In the first quarter of 2023, the volume of rail freight transport from China to Poland amounted to 30 TEU, which means a year-on-year decrease by 684%. This decline is attributed to exceptionally low ocean freight rates rather than the Russia-Ukraine conflict or the development of the Trans-Caspian Corridor. Currently, the freight rate of one 29-foot rail container is enough for 40-3 ocean freight containers, and high inflation in Europe encourages people to choose economical transport. China's State Council recently announced six measures to stabilize foreign trade, including financial and tax support, visa discounts and airline tickets. April 4 The Shanghai Road Transport Administration also announced the suspension of new requests for containerized road freight capacity in Shanghai from May 24, 1.
- Sea freight
Some shipping companies announced the GRI (General Rate Increase) from May 1 this year. but due to weak freight demand and oversupply, the hike was pushed back to mid-May. Drewry has stated that the increase in freight rates is a temporary phenomenon and will not be permanent. The shipping industry is increasing freight rates to put itself in a more favorable position in long-term price negotiations. However, the main drivers of prices in the market are supply and demand. The European consumer market is still weak, with more than a third of Germans pointing to a decline in spending, and demand for imports from Asia is not strong. In addition, the data shows that China's exports to Europe in the first quarter of 2023 grew by only 0,3%, two-thirds of which were electronic products. China's exports to the EU in March this year. turned positive for the first time in 5 months due to the accumulation of some export orders in January and February this year. which were shipped in March, and a low export base in March 2022, when Shanghai was shut down for a month due to the pandemic, causing exports to fall.
Although some shipping companies and freight forwarders have announced that from May this year. will raise freight rates, it is reported that they secretly collect low-rate loads. Some companies even transport goods at a loss to keep customers, which makes it difficult for companies without financial capabilities. Experts believe that it will be a long time before the sea freight market really recovers. In addition, the IMF lowered in April this year the global economic growth rate from 2,9% to 2,8%, citing a slowdown in the growth of developed economies.
China's State Council recently announced six measures to stabilize foreign trade, including financial and tax support, visa discounts and airline tickets. April 24 The Shanghai Road Transport Administration also announced the suspension of new requests for containerized road freight capacity in Shanghai from May 1, 2023. This includes the suspension of the establishment of new transport companies, the suspension of the expansion of road container transport activities by other companies, and the suspension of applications for new container transport vehicles.
- Rail freight
Currently, there are only a few public trains available to ship goods from China to Europe. In May this year only 5 trains are scheduled to depart from Chongqing. If slots are available, customers prefer Chongqing and Chengdu due to the lower rates. Although more trains are available from Xi'an to Europe, rates tend to be higher. It is recommended to book slots at least 10 days in advance.
- FOB Shanghai - Mala: USD 6100
– FOB Guangzhou – Small $5900
– FOB Guangzhou / Shenzhen / Shanghai / Ningbo: $115 / cbm (light cargo)
– FOB Guangzhou / Shenzhen / Shanghai / Ningbo: $123 / cbm (heavy load)
In the first quarter of 2023, the volume of rail freight transport from China to Poland amounted to 30 TEU, which means a year-on-year decrease by 684%. This decline is attributed to exceptionally low ocean freight rates rather than the Russia-Ukraine conflict or the development of the Trans-Caspian Corridor. Currently, the freight rate of one 29-foot rail container is enough for 40-3 ocean freight containers, and high inflation in Europe encourages people to choose economical transport. In addition, most goods shipped from China to Europe are not time sensitive, and the COVID-4 situation in China has improved, reducing the risk of supply chain disruptions. Therefore, European importers can better plan and place orders in advance.
At the same time, Russia and Belarus are becoming the main destinations of Chinese trains. Some companies reported that before the war 20% of their rail cargo went to Russia and 80% to Europe, but now the opposite is true (20% to Europe, 80% to Russia). The current volume of rail cargo comes mainly from large direct customers of flatcars and bespoke trains to specific destinations.
The increase in rail cargo from China to Russia is due to the increase in China-Russia trade. In the first quarter of 2023, the volume of trade between China and Russia amounted to USD 53,85 billion, which means an increase of 38,7% y/y. In 2022, China-Russia trade increased by 29,3%, reaching a value of USD 190,271 billion. However, the inability to transport goods by ocean to Russia is also a significant factor driving the growth of rail transport. Due to Western sanctions, most shipping companies have withdrawn from the Russian market, creating a vacuum in ocean freight. However, after a year, ships from China to Russia appeared, which resulted in a decrease in rail freight rates to Russia from March this year. In addition, consumption on the Russian market decreased. Rail freight rates to Russia may continue to fall.
The market indicates that the problems for China-Russia trains are prices that fluctuate greatly and vary from region to region, unstable departure dates, long waiting times at departure stations, unclear prices for "accidents", poor service and multiple inspections in Kazakhstan . In addition, strict requirements for the loading of goods and the prohibition of mixed loading of goods also pose challenges.
Overall, China-Europe train volumes are significantly influenced by ocean freight, and the quality of rail services needs to be improved.
- Road transport
Despite the availability of other means of transport, some companies still use trucks to transport goods to Europe. The current price of transporting a full truck load from China to Poland is around USD 20, and the door-to-door transit time is 000-16 days. Road crossings on the border of China and Kazakhstan operate on a 20-day system with working hours from 7:10-00:22 Beijing time. The border crossing time at the border is 00 days and the transit customs clearance process takes 2 days, which is a significant improvement.
However, most companies consider the volume of road transport to Europe to be small and therefore do not invest much time and energy in China-Europe road transport. Companies that previously focused on China-Europe road transport are now turning their attention to Central Asia and Russia. They mainly transport used cars, machines and devices.
Some Chinese companies use road transport for LCL shipments that cannot be transported by rail or plane. However, due to low demand, the goods have to be held in the logistic company for about 2 weeks until enough goods are collected for a full truck before departure.
Land border crossings:
The Khorgos port road crossing terminal will be closed on May 1, May 7 and May 9, 2023, while the railway port will operate normally.
Chinese RMB Appreciation:
RMB/USD is expected to peak at 6,3-6,5 over the next two quarters.
– March 29 this year Brazil has reached an agreement with China to stop using the USD as an intermediary currency and settle trade in the local currency.
– The Argentine government announced on April 26 that it will stop using the US dollar to pay for imports from China and will instead use the yuan for settlements.
– In March 2023, the share of RMB in foreign-related Chinese bank payments rose to 48%, setting a new record in more than thirteen years, while the share of USD fell to a record low of 47% from 83% over the same period.
The profits of the logistics giants:
- In Q1 2023, ONE had a net profit of USD 1,210 billion, down 76,3% year-on-year.
– In Q2023 40,954DSV generated revenues of DKK 6 million (approximately USD 33 billion), down XNUMX% year-on-year.