INTERNATIONAL: 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.’