Surging China-Europe railfreight could hit the buffers if Red Sea crisis ends

By Alexander Whiteman[1] 06/02/2025

After two years of decline, China-EU railfreight volumes are back on track, westbound flows last year soaring 130% year on year, helped in part by the Red Sea crisis. Volumes from China to Europe passed 330,700 teu, with 49,730 teu heading the other way, and while that represented the lowest score since 2017 - and a drop of 26.7% year on year - the combined China-Europe volumes were up 80.2% on 2023, according to the European Rail Alliance. Supply chain analytics platform Upply said disruption had been one factor in the China-to-Europe increase.

It said: "During 2024, freight rates rose again on containerised maritime routes between Asia and Europe, due to the disruption caused by attacks by Yemen's Houthi rebels in the Red Sea. This has enabled rail freight to regain its competitiveness." But it warned against relying on the Red Sea for growth, noting that if the Middle East ceasefire holds and the Houthis refrain from attacks on shipping, ocean freight rates could fall significantly.

To which it added: "The extension of maritime routes had, in part, made it possible to absorb overcapacity which promises to be massive if the situation returns to normal. Chinese exports will then be able to count on low-cost maritime transport and fluid access to capacity. "For the time being, rail freight between China and the EU remains a tool with room for improvement, from both an operational and pricing point of view."

Overall, Chinese exports to Europe enjoyed a healthy 12 months, rising 3% year on year, according to preliminary data from Chinese Customs, the total value hitting £516.6bn. And with European manufacturing struggling, China's vehicle manufacturers had a particularly strong year, recording growth of 192%, to 31,304 teu, representing 9.5% of the total export flow. Amid all the tariff talk coming out of Washington, that could prove vital in the years ahead, particularly with suggestions that President Trump's hostile rhetoric against the bloc could force Europe closer to China.

And, should rail maintain its footing, one country that looks to benefit is Poland, which handled more than 88%, or 292,950 teu, of the volumes from China.

Four years ago, Poland suceeded Germany as China's main railfreight gateway to Europe, and last year's figures kept it there, with the east European country recording a year-on-year increase of 149%.

Having hit 150,000 teu in 2021, flows into Germany collapsed, but they did return to growth in 2024, albeit at an "historic low" of just 23,790 teu.

References

1. ^ Alexander Whiteman (theloadstar.com)