Shipping HP computers by rail from China to the Netherlands

An article in the New York Times (July 21, 2013) describes Hewlett Packard’s shipment of computers, produced in Chongqing to Oostrum in the Netherlands. The trip takes 21 days, compared to 5 weeks by sea, and is cheaper than air shipments (which would cost seven times as much and generate 30 times the pollution of rail). This new rail link, called the new Silk Road, passes from China to Kazakhstan to the west to Europe. Trains from China to the West carry tires, shoes and clothes, while trains back to China carry electronics, auto parts, medical equipment and cars. The expectation is that flows on the rail link will permit Chinese plants to have low cost logistics access to Western markets and thus remain competitive despite labor cost increases. Will the presence of such rail options permit countries along the rail line the opportunity to offer competitive manufacturing, that provides even further cost reductions ? How should logistics managers best leverage the rail to coordinate product markets i.e., outbound to the customer along with inbound from China ? As more product moves along the rail, what products will shift to use the sea option to replace these products ?

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About aviyer2010

Professor
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3 Responses to Shipping HP computers by rail from China to the Netherlands

  1. Shipping by rail is a more faster and cheaper way than shipping by boat. In that case, the lead time can be reduced and so can be the shipping costs.If the products do not need to have short lead time and also the products are expensive, sea shipping can be a better choice.

  2. Prasun Bhansali says:

    I feel the main problem while transferring the goods through this type of rail line are political wish and political stability of the countries sharing the rail network. Once this issue is resolved significant cost reduction is possible.

  3. Irina Benedyk says:

    It is interesting that at the time of designing of the project it was declared that planning transit time – only 16 days. When project was this figure has turned into 21. Now, after a certain period of use, there is 28 days (in different sources he figure is different). This is the reality of such projects now.
    A huge number of manufacturers willing to invest in such projects , since the potential of savings – is huge. Interest is shown by many computer giants (Foxconn, Acer, Asus), manufacturers of spare parts for the automotive industry , etc. According to different views these projects could lead to the construction of new plants in China in close proximity to the beginning of the path.
    Unfortunately there are number of problems and solving of them will be very difficult. That makes the implementation of the plan of a daily schedule very doubtful.
    Problems:
    1 – different rail standards on the route . Three different technical standards require two train stops. If on the way Russia – Europe these procedures have been established, then on the way China – Kazakhstan is constantly undergoing serious congestion. Cargo owners say sometimes about waiting period of 20-30 days! (during periods of high demand / in summer). Even if for this train will be made an exception, the waiting time will be minimize – the technical limitations do not yet allow it on a daily basis.
    2 – There is only one rail transition route between China and Kazakhstan. The second transition is planning to be open in a couple years. But in accordance with government of Kazakhstan: it will be done for their own use firstly, as the flow of goods in Kazakhstan from China – is huge.
    3 – Theft on the way. It is planned to transport expensive goods. Unfortunately the solution of this problem can not be solved through political negotiations and investment …

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