Even though I have been covering the electronics supply chain for years, there are some dots I'm slow at connecting.
For instance, I just assumed that most parts coming and going from China to Europe moved by plane and boat. However, looking at the €500 million (about $645 million in US dollars) investment a Chinese company poured into a port expansion project is Barcelona, Spain, where I'm based, helped steer me to that conclusion. And mostly for safety reasons and the amount of time I thought was needed to cross the vast the Eurasia land mass, rail — and certainly truck — deliveries didn't even show up on my radar screen.
But seeing DHL's recent announcement about launching the first fast-rail connection between China’s megacities and Europe got my own wheels chugging (bad pun intended).
People have used this overland trade route since the days of Marco Polo, so why was I surprised to hear that this could now be applied to the 21st Century global supply chain? Was this an option before, and if so, how did I miss that? Have we indeed reached a point in time when it's now safe and cost-effective enough to move goods by train between these continents?
Here's what DHL is bringing to market, as spelled out in its press release:
The new service now offers two routes that combine rail and road transportation: daily shipments from Shanghai via the trans-Siberian route in the North and a weekly departure from Chengdu through China’s West Corridor rail line.
Amadou Diallo, CEO of DHL Freight, adds:
As a flexible solution, this service offers the option of booking variable capacity — ranging from a single container to a whole train. At the same time, it connects seamlessly with both our groupage [STET] network in Europe and DHL Global Forwarding, Freight’s Asian network, including markets such as Japan and Korea.
The benefits, listed by the company, chalk up to a seemingly impressive list:
- A greener option: The multimodal solution reduces CO2 emissions by up to 90 percent.
- Lower transportation costs
- Shorter lead times: Door-to-door lead times decreased by up to 21 days compared to ocean freight
On the Trans-Siberian route to and from Shanghai, DHL claims to be first in the industry to offer customers the option of booking the transport capacity they require at a particular point in time. The main overland transportation mode between Shanghai and the European Union border at Małaszewicze (Poland) is rail, with last-mile transportation by road.
The other route is “optimized for Chengdu-based customers,” and provides “lower transit times of up to eight days compared to the trans-Siberian route and greater cost reduction.” The once-a-week service departs every Friday to Małaszewicze along China’s West Corridor rail line through Kazakhstan, the company said.
So tell us, do you think this a viable alternative? Is this really the most cost-effective way to ship parts? Let us know in the comments section.