Shipping containers by rail offer significant cost advantages

According to research conducted by Drewry, an independent international research company, the cost of shipping a container by rail in the current economic crisis and post-coronavirus restrictions is just slightly higher than sea freight prices. Yet land transit times are 3-4 times faster.

Asia-North Europe shippers have adjusted their supply chains to account for the longer transit times around Africa, but now they need freight rates to settle at an acceptable level.

All the major carriers are diverting their Asia-Europe services around the Cape of Good Hope, rather than transiting the Suez Canal, with several temporarily adjusting their proforma networks and providing helpful revised ETAs to customers. CMA CGM was the latest carrier to confirm it would no longer send its ships through the Red Sea and Suez Canal.

Between mid-December and mid-January, average container spot rates on the route skyrocketed, by some 200%, to about $5,000 per 40ft, with some shippers desperate to get their product shipped before next week’s Chinese New Year being asked to pay up to $10,000 per 40ft to guarantee equipment and shipment.

In such circumstances, rail transportation emerges as the most cost-effective and lucrative means of transporting various goods over long distances. Decrease in the cost of delivery of freight containers as a result of the growth in the volume of rail freight

As the demand for expedited shipping rises, air freight rates from China to Europe have quadrupled, enhancing the appeal of rail transit, as evidenced by the following indicators:

• ERAI railway transit index;

• Shanghai Container Shipping Index (SCFI);

• The World Container Index (WCI) by Drewry consulting agency.

As the leading operator of rail cargo transportation, Joint Stock Company UTLC ERA provides customers with competitive rates for shipping cargo containers when arranging transportation from China to Europe and vice versa.

Rail Delivery Costs for Containers: Analyzing Current Trends with Confidence

The tariff for containerized cargo delivery remains stable, despite the volatility seen in air and sea freight rates. According to Drewry as an independent maritime research consultancy, in 2024 the ERAI rail freight cost index stood at $3.085, while the WCI index was $3.824. A stability of the rail freight index is a clear competitive advantage for the rail transit corridor facilitated by the UTLC ERA, benefiting European and Chinese suppliers of goods, raw materials, and other cargo. Rail tariffs provide  predictability and consistency , offering shippers greater convenience compared to highly variable shipping indices. In certain cases, rail delivery proves to be more cost-effective and significantly faster, with transit times 3-4 times quicker than sea delivery. This advantage is attributed to the accessibility of receptacle delivery services offered by logistic companies using UTLC ERA services, which are conveniently located for customers compared to distant ports. Leveraging its extensive railway network in Russia, Belarus, and Kazakhstan, the company operates a robust fleet of regular freight trains, dispatching more than 450 trains monthly along various routes.

UTLC ERA freight delivery rate structure  

The following factors are considered when determining the cost of deliverings container by rail over the 1520-gauge area:

• Customs and terminal services;

• Rail tariffs;

• Delivery speed, among others.

The specialists of  UTLC ERA are constantly striving to minimize costs and increase delivery speed, providing customers with optimal rail delivery options in terms of both time and price. As a result, shipping boxes are more affordable, owing to swift transport speeds and consistent rail rates. With stable and prompt delivery, trading operations can be executed more quickly, leading to savings on working capital.