR or FOT delivery terms, it is worth using the more up-to-date and more universal FCA delivery terms.
The International Chamber of Commerce (ICC) was created in 1919. It took up the study of trade terms in international transactions for the first time and created a set of Incoterms rules based on the study data.
In the edition of Incoterms of 1953, were approved the terms of delivery that do not apply to maritime transport: FOR and FOT.
FOR (“Free on the railway”) as a delivery basis means that the seller bears all costs associated with the delivery of cargo to the railway station and its loading into a wagon (container, platform). In the future, all risks, responsibility for the goods, as well as subsequent transportation costs, are covered by the buyer.
FOT (“Free on truck”) as a delivery basis means that the seller bears all costs associated with the delivery and loading of goods into a truck. In the future, all risks, responsibility for the goods, as well as subsequent transportation costs, are covered by the buyer.
At the same time, it should be remembered that the costs associated with the payment of customs duties when exporting goods abroad, as well as the execution of an export transaction, in FOR / FOT bases, are borne by the seller.
Currently, the terms of delivery FOR and FOT are not so widespread, despite the fact that the International Chamber of Commerce does not prohibit the use of old versions of Incoterms, and according to international practice, the buyer and seller have the opportunity to carry out transactions according to the schemes that are most acceptable to them.
On the territory of the countries of the Customs Union, the Decision of the Commission of the Customs Union No. 257 and the Classifier of delivery terms in the version of Incoterms 2010 are in force, in which there are no delivery bases FOR and FOT. However, FOR and FOT can easily be replaced by FCA as the most universal terms of delivery.
FCA (“Free carrier”) was introduced as a term in connection with the emergence of variability in the methods of cargo transportation by mode of transport (railway, road, air, etc.). It covers more types of transport, since there is no direct indication of the airport, truck, etc.
The FCA terms of delivery provide for the transfer of risks and responsibility for the goods from the seller to the buyer not on board the transport, but at a certain point (at the port, at the terminal). The costs of delivery and loading operations, as well as the responsibility for the goods and all risks associated with them, are borne by the seller until the cargo is delivered at the point to the named carrier.
As a result, at present, when executing international transactions, instead of the FOR or FOT delivery terms, it is worth using the more up-to-date and more universal FCA delivery terms.
"Transit along the Silk Road will continue under any circumstances." How the military conflict between Russia and Ukraine will affect logistics and cargo transportation
Military operations in Ukraine continue. The conflict has also affected Belarus: it is already known that Kyiv has closed all checkpoints on the border with Belarus. How will the current situation affect the international transport and logistics system in general and Belarusian business in particular? What do the ones who directly transport cargo say? "Pro-Business" collected comments from representatives of this market.
Railway transportation: no reason to stop cargo shipment
Due to hostilities in Ukraine, Belarus has remained the only link between Europe and China in the communication of accelerated container railway transportation. Therefore, one should not expect that the political aspect will be a priority over the economic one, says the founder and director of PRO-LOG logistics company Oleg Yanulevich:
— Europe and China are connected by several dozen logistics rail chains. The vast majority of them pass through the territory of Russia and Belarus.
— And at the moment I can’t imagine a situation when the cargo stops shipping along them, because this concerns much expense for all participants in the process.
In Ukraine, - the expert continues, - there are only 2 strategically important routes for the continent. They connect the Chinese cities of Xi'an and Chongqing with the Hungarian Budapest. Now it is clear that no one will transport cargo through the country where the war is going. This fact might affect Belarus and bring certain risks:
- Cargo should go by a detour to the Polish station Malaszewicze. They will reach there through Brest.
— Europe and China are connected by several dozen logistics rail chains. The vast majority of them pass through the territory of Russia and Belarus.
— And at the moment I can’t imagine a situation when the cargo stops shipping along them, because this concerns much expense for all participants in the process.
In Ukraine, - the expert continues, - there are only 2 strategically important routes for the continent. They connect the Chinese cities of Xi'an and Chongqing with the Hungarian Budapest. Now it is clear that no one will transport cargo through the country where the war is going. This fact might affect Belarus and bring certain risks:
- Cargo should go by a detour to the Polish station Malaszewicze. They will reach there through Brest.
Transit traffic on Belarusian territory may increase even more. Therefore, delays are possible due to the additional load on the railway infrastructure.
Further, the goods that were supposed to get to Budapest will be transported there in some other way, the source explains.
Oleg Yanulevich believes that the railway transportation industry is now out of danger. In any case, none of the parties, at the time of forming the current article, has made any official statements that could allow speaking otherwise.
Oleg Yanulevich believes that the railway transportation industry is now out of danger. In any case, none of the parties, at the time of forming the current article, has made any official statements that could allow speaking otherwise.
The New Silk Road is too important for both Europe and China, so the parties are likely to continue cargo shipment under almost any circumstances.
— By the way, in case the events of 2014 hadn’t begun in Ukraine, this country could have become the center of the New Silk Road. But since that year, all transport volumes have gone to the territory of Belarus,” the expert sums up.
International road transport: the main events are yet to come
The trucking market reacted differently to the situation. It is known that companies that transported cargo to Ukraine are forced to adjust their plans:
“Deliveries of all cargoes to Ukraine from our customers have been put on hold for an indefinite period,” says Valentin Gorbach, founder of ShimaPlus LLC.
“Deliveries of all cargoes to Ukraine from our customers have been put on hold for an indefinite period,” says Valentin Gorbach, founder of ShimaPlus LLC.
I think that there will be no opportunities to resume transport communication with Ukraine in the near future.
The Valentin’s company also carries cargo from Europe. On the evening of Thursday, February 24, the trucks of the company kept standing in line to enter Belarus after shipment in the logistics centers of Poland and Lithuania - everything basically went on as usual. However, there was a precedent related to interaction with Polish colleagues:
— I don’t know why, but one of the Polish companies refused to ship the cargo on our trucks, which were supposed to follow to Russia. Without explanation, they rejected the previously confirmed application.
We also spoke to a Belarusian who works for a Polish logistics company. At the time of communication with our journalist (evening of February 24), he was in a rut on the Polish side to enter Belarus. He said that on the evening of February 23, he loaded up in Poland and left for Russia. The loading process went as usual:
“But I know other drivers have had problems. As I got up to enter Belarus through Bobrovniki, I found out that several people could not get the cargo for a drive to the Russian Federation.
The speaker says that the drivers were quite worried about this issue.
— I don’t know why, but one of the Polish companies refused to ship the cargo on our trucks, which were supposed to follow to Russia. Without explanation, they rejected the previously confirmed application.
We also spoke to a Belarusian who works for a Polish logistics company. At the time of communication with our journalist (evening of February 24), he was in a rut on the Polish side to enter Belarus. He said that on the evening of February 23, he loaded up in Poland and left for Russia. The loading process went as usual:
“But I know other drivers have had problems. As I got up to enter Belarus through Bobrovniki, I found out that several people could not get the cargo for a drive to the Russian Federation.
The speaker says that the drivers were quite worried about this issue.
Unconfirmed information about the imminent closure of Poland's borders for all modes of transport has been circulating in the queue.
- They say that such a decision of the Polish authorities will come into force on March 1. Right now we don’t know what to expect,” the source shares.
Sea transportation: the necessity to change ports
Belarusian companies, whose business is connected with maritime transportation, are also experiencing problems. The military conflict in Ukraine and the sanctions that followed it raise new questions for them in organizing the delivery of cargo. Aleksey Martynovsky shared them with us, as his company WestMotors delivers cars from the USA for Belarusians.
“There appeared problems along the entire delivery chain,” says the expert.
“There appeared problems along the entire delivery chain,” says the expert.
We are preparing for the fact that those containers that are already being transported by sea will be forced to redirect from Klaipeda to the ports of Kotka (Finland) and the Leningrad Region.
— Containers delivered to Lithuania are more difficult to take out: almost all European carriers refused to carry cargo to Belarus without explanation. Car shipping companies from the US and Canada do not organize shipment without full prepayment. They are worried that we will not pay out the full sum due to the disconnection of our banks from the world payment systems,” added Alexey Martynovsky.
The company still has contracts with Russian and Belarusian carriers, but due to the fact that the number of organizations ready for cooperation has decreased, and the number of goods transported has not, there is a risk that demand will exceed supply.
Therefore, until a new scheme of guaranteed deliveries is debugged, says Alexei Martynovsky, it is difficult for West Motors to ship new containers from the United States. These moments will eventually affect the final consumer: both the cost of deliveries and the time of their waiting is likely to increase.
The company still has contracts with Russian and Belarusian carriers, but due to the fact that the number of organizations ready for cooperation has decreased, and the number of goods transported has not, there is a risk that demand will exceed supply.
Therefore, until a new scheme of guaranteed deliveries is debugged, says Alexei Martynovsky, it is difficult for West Motors to ship new containers from the United States. These moments will eventually affect the final consumer: both the cost of deliveries and the time of their waiting is likely to increase.
Growing demand for railway transportation due to the Suez Canal incident.
In connection with the incident that occurred in the Suez Canal, there has been a surge in demand for rail freight in the direction of China-Europe.
Brief information
In the spring of 2021, in the conditions of a severe sandstorm, the container ship Ever Given turned 90 ° at the entrance to the Suez Canal, as a result of which it rested its bow on one side and the stern on the other and ran aground, thereby completely blocking traffic along the canal in both directions. He was heading from Shenzhen to Rotterdam. The container ship Ever Given was built in 2018 and has a total capacity of 20388 TEU.
Several tugboats were brought in by the canal authorities to refloat the vessel. The rest of the ships lined up, waiting for their passage.
About 12% of the world cargo flow passes through the Suez Canal. This is the busiest water artery that carries out the world transportation of oil and liquefied gas. Every year, about 19,000 ships pass through the Suez Canal (more than 50 ships per day).
The limited capacity of the Suez Canal has prompted customers to look for alternatives to sea freight from China to Europe, turning to rail transport. In addition, when bookings resume on ships sailing through the Suez Canal, demand will greatly outstrip supply, resulting in higher shipping costs. All of these are factors that explain the surge in demand for China-Europe rail transport in the wake of the situation in the Suez Canal.
According to experts, already at the end of March 2021, there were very few free cargo spaces on trains traveling from China to Europe. In the current situation in the Suez Canal, the remaining places for cargo transportation by rail are sold out for the next couple of months. As demand grows, so do rail freight rates.
The blockade of the Suez Canal and the congestion of the port of Los Angeles led to a significant shortage of empty containers. In addition, China's railway terminals are not as developed as seaports in terms of customs control. Operators have to go through many checks of cargo codes according to the TN VED in order to prevent the detention of a groupage cargo and, as a result, the entire container train at customs control points. All these factors greatly affect the long delays of goods in transit.
According to Chinese media, in 2020, due to the limited capacity of air and sea transport, the volume of cargo transportation by rail between China and Europe increased by about 56%, to 1,140,000 TEU and 12,400 flights. And the first two months of 2021 noticed a record increase in rail freight volumes, up 96% year-on-year.
Brief information
In the spring of 2021, in the conditions of a severe sandstorm, the container ship Ever Given turned 90 ° at the entrance to the Suez Canal, as a result of which it rested its bow on one side and the stern on the other and ran aground, thereby completely blocking traffic along the canal in both directions. He was heading from Shenzhen to Rotterdam. The container ship Ever Given was built in 2018 and has a total capacity of 20388 TEU.
Several tugboats were brought in by the canal authorities to refloat the vessel. The rest of the ships lined up, waiting for their passage.
About 12% of the world cargo flow passes through the Suez Canal. This is the busiest water artery that carries out the world transportation of oil and liquefied gas. Every year, about 19,000 ships pass through the Suez Canal (more than 50 ships per day).
The limited capacity of the Suez Canal has prompted customers to look for alternatives to sea freight from China to Europe, turning to rail transport. In addition, when bookings resume on ships sailing through the Suez Canal, demand will greatly outstrip supply, resulting in higher shipping costs. All of these are factors that explain the surge in demand for China-Europe rail transport in the wake of the situation in the Suez Canal.
According to experts, already at the end of March 2021, there were very few free cargo spaces on trains traveling from China to Europe. In the current situation in the Suez Canal, the remaining places for cargo transportation by rail are sold out for the next couple of months. As demand grows, so do rail freight rates.
The blockade of the Suez Canal and the congestion of the port of Los Angeles led to a significant shortage of empty containers. In addition, China's railway terminals are not as developed as seaports in terms of customs control. Operators have to go through many checks of cargo codes according to the TN VED in order to prevent the detention of a groupage cargo and, as a result, the entire container train at customs control points. All these factors greatly affect the long delays of goods in transit.
According to Chinese media, in 2020, due to the limited capacity of air and sea transport, the volume of cargo transportation by rail between China and Europe increased by about 56%, to 1,140,000 TEU and 12,400 flights. And the first two months of 2021 noticed a record increase in rail freight volumes, up 96% year-on-year.
Georgia, Azerbaijan, Turkey and Kazakhstan are going to establish a joint venture to build the capacity of the China-Europe Southern Corridor
Georgia, Azerbaijan, Turkey and Kazakhstan will establish a joint venture (JV) to enhance the capacity of the China-Europe Southern Corridor. This is the so-called Trans-Caspian Corridor, which is becoming even more popular in the light of the changing geopolitical situation.
On March 31, 2022, four countries - Georgia, Azerbaijan, Turkey and Kazakhstan - signed a quadripartite statement on the development of the Trans-Caspian International Transport Corridor, aimed at strengthening cooperation and increasing the transit potential of countries along the corridor.
The new facility is expected to be completely operational in early 2023. The joint venture is aimed at facilitating transportation and will allow solving the issues of tariff setting and cargo declaration.
The Trans-Caspian route is an alternative to the Malashevichi. However, the so-called Southern route cannot completely replace the traditional one (through Russia and Belarus). This route also requires a significant development of infrastructure, primarily terminal on the territory of Kazakhstan, Georgia and Azerbaijan.
One of the priorities is to increase the competitive advantages of the Baku-Tbilisi-Kars railway line in Eurasian transport and to speed up work to increase the capacity of this line.
PRO-LOG logistics company already supplies China-Europe using the Southern route and offers European companies to organize the delivery via the Trans-Caspian corridor.
On March 31, 2022, four countries - Georgia, Azerbaijan, Turkey and Kazakhstan - signed a quadripartite statement on the development of the Trans-Caspian International Transport Corridor, aimed at strengthening cooperation and increasing the transit potential of countries along the corridor.
The new facility is expected to be completely operational in early 2023. The joint venture is aimed at facilitating transportation and will allow solving the issues of tariff setting and cargo declaration.
The Trans-Caspian route is an alternative to the Malashevichi. However, the so-called Southern route cannot completely replace the traditional one (through Russia and Belarus). This route also requires a significant development of infrastructure, primarily terminal on the territory of Kazakhstan, Georgia and Azerbaijan.
One of the priorities is to increase the competitive advantages of the Baku-Tbilisi-Kars railway line in Eurasian transport and to speed up work to increase the capacity of this line.
PRO-LOG logistics company already supplies China-Europe using the Southern route and offers European companies to organize the delivery via the Trans-Caspian corridor.
Prohibitions and restrictions in the implementation of cargo transportation by rail
There are international norms and rules governing the transportation of goods by all possible modes of transport. These norms regulate the list of goods prohibited for transportation by rail, and goods that have specific features in the course of their transportation.
Goods prohibited for transportation by rail according to the rules of standard cargo transportation:
1. Radioactive, explosive, poisonous, caustic, flammable and other dangerous substances classified as dangerous goods:
- explosives and items stuffed with them (hazard class 1): gunpowder, live ammunition, hunting pistols, pyrotechnics (signal cartridges and rockets, smoke bombs, sparklers, railway firecrackers, etc.), detonators, dynamite, TNT, ammonal and others;
- compressed, liquefied and dissolved gases under pressure (hazard class 2): for domestic use, gas cartridges filled with nerve agents and tear agents, cylinders and cartridges under pressure;
- flammable liquids (hazard class 3): acetone, gasoline, flammable petroleum products, methanol, methyl ether, carbon disulfide, ethyl alcohol and others;
- flammable and spontaneously flammable solids (hazard class 4): flammable upon contact with water (potassium, sodium, calcium metal and phosphorous and others), flammable substances (white, yellow and red phosphorus and others), dry or wet nitrocellulose and others;
- oxidizing agents, organic peroxides (hazard class 5): ammonium nitrate fertilizer, ammonium nitrate, potassium nitrate, calcium chlorate, hydrogen peroxide and others;
- poisonous, toxic, toxic and potent substances in liquid or solid state (hazard class 6): brucine, nicotine, strychnine, antifreeze, mercury, hydrocyanic acid salts, cyanide, arsenic anhydride, narcotic drugs and psychotropic substances, poisonous plants and others;
- radioactive materials and their isotopes (hazard class 7): radioactive materials for diagnostic and treatment purposes, medical preparations and equipment using radioactive elements and isotopes, uranium and similar radioactive materials and products made from them, waste of radioactive materials, explosives containing precious and rare earth metals and precious stones;
- caustic and corrosive substances (hazard class 8): hydrochloric, sulfuric, nitric, hydrofluoric and other acids.
2. Weapon:
- firearms, gas, pneumatic (rifles, revolvers, pistols and other firearms, gas and pneumatic weapons);
- cold and mechanical (hunting knives, Finnish knives, knives with ejected blades, etc., swords, daggers, swords, sabers and analogues);
- electroshock devices and their simulators.
3. Strategic materials: rocket and space systems, encryption equipment and systems for military purposes, technical means designed to secretly obtain information, regulatory and technical documentation for the production and use of weapons and special equipment, the results of research and design work on the creation of weapons and military equipment.
4. Precious and rare earth metals, precious stones and articles made from them.
5. Banknotes, foreign currencies of all countries, metal coins.
6. Live animals, fur.
7. Human organs, remains, ashes.
8. Cargoes containing perishable items and items requiring special storage and/or transportation conditions.
9. Goods, the import of which is prohibited by the regulations of the importing state.
Transportation of lithium batteries
Lithium batteries are technically classified as materials of Hazard Class 9 "Miscellaneous Dangerous Goods". Defective or damaged lithium batteries are prone to explosive spontaneous combustion with thermal runaway that cannot be extinguished by conventional means.
There are a number of UN regulations governing the transportation of lithium batteries:
- UN 3090 Lithium metal batteries;
- UN 3480 Lithium ion batteries;
- UN 3091 Lithium metal batteries contained in equipment or packed with equipment;
- UN 3481 Lithium ion batteries contained in or packed with equipment.
Transportation of lithium batteries by land (by rail and road) is regulated by the ADR / RID Requirements "Transportation by road and rail".
Lithium batteries must be transported as part of the devices (equipment) for which they are intended. Shipments with lithium-ion and lithium-metal batteries must be marked in accordance with the requirements and confirmed by the technical documentation and product data sheet.
Cargoes with hidden prohibited and dangerous components
Some of the transported goods may contain attachments prohibited for transportation. For such shipments, confirmation of the contents of the shipment is required.
Examples of goods with hidden prohibited and dangerous components:
1. Automobiles, automotive parts and spare parts for equipment (engines, motors): may contain residues of fuel, wet batteries, compressed gases, as well as fire extinguishers, air bags, aerosol packages with lubricants and paints and varnishes, etc.
2. Equipment for artificial respiration: it is possible to contain cylinders with compressed air, oxygen, oxygen generators, cooled liquefied oxygen.
3. Appliances with electric motors (wheelchairs, lawn mowers, electric cars, etc.): may contain wet batteries.
4. Cylinders and containers (barrels, flasks): may contain compressed or liquefied gases, fuels, solvents, paints.
5. Drilling equipment, geographic equipment, mining equipment: may contain explosives, radioactive materials and other hazardous substances.
6. Household supplies and utensils: may contain flammable household liquids, corrosive toxic substances in household chemicals, lighter refills, etc.
7. Diving equipment: it is possible to contain cylinders with compressed gases, underwater lamps, internal combustion engines, batteries, signal pyrotechnic devices.
8. Electrical equipment and switches for electrical equipment or appliances: may contain magnetized materials, mercury, wet batteries, etc.
9. Paint and varnish products: the content of flammable liquids.
10. Medicines, pharmaceuticals: may contain infectious substances, radioactive materials, flammable liquids, oxidizing agents, organic peroxides or corrosive substances, packaging using "dry ice" (solid carbon dioxide) is possible.
11. Tool kits: may contain construction guns with cartridges, compressed gases, aerosols, flammable and corrosive substances.
12. Equipment for film crews: explosive pyrotechnic devices, liquid batteries, fuel, etc. may be contained.
When contacting a logistics company for the purpose of carrying out cargo transportation by rail, it must be remembered that the logistics operator has the right to individually supplement the list of goods prohibited for transportation and goods containing prohibited and dangerous components, and use it in their daily practice.
Goods prohibited for transportation by rail according to the rules of standard cargo transportation:
1. Radioactive, explosive, poisonous, caustic, flammable and other dangerous substances classified as dangerous goods:
- explosives and items stuffed with them (hazard class 1): gunpowder, live ammunition, hunting pistols, pyrotechnics (signal cartridges and rockets, smoke bombs, sparklers, railway firecrackers, etc.), detonators, dynamite, TNT, ammonal and others;
- compressed, liquefied and dissolved gases under pressure (hazard class 2): for domestic use, gas cartridges filled with nerve agents and tear agents, cylinders and cartridges under pressure;
- flammable liquids (hazard class 3): acetone, gasoline, flammable petroleum products, methanol, methyl ether, carbon disulfide, ethyl alcohol and others;
- flammable and spontaneously flammable solids (hazard class 4): flammable upon contact with water (potassium, sodium, calcium metal and phosphorous and others), flammable substances (white, yellow and red phosphorus and others), dry or wet nitrocellulose and others;
- oxidizing agents, organic peroxides (hazard class 5): ammonium nitrate fertilizer, ammonium nitrate, potassium nitrate, calcium chlorate, hydrogen peroxide and others;
- poisonous, toxic, toxic and potent substances in liquid or solid state (hazard class 6): brucine, nicotine, strychnine, antifreeze, mercury, hydrocyanic acid salts, cyanide, arsenic anhydride, narcotic drugs and psychotropic substances, poisonous plants and others;
- radioactive materials and their isotopes (hazard class 7): radioactive materials for diagnostic and treatment purposes, medical preparations and equipment using radioactive elements and isotopes, uranium and similar radioactive materials and products made from them, waste of radioactive materials, explosives containing precious and rare earth metals and precious stones;
- caustic and corrosive substances (hazard class 8): hydrochloric, sulfuric, nitric, hydrofluoric and other acids.
2. Weapon:
- firearms, gas, pneumatic (rifles, revolvers, pistols and other firearms, gas and pneumatic weapons);
- cold and mechanical (hunting knives, Finnish knives, knives with ejected blades, etc., swords, daggers, swords, sabers and analogues);
- electroshock devices and their simulators.
3. Strategic materials: rocket and space systems, encryption equipment and systems for military purposes, technical means designed to secretly obtain information, regulatory and technical documentation for the production and use of weapons and special equipment, the results of research and design work on the creation of weapons and military equipment.
4. Precious and rare earth metals, precious stones and articles made from them.
5. Banknotes, foreign currencies of all countries, metal coins.
6. Live animals, fur.
7. Human organs, remains, ashes.
8. Cargoes containing perishable items and items requiring special storage and/or transportation conditions.
9. Goods, the import of which is prohibited by the regulations of the importing state.
Transportation of lithium batteries
Lithium batteries are technically classified as materials of Hazard Class 9 "Miscellaneous Dangerous Goods". Defective or damaged lithium batteries are prone to explosive spontaneous combustion with thermal runaway that cannot be extinguished by conventional means.
There are a number of UN regulations governing the transportation of lithium batteries:
- UN 3090 Lithium metal batteries;
- UN 3480 Lithium ion batteries;
- UN 3091 Lithium metal batteries contained in equipment or packed with equipment;
- UN 3481 Lithium ion batteries contained in or packed with equipment.
Transportation of lithium batteries by land (by rail and road) is regulated by the ADR / RID Requirements "Transportation by road and rail".
Lithium batteries must be transported as part of the devices (equipment) for which they are intended. Shipments with lithium-ion and lithium-metal batteries must be marked in accordance with the requirements and confirmed by the technical documentation and product data sheet.
Cargoes with hidden prohibited and dangerous components
Some of the transported goods may contain attachments prohibited for transportation. For such shipments, confirmation of the contents of the shipment is required.
Examples of goods with hidden prohibited and dangerous components:
1. Automobiles, automotive parts and spare parts for equipment (engines, motors): may contain residues of fuel, wet batteries, compressed gases, as well as fire extinguishers, air bags, aerosol packages with lubricants and paints and varnishes, etc.
2. Equipment for artificial respiration: it is possible to contain cylinders with compressed air, oxygen, oxygen generators, cooled liquefied oxygen.
3. Appliances with electric motors (wheelchairs, lawn mowers, electric cars, etc.): may contain wet batteries.
4. Cylinders and containers (barrels, flasks): may contain compressed or liquefied gases, fuels, solvents, paints.
5. Drilling equipment, geographic equipment, mining equipment: may contain explosives, radioactive materials and other hazardous substances.
6. Household supplies and utensils: may contain flammable household liquids, corrosive toxic substances in household chemicals, lighter refills, etc.
7. Diving equipment: it is possible to contain cylinders with compressed gases, underwater lamps, internal combustion engines, batteries, signal pyrotechnic devices.
8. Electrical equipment and switches for electrical equipment or appliances: may contain magnetized materials, mercury, wet batteries, etc.
9. Paint and varnish products: the content of flammable liquids.
10. Medicines, pharmaceuticals: may contain infectious substances, radioactive materials, flammable liquids, oxidizing agents, organic peroxides or corrosive substances, packaging using "dry ice" (solid carbon dioxide) is possible.
11. Tool kits: may contain construction guns with cartridges, compressed gases, aerosols, flammable and corrosive substances.
12. Equipment for film crews: explosive pyrotechnic devices, liquid batteries, fuel, etc. may be contained.
When contacting a logistics company for the purpose of carrying out cargo transportation by rail, it must be remembered that the logistics operator has the right to individually supplement the list of goods prohibited for transportation and goods containing prohibited and dangerous components, and use it in their daily practice.
