The war Israel and the US launched against Iran last month has completely shaken up the supply chain. The recent closure of the Strait of Hormuz in particular has blocked hundreds of ships and thousands of sailors. With uncertainty looming, the Europe-Asia supply chain is seeking alternative solutions including rail. Chris Clowes, associate director at supply chain and logistics consultancy SCALA, said rail could be a credible middle option for some goods.
Clowes said: "Rail can be a credible 'middle option' for some goods, but it won't replace ocean freight." A standard container ship carries tens of thousands of TEU, whereas rail's volume capacity is far below that. Only a small percentage of annual Europe-Asia container traffic can move by rail. Rail can be economical for high-value and time-critical goods.
Alternative land corridor options include the Middle Corridor (Trans-Caspian), the Northern Route (via Russia, restricted by sanctions), and the China-Europe Express. The Middle Corridor reaches Europe across the Caspian via Kazakhstan, Azerbaijan, and Georgia. However, Clowes reminded that even the Middle Corridor's existing capacity is limited and could not absorb large volumes in a crisis. Fast capacity growth requires investments in infrastructure, ships/wagons, and cross-border policy alignment.
Key Takeaways:
1. SCALA's Chris Clowes stressed that rail cannot replace ocean freight.
2. Rail offers a credible middle option only for high-value, time-critical goods.
3. Only a small percentage of Europe-Asia container traffic can move by rail.
4. Even the Middle Corridor's existing capacity is limited and cannot absorb large volumes.
5. Fast capacity growth requires infrastructure, ship/wagon investment, and cross-border policy alignment.
