A New East-West Rail – Will It Threaten Air Freight Traffic?

KN Eurasia Express Railway

Posted on 05-11-2017 by Posey International

For many, rail seems hardly a threat to air freight: all other things being equal, air transportation is almost always more expedient than rail. For example, if you need to transport a relatively small load from point A to point B — and you’re willing to pay a premium to get it there as quickly as possible — you’ll choose air freight every time.

Rail: A New Threat to Air Freight in Eurasia?

But air isn’t automatically a superior method of transportation. Soon, a new East-West railway may test the viability of rail freight over long distances.

According to Air Freight News, the route will stretch from Wuhan, China to Hamburg, Germany by way of Poznan, Poland, linking a bustling gateway to the Pacific with a centuries-old hub for North Atlantic maritime freight. Operated by Kuehne + Nagel’s (K+N) and known (appropriately enough) as KN Eurasia Express, the link caters to “less than container load consignments, particularly customers in automotive, high-tech, and fashion.”

KN Eurasia Express isn’t exactly lightning-quick, though. Under ideal circumstances, the journey from Wuhan to Hamburg will take 14 days. That’s far slower than air journeys, which can deliver goods from location to location in less than 24 hours (including ground transit time) under optimal conditions.

Favorable Cost Comparisons

Of the four major shipping modes — rail, air, road, and maritime — rail is by far the most economical choice for overland routes. According to the Congressional Budget Office, train transport is roughly eight times cheaper than road transport, before accounting for the diffuse costs of wear and tear on road and bridge infrastructure.

For most shippers, choosing rail over air (or vice versa) boils down to a relatively simple calculus: are rail’s longer transit times worth the anticipated cost savings? If so, rail wins; if not, air it is.

That’s why KN Eurasia Express expects to attract high-value “automotive, high-tech, and fashion” consignments. None of those industries are especially time-sensitive, and though high-tech and fashion goods tend to be relatively light, their value per weight unit often isn’t high enough to justify more expensive air transportation in the absence of time pressure.

A Technological Boost

Another potential detriment to rail freight: unless shippers use climate-controlled containers (which can add to shipping costs), rail shipments can encounter a slew of unpredictable weather and climate conditions — high or low relative humidity, temperature swings, pressure changes, excessive moisture, etc. To mitigate these issues, KN Eurasia Express plans to offer “GPS-based data monitoring [that] delivers real-time data on temperature, humidity, pressure and light exposure,” as well as insulated reefer containers for goods that simply can’t be exposed to temperature swings.

It’s unlikely that KN Eurasia Express will significantly threaten the increasingly robust air freight links between northern Europe and southeast Asia. But it may make significant inroads on the margins, especially for shippers whose loads aren’t particularly valuable or time-sensitive.

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