Companies turning their eyes to the railroad as the sea road to Europe becomes expensive… In 9 months, the volume of railroad traffic increased by 5 times

Input 2020.12.15 06:00

Rail transportation is emerging as an alternative as sea freight rates to Europe reach an all-time high. Transportation via train takes less time to travel than ships, but costs about 30% more, but it is reported that the price difference has significantly decreased due to the recent surge in sea fares.

According to the Shanghai Shipping Exchange on the 15th, the Shanghai Container Fare Index (SCFI), which represents the level of freight rates for sea transportation routes as of the 11th, recorded 2311.71. It is the highest level since the start of the statistics in October 2009, and has increased for nine consecutive weeks since October 9 (1438.22). On the 27th of last month, it broke through the 2000 line for the first time in history. The route to Europe is also recording a record high. On the 11th, the European route fare recorded $2948 per 1TEU (one 20-foot container), up 24.2% from the previous week ($2374). This is a 170% increase from the average of $886 on June 5, about six months ago.

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With sea freight rates soaring every day, the focus of export companies is road transport. Unlike the United States, Europe can transport overland, so the Trans-China Railway (TCR) and the Trans-Siberian Railway (TSR) are attracting attention as alternatives. TCR travels by boat from Incheon and Pyeongtaek ports to Weihai ports in China, then crosses mainland China and heads to Europe.

The industry believes that rail transportation, which was relatively expensive, has become competitive with the recent surge in shipping rates. According to the comprehensive logistics company Pantos, the volume of rail transport to Europe increased from 300 FEU (one 40-foot container) in January to 1500 FEU in October. In about nine months, the cargo volume has increased fivefold.

An industry official said, “It takes about 40 days to get to Eastern Europe by boat, but by using a train such as TSR, it is reduced to almost half.” Increasingly, companies that choose rail transport in case it will happen.”

LG Chem (051910)Is sending semi-finished electric vehicle batteries (battery cells) and equipment produced in Korea and China to Europe through TCR and TSR. Most of the dangerous goods such as batteries have been transported by sea, but due to the high sea fare, they chose rail transportation using special containers. Kumho Tire (073240)Also, as it became difficult to carry tires produced by Chinese factories by boat, railroad transportation was recently started.

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As a logistics company that provides rail transportation using TCR and TSR, Hyundai Glovis (086280)Wow CJ Logistics (000120)There are many such as, but Pantos is one of them. In January, Pantos, which secured exclusive rights to supply domestic TSR transport with Transcontainer, Russia’s largest railroad logistics company, increased the number of TCR and TSR operations from 1 to 2 times a week to 3 to 5 times a week from September.

Thanks to this, Pantos is recording good results. Until the third quarter of this year, cumulative operating profit exceeded last year’s overall profit. Looking at the third quarter alone, it recorded an operating profit of 48.2 billion won, in 2015 LG International (001120)Since its incorporation into a subsidiary, it achieved the highest quarterly performance ever.

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