Strategic Trade Routes: Seeking new ways to deliver the goods

One of the best places to appreciate the development of trade between Asia and Europe is aboard a ship in the Gulf of Suez. (Click here to look at possible routes for transporting cargo in Asia and Europe.)

According to figures from Global Insight, an economics and trade forecaster, container shipping volumes between Asia and Europe are likely to grow 17.2 per cent this year alone. Traffic this year will approach double its 2003 level – part of the reason why ships deployed on the route now are two-and-a-half times the size of the largest a decade ago.

With demand in North America slowing this year, Asia-Europe trades could soon overtake trans-Pacific trades as the world’s main long-haul container trade route. The surge has led to questions all along the route of this remarkable flow of goods about how best to capitalise on the trade and how to cope with it. Operators’ strategies are constantly changing as they seek ever-cheaper, faster, more reliable means of moving their goods.

One of the most important trends at work is obvious along China’s River Yangtze, which links much of inland China to the sea at Shanghai.

The move inland has inspired hope that the rail route from Asia to Europe, via the trans-Mongolian or trans-Manchurian railways on to Russia’s famous trans-Siberian route, might be able to capture a portion of the traffic. Russian and Chinese railway officials argued at an event this year in Brussels that the faster journey time on the route compared with sea transport gave it a significant competitive advantage. In June, European Rail Shuttle, part of Denmark’s AP Møller-Maersk, operated what it said was the first train carrying imports to Europe all the way from China.

Many parts of Asia are also focusing on developing the cargo capabilities of their airports, in the hope of acting either as hubs or gateways to and from areas producing high-value electronics or other valuable goods that are expensive enough to justify the higher costs involved in air transport.

Lines can also use different strategies to improve their reliability, using small feeder vessels to call at congested ports such as India’s Jawaharlal Nehru Port then picking up the goods from a transshipment hub such as Colombo in Sri Lanka or Salalah in Oman. At the European end, lines are particularly concerned with how to cope with soaring traffic levels at relatively undeveloped ports in the Black and Baltic Seas.