Gefco Group, the international arm of Russian Railways specializing in automotive and industrial goods logistics, is launching a new door-to-door route between China and Europe, aiming to expand into more industries.
The new service allows overland cargo and ocean freight collected at China's major ports to be delivered via Alataw Pass or Manzhouli, in China's Xinjiang Uygur and Inner Mongolia autonomous regions, to such countries as Russia, Ukraine, Belarus, Poland, Germany and Hungary.
Christophe Poitrineau, Gefco's Asia president, said that since rail service tends to be more expensive than sea freight, the company is working on solutions for better backflow transportation, so costs can be lowered.
"Now, it is often a one-way operation from China to Europe, and when the train returns, it is often empty. There is work to be done on both sides - the work of unifying one custom system along the Eurasian line," Poitrineau said.
Although there are regular block trains from Chongqing, Chengdu, Zhengzhou and Yiwu to both Europe and Central Asia, most haven't been able to operate bidirectional service yet.
As trade accelerates, Poitrineau said more products from Europe will be transported to China using rail routes in coming years.
"The cooperation between the Russian and Chinese governments in terms of unifying railway transportation will benefit us a lot. Our team in Russia is developing another trans-border block train," he said.
Gefco is reviewing policies of the China (Shanghai) Pilot Free Trade Zone and may invest there to build warehouse facilities, which would be beneficial to its duty management.
But automotive logistics is still Gefco's key market in China, as Chinese carmakers plan to export more vehicles over the next several years.
Since China became a revenue powerhouse for global automakers, an increasing number of overseas car companies have set up joint ventures in China. They have synchronized the launch of new models in China with those in the US and Europe, as well as shipping them to China's neighboring countries to further expand their export channels.
China's auto production and sales set a world record for a fifth consecutive year in 2013, data from the Beijing-based China Association of Automobile Manufacturers show.
Eager to enhance its earning ability, Gefco has established two joint ventures that serve Dongfeng Peugeot-Citroen Automobile Co Ltd and Changan PSA Automobiles Co Ltd.
It opened a new branch in Chengdu in 2013, where Volvo Car Group built a manufacturing plant and where DPCA plans to open a factory.
Hou Hanping, professor of logistics management at Beijing Jiaotong University, said foreign carmakers commonly spend a lot of money and resources to optimize their supply chain.
Headquartered in Courbevoie, France, Gefco's global revenue hit 4 billion euros ($5.5 billion) in 2013, and revenue from its China operation totaled 100 million euros the same year.
Gefco will set up new branches in Ningbo and Dalian in 2014 to enhance its ocean transport capabilities. It also sees possibilities in establishing branches in Kunming and Urumqi.
"We are building our own capabilities in China, extending our own networks and working on our own export solutions both at sea and on land port. Additional connectivity between China and India, China and Thailand, Vietnam and Indonesia also is on our radar over the next three years," Poitrineau said.