Evolving Transportation Niches Between China and Europe

Credit: Far East Land Bridge
Credit: Far East Land Bridge

By Harry Valentine 2017-11-11 17:43:05

While mega-ships carry most of the high volume of container trade between China and Europe, carriers using other modes of transport are developing market niches for themselves.

The nature of container transportation between Eastern Asia and the United States revealed the existence of two distinct container transportation markets when it comes to delivery. That market trend involved the Eastern U.S. and began to reveal itself long prior to the enlarging of the Panama Canal to transit larger ships. Some east coast customers wanted priority delivery of their containers while other customers were willing to wait a few days to save on transportation costs. Trans-Pacific ships carried high priority containers to American Pacific Coast ports that were transferred on to long-distance trains.

Train through Russia

A company called Far East Land Bridge appears to be using the American east coast precedent as the basis of their business plan. A small percentage of European customers want faster delivery of their containers from China and are willing to pay premium tariffs for that service. The company’s transportation service involves carrying higher-priority containers from China to Europe via a railway train of 11,000 kilometers (6,800 miles) length that passes mainly through Russia. Mega-ships carrying 20,000 TEUs sail at an average speed of 15 knots between Shanghai and Rotterdam and can take 27 to 30 days to complete the voyage.

While the mega-ships offer the lowest container transportation cost available, the train can carry 40 to 50 FEU (80 to 100 TEU), and the company has begun to offer daily departures. Depending on points of origin and destination, the typical trans-Russian railway journey takes 11 to 14 days or slightly less than half the duration-in-transit. While the railway infrastructure across most of the journey through China, Russia and Europe is unable to transit double-stacked containers on railway flat-cars, there appears to be a sufficiently large market in Europe to warrant the premium container transportation service.

Container Air Freight

At the present time, Boeing in believed to have computer generated images of a concept freight aircraft capable of carrying up to 14 containers (28 TEUs). Perhaps some expansion or extension of the business plans by air freight companies such as UPS or FEDEX could create a market niche for container air freight between major metropolitan areas. The airline industry already carries some freight in specialized containers and that operational precedent could serve as the basis to develop a freight aircraft capable of carrying conventional shipping containers. Viable air freight service involving transport of conventional shipping containers is a future possibility.

While a container freight plane is being considered, concurrent aeronautical research is focused on improved wing design such as the ‘blended wing-and-fuselage’ concept that could be adapted to international container freight transport. Other concurrent research involves small, light-weight closed-cycle turbine-electric propulsion technology that can operate at much higher efficiency than present jet engines. An evolving ‘convergence of technologies’ could lead to the development of cost-competitive air-freight transport planes capable of carrying containers between major international airports that serve as air freight transportation hubs and function as intermodal and transshipment terminals.

Arctic Ship Route

While several ships have successfully sailed via the Arctic between China and Europe, the shallow water depth on the Russian side restricts the size of ship that can undertake the voyage. The biggest trans-Arctic container ship would likely carry less than 10 percent the payload of the largest container ships that sail via the Suez Canal between China and Europe. During the northern summer, a trans-Arctic container ship could likely undertake the voyage within 19 to 22 days, up to a week faster than the mega-ship. There would likely be a market niche for such a service. 
  
The trans-Arctic precedent could likely set the stage for container ships to sail via the Arctic between west coast America (Los Angeles) and Europe (Rotterdam) using a comparable size of container ship that sail between Rotterdam and  Cleveland on Lake Erie. While the Canadian side of the Arctic is much deeper than the Russian side, the short shipping season and frequency of icebergs could discourage operation of large ships between Eastern Asia and Eastern North America. 

Wing-in-Ground Effect Option

Wing-in-Ground effect vessels have proven to sail above a hard-packed ice and snow surface. Ultra-large versions of the technology could undertake the voyage between the Yellow Sea via the Bering Strait and Europe. Type-A wing-ships capable of reaching 15 meters (50 feet) elevation or Type-B versions capable of reaching 150 meters elevation would assist in Arctic conditions. A wing-ship could theoretically sail between Shanghai and Rotterdam within five to eight days, depending on vehicle speed. To reduce operating costs, the vessel would require the combination of autonomous navigation, computer piloting and remote pilot control when approaching and leaving terminals.

Cooperation from Russia combined with innovative technology could bypass the Bering Strait and reduce the route distance between Shanghai and Rotterdam by some 3,500 kilometers. A possible route between the Laptev Sea and Sea of Okhotsk would involve sailing the W-I-G vessel above the Lena River and its tributaries, the Aldan and Maya Rivers. Further research would be required in regard to possible freight movement across the Dzhugdzhur Range of coastal mountains, between the Sea of Okhotsk and Maya River. Another possible option exists between the White Sea and Gulf of Boothia, above the Liva River. 

Market Evolution

A competing railway route offering daily departures between Shanghai and Western Europe would divert a small volume of high-priority containers from ship to railway transportation. The difference in time-in-transit comparing mega-ships sailing via the Suez Canal (29 days), smaller icebreaker ships sailing via Russian side of the Arctic (22 days), railway transportation (11 to 14 days), W.I.G. transportation (five to eight days via Bering Strait) and container air freight (one day) would result in each service developing its own unique market segment. If route distance reductions became available to W.I.G. transportation, the Russian owner would increase market share on a four to six day journey. 

In terms of transportation costs between East Asia and Western Europe, mega-ships sailing via the Suez Canal would incur the lowest transportation cost per container and followed by smaller ships that sail via the Arctic Route. While container air freight would offer the lowest time-in-transit, it would incur the highest transportation cost per container. W.I.G. planes would be competitive with container air freight if a route along the Lena River became available. Railway container transportation between Eastern China and Western Europe can access a massive transportation market and promises to be feasible.

Conclusions

Mega-ships sailing between China and Europe will carry the greatest proportion (over 90 percent) of the container trade. Seaway-max size of ships sailing via the Arctic would capture a small percentage (five percent) of the China – Europe container trade market.

Future container air freight would capture less than one percent of the China – Europe trade. If W.I.G. container freight movement via the Arctic develops between China and Europe, the route along the Lena River would only be available to Russian owners and could be a viable and competitive service capturing perhaps one percent of the trade.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.