What is the impact of Russia's sanctions on China-Europe freight trains?

Some shippers have speculated that Russia may be subject to sanctions, preventing China-Europe trains from passing through Russia, so bookings for China-Europe trains are being cancelled. Scan Global logistics company said the China-Europe trains are still operating despite the need to travel through Russia and Belarus. Russian Railways is on the U.S. sanctions list, although shipments of goods through Russia are not currently under sanctions.

The focus now is on the potential impact of Russia's exclusion from SWIFT (Society for Worldwide Interbank Financial Telecommunication), and how China's rail freight providers will respond to this. But it is foreseeable that rail freight will eventually suffer.

In fact, shippers and forwarders are taking unilateral measures to mitigate risk even if sanctions have not yet forced shipments through Russia. For example, the Flexport company immediately stopped the booking of the trans-Siberian railway service, and Maersk, a fan of the Russian railway line, also announced that its intercontinental line to and from Russia was also temporarily suspended.

Shippers have started canceling bookings due to concerns about sanctions and insurance, the CEO of New Silk Road Intermodal said. He told The Loadstar: "Currently, most trains go to Poland via Russia and Belarus, so services have not been affected, and trains that used to pass through Ukraine have also been diverted to Malaszewicz, Poland." A Taiwanese electronics manufacturer has already It suspended bookings, citing concerns that its cargo could be stuck on the Russian-Polish border.

Lars Jensen, founder of Vespucci Maritime, said that unless there is a major change in the Russian-Ukrainian war, all shippers, carriers and forwarders will need to have contingency plans for the possible suspension of regional services in Russia.

In view of the impact of the new crown epidemic on sea and air freight, the China-Europe freight train has been very popular in the past two years, and the freight volume in 2021 will surge by 29% year-on-year to 1.46 million TEU. Lars Jensen said: "The biggest potential knock-on effect now is that the flow of China-Europe freight trains is about 500,000 TEU. If the China-Europe freight trains stop running, the Asia-Europe route will add a capacity gap of nearly 10,000 TEUs per week, which will be closely related to the capacity gap of the already overcrowded freight trains. Vessels compete for space. And shippers transport goods via rail lines, which are usually time-sensitive and have higher freight rates, and if these goods are moved to sea, it will further squeeze some space for low-value goods.”