Rail freight offered with air cargo style pricing to highlight cost saving

04.27.2020

Davies Turner has added a pricing mechanism based on air freight practice for its weekly Express China Rail rail, road and sea service from Xi’an to the UK. This is intended to demonstrate the potential cost savings to importers who have traditionally used aviation.

The company said rail from China to Europe had been around 70% cheaper than air freight until recently, but the price differential has ‘rocketed’ as air freight rates reach record levels.

‘Since we launched the service in 2016, we have used the standard overland freight industry pricing technique, which is US$/m3’, said Tony Cole, Head of Supply Chain services on April 19. ‘To make pricing more comprehensible for the air freight sector, we are now additionally quoting per kg rates, which is the language that air freight importers are more used to dealing with. It makes a comparison between the relative costs of the intermodal rail service and air freight more immediately obvious.

‘At the current rate of just US$0·24/kg or 2 000 cm3, with a minimum cost of US$120, it is no surprise that our direct Express China Rail service is becoming of great interest to the air freight sector, which is facing sky-high air freight rates out of China, with costs of US$10 to US$15 per kg now being seen.

‘Importers that traditionally move freight by air only need to factor in the slightly longer lead times for delivery by rail, to see what a massive cost saving they can benefit from by using our direct rail alternative. Importers that are able to remodel their supply chains to use the rail freight option may do so on a permanent basis.’

Analytics on topic
Report
08.07.2020
Report
08.07.2020
Global Transport: What Does the Future Hold Beyond COVID-19?
The COVID-19 pandemic has had a disastrous impact on the global transport sector with all the modes of transport, primarily air and maritime ones, experiencing a strong deterioration in activity at the global level. However, some markets, for instance rail freight between China and Europe, are benefiting from the situation. The report by COFACE credit insurance company titled «Global Transport: What does the future hold beyond COVID-19?» analyzes the current state of the global transport sector suffering a heavy blow from the pandemic and presents three scenarios for the recovery of the sector.
Report
03.18.2022
Report
03.18.2022
Rail container transportation in the Eurasian space in 2021

What results did Eurasian transportation show in a difficult 2021?