The train takes the strain from China as sea container prices rise

Howden Joinery Group, the FTSE 250 listed kitchen trade supplier, has announced it is expecting its first delivery of goods from China by freight train due to the rising cost of using maritime shipping containers.

About a third of the products it sells are made at its factories in Runcorn, Cheshire, and Howden, East Yorkshire. The remainder, including appliances, joinery and flooring, are bought from suppliers around the world.

Goods from China have traditionally been transported by sea, particularly from Shenzhen, the world’s fourth-busiest container port and a key node for the shipment of Southern China’s goods, but retailers and bulk manufacturers are now utilising alternatives to maritime transport, given the rise of almost 200% in shipping container prices in the past year.

Air freight costs have also risen significantly due to the construction of cargo space due to the grounding of passenger flights in 2020, which has continued into 2021 due to the muted resumption of air passenger travel due to on-going international travel restrictions due to the continued prevalence of COVID-19.

Sarah Laouadi, manager for European and international policy at the trade body Logistics UK, speaking to The Times newspaper said:

“Maritime remains cheaper, but the difference has reduced and when you take into account the duration of transit, it has made [rail] a more attractive alternative recently.

“There is definitely a trend. I think the pandemic and the situation in the Suez Canal has precipitated some of those changes.

“The shift to using rail for certain retailers and exporters is a testament to the logistics industry’s ability to constantly adapt.”

It takes about 40 days to import goods by sea, but between 18 and 20 days via freight train.

With vessels spending as long as five days at port in Shenzhen due to congestion and labour shortages caused by a coronavirus cluster amongst the port staff and broader community, severe bottlenecks could last until the end of this month and lead to further rise in ocean freight rates.

Rail freight is also being promoted by some governments to support ambitions to reach net-zero carbon emissions targets., with some third party logistics providers, such as DHL, having recently launched new freight rail transport options between China and the UK.

Photo by Nishant Kirar on Unsplash