Selecting a New Logistics Service for Exports to Europe
The railway route from China to Asia and Eastern Europe is emerging as a new logistics service option that shortens transit time and reduces transportation costs for exports to Europe.
Before the conflicts in Ukraine and the Middle East, exports from Vietnam to Europe were transported via two main routes. Most goods were shipped by sea through the Suez Canal to northern European ports and then transported by land to various countries. A smaller portion, mainly electronics and electrical goods from large corporations with investments in Vietnam, utilized the railway route through China, crossing Siberia and reaching Eastern Europe via Ukraine or Belarus.
However, geopolitical fluctuations have disrupted both traditional transportation routes, causing a sharp rise in freight costs and longer delivery times. According to quotes from some shipping companies, the cost of container shipping from Vietnam to the port of Gdynia, Poland, recently increased to approximately 2,800 USD per 20-foot container and 4,950 USD per 40-foot container, compared to about 1,500 USD per 20-foot container before the Middle Eastern conflict.
Additionally, the railway route to Eastern Europe is currently operating only via Belarus, but political tensions between Western Europe, Russia, and Belarus are seriously threatening the stability of this corridor.
In this context, European logistics companies have developed alternative transportation plans to ensure the smooth flow of goods between the two leading global economic regions in response to the potential escalation of regional conflicts. One logistics solution currently being tested is the railway route from China through Central Asia and Western Asia to Eastern Europe, known as the “Strategic Transport Corridor LHS New Station - China - Russia - Ukraine - Poland - European Union”.
This initiative aims to facilitate the transportation of goods between Asia and Europe via rail, replacing the current sea routes.
Through this transport route, goods from the Asian region will be shipped to Chinese ports and then transported by rail through Russia, Ukraine, and Poland, allowing for deeper penetration into European countries. The advantage lies in the broad railway gauge (1,520 mm) characteristic of the former Soviet Union's railway system in Poland, which enables easy direct connections with countries from the former Soviet bloc. This feature allows goods to be transported without the need for unloading at borders, significantly optimizing transit times and reducing costs.
Moreover, advanced technologies are employed for management and monitoring, minimizing delays and enhancing logistics operations.
Compared to the previous two transport routes, using the LHS station railway corridor will shorten transit times, reduce transport costs, and eliminate delivery delays caused by weather conditions, as is the case with sea transport.
Additionally, the LHS station utilizes sustainable energy sources and renewable energy to minimize emissions and protect the environment. The LHS station project is positioned as a strategic logistics hub and a crucial transport route linking the East and West. Poland serves as the gateway for goods to further penetrate into the heart of Europe, including countries like Germany, the Netherlands, France, Belgium, and the Nordic nations.
With its strategic geographical location near the heart of Southeast Asia, along major international shipping routes, and its proximity to China, coupled with ongoing infrastructure investments in Vietnam's road, rail, sea, and air transport sectors, Vietnam's participation in the LHS station project presents a new opportunity for the logistics industry. It could help facilitate exports and imports to Poland and provide deeper access to other European markets, without relying solely on sea transport as is the current practice.
This initiative is designed to facilitate the transportation of goods from Asia to Europe and vice versa via rail, replacing the current sea routes.
Through this transport corridor, goods from the Asian region will be shipped to Chinese ports and then transported by rail through Russia, Ukraine, and Poland, allowing for deeper penetration into European countries. The wide railway gauge (1,520 mm) typical of the post-Soviet railway system in Poland allows for easy direct connections with former Soviet countries, enabling goods to be transported without the need for unloading at borders. This optimizes transit time and reduces costs significantly.
In addition, advanced technologies are used for monitoring and management, which reduces the risk of delays and improves logistics operations.
Compared to the two previous transport routes, using the LHS station railway corridor will shorten transit times, lower transportation costs, and eliminate delivery delays caused by weather conditions, as is often the case with sea transport.
The LHS station also uses sustainable energy sources and renewable energy to reduce emissions and protect the environment. The LHS station project is a strategic logistics hub and a vital transport route between the East and West. Poland serves as the gateway to transport goods deeper into the European interior, including Germany, the Netherlands, France, Belgium, and Nordic countries.
With its geographical proximity to the heart of Southeast Asia, along major international shipping routes, and its location bordering China, along with ongoing investments in infrastructure such as roads, railways, sea, and air transport in Vietnam, participating in the LHS station project offers a new opportunity for Vietnam's logistics industry. It could help facilitate exports and imports to Poland and provide deeper access to other European markets, without being fully reliant on sea transport as is currently the case.
During Prime Minister Pham Minh Chinh's business trip to Chongqing, China, on November 8, 2024, he praised the strategic position and role of the Chongqing Logistics Center in facilitating trade connections and expressed the desire to further strengthen connectivity with Vietnam, especially regarding the international railway corridor from Vietnam through Chongqing, China, to Central Asia and Europe.
Currently, the railway route from Vietnam transports goods through ASEAN countries via Vietnam. These containers are then connected to the Asia-Europe train services departing from Chongqing, traveling to various cities in Europe.
With its advantageous geographical location, Vietnam has the potential to become a key transit hub for rail transport from ASEAN countries, as well as a gateway for Vietnamese exports to Chongqing, China. Vietnam can also participate in the LHS project to export goods to Poland and Europe. This rail transportation offers the benefit of reduced delivery times compared to sea routes and is significantly cheaper than air freight.
Although the LHS station project is expected to become a key rail transport route that could replace older maritime routes such as those via the Suez Canal, Panama, and the Europe-Africa-Asia routes or the Arctic route, the ongoing conflict between Russia and Ukraine and Poland's antagonism toward Russia could affect the LHS station project.
U.S. President-elect Donald Trump, who has just won his second term as the 47th President of the United States, has announced plans to end the Russia-Ukraine war upon taking office in February 2025. This development is eagerly awaited by the world, and the cessation of the conflict between Russia and Ukraine would create better conditions for the implementation of the LHS transport project. Vietnam could potentially play a key role as a transit link in this Asia-Europe transportation system.
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