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Anybody who thinks about global trade usually has particular images in mind: huge container ships plying the world’s oceans, cargo planes on their way to other continents or long lines of trucks on roads. However, one means of transport is often less conspicuous on the list: rail freight. Yet transporting goods by train has turned into an indispensable element in global trade during the last few decades. The growing network of routes and the capacity to transport enormous quantities of goods are enabling it to make an essential contribution to efficiency and sustainability in international supply chains.
The benefits of rail transportation – cost-effective, environmentally-friendly and dependable
The important role played by rail freight is evident from the figures for Germany, for example: Following the dominant position held by trucks, which account for 70 percent of traffic, freight trains (at least in 2022) were the second-most important mode of transport, carrying about 20 percent – and even surpassed inland waterway shipping. The cumulative figure amounted to no less than 140 billion metric ton/kilometers along the railroad network that stretches for more than 39,900 kilometers.1 According to one forecast, the volume of rail freight at a global level is expected to exceed 19,000 trillion metric ton/kilometers by 2050.2
Thanks to its transport capacity, which on average makes it possible to convey the cargo that as many as 52 trucks would carry in a single train3, rail freight provides a cost-efficient and reliable alternative to other means of transport. This is particularly beneficial on long routes, where the efficiency of railroad services is unbeatable in terms of both costs and time. One of the other crucial benefits of rail transportation is its environmental credentials. It causes significantly fewer CO2 emissions when compared to other means of transport. This enables corporations to reduce their CO2 footprint, meet national and global standards and reach their own sustainability goals.
A comparison with road traffic
The movement of freight by road continues to dominate the modal split in the overall picture for transport services, both globally and nationally. However, this is also accompanied by certain challenges in terms of time, efficiency and environmental compatibility – who is not familiar with the well-known stop-and-go movements of trucks on highways or blocked roads in downtown areas?
Motorized road transport is one of the main sources of emissions and it cause enormous levels of air pollution, particularly in downtown city areas. Trucks, for example, cause about 10 percent of global CO2 emissions.4 While road freight traffic on average emits 118 grams of CO2 per metric ton/kilometer, the figure for railroad freight traffic is just 16 grams of CO2 per metric ton/kilometer.5 This means that railroad transportation emits about 86% less CO2 and therefore plays an important role in reducing global greenhouse gas emissions – and this is probably one of the greatest benefits of rail transportation when comparing different modes of transport.
In contrast with trucks, rail freight is particularly beneficial for transport services over long distances. After all, this is where the potential for switching long-distance traffic to railroad services is greatest. The role played by so-called combined traffic is becoming increasingly important: Trucks only need to handle the short distance from the starting point here. Once they arrive at the railroad terminal, the cargo units are loaded on board freight trains and are dispatched to their destination by rail. The cargo units are then loaded on trucks again for the last mile at the other end of the transport chain.
A comparison with air traffic
This is absolutely no doubt that air traffic is unbeatable when it comes to speed: Planes cover long distances quickly, which is important, particularly for intercontinental freight traffic. However, numerous factors can have a negative affect on the favorable transit time: Poor weather conditions can delay flights and slow down the entire transport process. Airport capacity and infrastructure also have an effect on the transit time. Any congestion at heavily used airports can create delays. Rail transportation offers persuasive arguments here.
Rail freight is also much more environmentally-friendly and more cost-efficient than air traffic. Rail freight is normally cheaper than air traffic, particularly on long-distance routes. While the operating costs of aircraft are high and can increase even further through factors like fuel prices and airport fees, the costs of freight traffic by railroad are more stable and more predictable. The capacity of freight trains is also much higher than that of aircraft.
A comparison with ocean traffic
Time efficiency is the main factor that stands out when transporting goods by railroad in comparison to using ocean services. Freight trains can cover enormous distances in a much shorter time than ships. While ocean transport services from China to Europe along the Eurasian Corridor normally take between 30 and 40 days, this time can be reduced to about 12 – 18 days when using rail transportation. This faster transit time makes rail freight particularly attractive for time-sensitive deliveries and corporations that wish to optimize their supply chains.
It is true that rail freight may be more expensive than ocean services, but it is much cheaper than air traffic. It therefore represents an ideal way of finding some middle ground between costs and speed for many corporations and offers a compromise that meets both the financial and the logistical requirements.
Railroads can also score plus points in terms of their reliability and safety: Trains operate according to set timetables and are less prone to delays because of weather conditions, port congestion or other disturbances, which are normal for ocean traffic. One of the benefits of rail transportation is also the fact that it is less vulnerable to piracy than ocean traffic and this increases the safety of the goods that are being transported.
A best practice example: The Silk Road Economic Belt
The Silk Road is one of the oldest trading routes in the world. The network of routes between east and west used to connect China with India, Persia, the Arabian Peninsula and Europe. The cargo that was traded historically particularly involved silk, tea, spices and precious metals. The mammoth project known as the “Belt and Road Initiative” (BRI) involving China and about 60 other countries in Africa, Asia and Europe was launched in 2013: It entails expanding the infrastructure along the New Silk Road. In addition to revitalizing existing intercontinental trade and infrastructure networks, it has created numerous new ports, roads, railroad lines, logistics centers and trading places. Countless items of freight have been transported along overland and ocean routes since that time.
For a long time, the overland routes, known as the Silk Road Economic Belt, tended to be viewed as a niche market than a genuine alternative for transport freight from east to west and conversely. The railroad line, which runs from China as far as Central and Western Europe via Iran, Turkey, Pakistan and Belarus, was more of a backup for the ocean Silk Road, which stretches from the Chinese coast and South-East Asia as far as Europe via the Mideast and East Africa. As a result of the COVID-19 pandemic and the associated shortage of shipping and container availability, the Silk Road Economic Belt with its extremely well-developed rail freight services and its time savings has become an even greater integral part of operations.
The different possible routes along the Silk Road Economic Belt have now turned railroad services into a stable and reliable transport solution and they are maintaining this position by providing set departure times and reliable transit times. This is offering a significant increase in efficiency within supply chains. If customers from the automobile sector were the only ones using the Silk Road Economic Belt in the early days, more and more corporations from every conceivable sector, including manufacturers of machinery, electronics and chemicals, but also those producing fast-moving consumer goods, are now relying on this mode of transport.
Conclusion: Rail freight creates the happy medium
Rail freight has become an indispensable element in global trade and offers a sustainable and cost-efficient alternative to other means of transport. It is particularly predestined to cater for long-distance traffic thanks to its traffic capacity, its ability to handle large quantities of goods and significantly lower CO2 emissions all at the same time. Corporations, which are optimizing their supply chains and want to achieve their environmental goals at the same time, can find a reliable and efficient option for transporting their goods thanks to the numerous benefits of rail transportation.
1 Source: https://www.allianz-pro-schiene.de/themen/gueterverkehr/daten-fakten/
2 Source: https://de.statista.com/statistik/daten/studie/483034/umfrage/schienengueterverkehr-weltweit/
3 Source: https://www.allianz-pro-schiene.de/themen/gueterverkehr/
5 Source: https://dialog.vde.com/de/vde-dialog-ausgaben/transport/transport-co2-footprint