On January 7th, the Chinese government publication Global Times (GT) churned out a new article about the shipping crisis currently going on in the Red Sea. As they pointed out, the crisis is now entering its third month, despite President Biden and his cohorts swearing that they would be securing the shipping lanes in short order. In what looked more like a paid advertisement article than a news story, they outlined just how ready Chinese companies are to provide an alternate shipping method.
Talking about the difference between Beijing to Europe rail versus container shipping through the Red Sea, they outlined what making the change from ship to rail would mean.
“The detour adds an estimated 7,000 to 10,000 kilometers and seven to 10 days to the journey. Data from the Shanghai Shipping Exchange showed that, on Friday, the market freight rate for exports from Shanghai Port to European basic ports was $2,871 per standard container, up 210.38 percent from December 8, 2023, according to media reports. The repercussions of the Red Sea crisis have roiled European businesses, affecting global trade and leaving those not in European trade businesses feeling the impact.”
Referencing multiple Chinese-based shipping merchants, they outlined just how good Chinese rail could be, especially when the Red Sea only looks to become more volatile as the weeks go on. According to GT, the differences don’t just stop with more protection from Houthi fighters or shorter shipping times. The rail lines also run far less frequently, and since less can be taken in a single rail line, the cost per container is far higher. They certainly can’t just put more in a single container or make it bigger, either.
Kang Shuchun, a director of the China Federation of Logistics and Purchasing, told GT, “More traders are using China-Europe freight trains, but there’s no fundamental solution to the Red Sea crisis at the moment. Rail shipping accounts for less than 3 percent of sea transportation, and it’s very difficult to increase that by even one percentage point.”
Multiple Italian-based merchants who carry Chinese goods have said that due to the conflict in the Red Sea, shipments are taking at least ten days longer than usual for this time of year. With most companies only inking one-year contracts in the face of global inflation and panic, they have opportunities open to them for being able to pivot with the conditions in the Red Sea. Yet no matter how they pivot, it would seem rather clear that China will benefit from the conditions on the water.
For years now, China and Iran have been trading partners. As of late, Tehran has been upset with Beijing’s refusal to pay more for their oil. Yet the Iranians are already importing 40% more goods than they ship to China. This imbalance gives China tremendous negotiation with the Iranian leaders, a position they have no problem exploiting.
Given China’s open desire to control the globe, this is just another step in their quest for global domination. With Iran in their back pocket due to foreign trade, and the Iranian involvement in Israel with Hamas already well documented, the Chinese are in a unique position. Using Houthi rebels to stage increased attacks on boats would be the perfect way to increase the use of Chinese rail service between mainland China and Europe.
As it is, China has an easy time (relatively speaking) importing goods from the rest of Asia. By boat, freight, or air, they have been known to get it in. For many companies, this makes it a natural place to gather up an entire order and put it all in one container. Naturally, the transition to rail could be done easily in their book, and they intend to exploit that option.
For China, any bump in rail service is a huge surge to the country’s economy. Already struggling to stay above water, the country will take any help they can. No matter how it shows up.
