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An aerial photo shows a China-Europe cargo train loaded with containers of electronic products leaving Nanjing, in eastern Jiangsu province, for Russia’s Vorsino station on January 27, 2021. Photo: Xinhua
TechTech Trends

War in Ukraine threatens to disrupt shipments via China-Europe railway, networking gear maker Zyxel warns

  • Zyxel, a maker of routers and switches, suspended freight through the link operated by China Railway about three days ago
  • Russia’s invasion of Ukraine risks worsening a global shipping crisis that has cut off electronics supplies, such as smartphones, video game consoles and chips
Transport and logistics
Bloomberg
Bloomberg
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Networking equipment maker Zyxel Communications Corp has stopped shipping from China to Europe by rail, as the war in Ukraine threatens to snarl a key land route at the heart of Chinese President Xi Jinping’s Belt and Road Initiative.

Zyxel, a maker of routers and switches controlled by Taiwan’s Unizyx Holding Corp, suspended freight through the link operated by China Railway about three days ago, company president Karsten Gewecke said.

The company anticipates potential disruptions along the route, which links China to swathes of Europe and Asia and is considered a major component of Beijing’s Belt and Road Initiative, a Zyxel representative said.

Russia’s invasion of Ukraine now risks worsening a global shipping crisis that has cut off supplies of electronics, from smartphones and video gaming consoles to semiconductors for cars, over the past year.
Karsten Gewecke, president of Zyxel Communications Corp, is concerned about disruptions in rail freight transport from China to Europe because of the war in Ukraine. Photo: Handout

The Taiwanese company had begun relying more on orders by train because they take three to four weeks to arrive, while a ship might take a couple of months, Zyxel’s Gewecke said in an interview.

“I was concerned that we could end up with a lot of products stuck” at the Russian-Polish border, he said. “With Europe, because of difficulties in getting space on container ships, we started using maybe a year-and-a-half ago trains from across China, over Russia into Europe - into Germany.”

The rail network, part of which runs through Russia and encompasses Belarus, is a major conduit for the export of Chinese-made goods such as laptop computers to the European continent.
Almost 10 million notebooks were shipped through that network from the giant southwestern Chinese city of Chongqing - a major laptop production base - in 2020 alone, according to Chinese media outlet 21st Century Business Herald.

01:43

China-Europe rail freight reaches 50,000-train milestone amid rising EU-Beijing tensions

China-Europe rail freight reaches 50,000-train milestone amid rising EU-Beijing tensions
Companies around the world are grappling with the fallout from Russia’s invasion of Ukraine, which threatens to upend banking, energy supply and currencies across the globe. Now, American-led sanctions on the export of technology are also giving the industry pause.
If US sanctions bar Russia from buying American technology, that could prevent Zyxel from selling the country telecommunications infrastructure like network switches because these products use US chipsets, Zyxel’s Gewecke said. Last year, the company had already experienced delays because of chip shortages.

“Frankly, at the moment I’m more concerned about the team itself than the business,” he said.

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