Anxious European importers turn to trucks to get Chinese goods

HAMBURG, Germany — Shoe distributor Hamm Market Solutions had to be sure this year’s fall/winter collection would arrive in Germany from its supplier’s factory in southern China’s Guangdong Province in time — or face having to dispose of 84,000 pairs of casual footwear at a steep discount.

Werner Prigandt, the company’s logistics chief, knew it would be risky to move the shoes by sea, Hamm’s usual method, given widespread delays from congested ports and a shortage of shipping containers.

Some European importers had been turning to rail as an alternative, but Prigandt worried he might still have a hard time getting shipping containers for a train trip. Sending the shoes by air would simply be too pricey.

So in July, Hamm’s supplier loaded the shoes into 12 truck trailers. Eleven of the shipments arrived in time at the company’s headquarters in the northwest German town of Osnabruck, dusty but intact, allowing Hamm to distribute the footwear to stores last month.

“China-Europe trucks are independent of container availability as the load is carried loose or on pallets,” Prigandt said. “Although one truck remains stuck at the China-Russian border near Manzhouli over a backlog caused by a local COVID-19 outbreak, we are quite satisfied with the situation.”

Trucking has emerged this year as a happy alternative for European importers desperate for options.

Two-thirds of global sea freight deliveries in August arrived late, a record high according to data compiled by Denmark’s Sea-Intelligence. The average delay hit 7.6 days, also a new high.

Rail shipments from China to Europe have also been moving more slowly than usual, due to a combination of COVID-related holdups in China’s northwest Xinjiang region and line work in Poland, both places through which most cargo lines to Western Europe pass. This has added an extra week or more to shipment times.

At the same time, rates to ship a container by sea from Asia to northern Europe are more than six times higher than they were a year ago, with the Freightos Baltic Index reaching $14,492 last week.

Airfreight rates between China and Europe, never a bargain, are 50% higher than they were a year ago, according to the Baltic Exchange Air Freight Index. It puts average net costs at 42.42 yuan ($6.63) per kilogram, down from a peak of 48.31 reached earlier this month.

Trucking rates have also been rising too, but for time-sensitive importers like Hamm, the rates can be attractive. According to figures from German freight forwarder Doerrenhaus, delivery by truck from China can be twice as costly as by sea, but takes one-third to one-half as much time these days.

A range of European logistics companies, including Doerrenhaus, Hellmann Worldwide Logistics and DHL International, launched China-Europe trucking services in the second half of 2020, as the scale of the capacity crunch and disruptions to ocean shipping became clear.

DHL now sends 30-50 trucks westward on the route each week, while Doerrenhaus’ service frequency peaked at around 30 a month in June and July.

Hellmann and a number of other operators favor sending trucks due north from China’s coastal manufacturing hubs to the country’s border with Russia. There, loads are switched from Chinese trucks to ones operated by Russian or Belarusian drivers who can then carry them all the way to western Europe.

“China’s highways leading to the borders are in an excellent shape, and the Russian and Kazakh highways are good, making the border crossings the only bottlenecks,” said Dieter Mauritz, head of China truck solutions at Hellmann. “Everything goes very smoothly Europe-bound unless there is a COVID-19 case.”

Each truck usually carries either a standard shipping container or the equivalent in freight packed into its trailer, capping shipment sizes far below the levels that can be sent in one go by sea or rail and making this a less carbon-efficient choice for shippers sensitive to environmental concerns.

As with Hamm’s shoes, Hellman has been seeing high demand for shipping seasonal products for Halloween and Christmas as well as auto parts, household products for supermarket promotions and hazardous goods like lithium-ion batteries.

“Our clients are mainly suppliers of German discounters who fear to be fined by their clients for missed deadlines if the loads get stuck in container shipping or rail,” said Doerrenhaus General Manager Adrian Boenisch.

Despite rising interest in rail shipping in recent years, statistics tallied by research company IHS Markit show that road freight from China to Europe has consistently outpaced shipping by rail. Last year, the EU and U.K. together received $41 billion worth of goods from China by road, double the amount arriving by rail.

While ocean shipping lost market share last year amid the sector’s disruptions, it remains the dominant mode for China-Europe freight, especially when imports are measured by weight. Air cargo, the leading mode for high-value goods, also remains well ahead of trucking.

But trucking has roared forward this year. According to the Geneva-based International Road Transport Union, EU imports from China by road, as measured by weight, rose 33% over the first eight months of 2021, triple the overall pace.

Although European operators are now seeing some signs of cooling demand for trucking after the pre-Christmas shipping peak amid a drop in sea and airfreight rates, they expect interest will continue until ocean shipping returns to normal.

That, Mauritz said, “could take well over a year.”