RUSSIA: TRANSPORT LOGISTICS
RUSSIA TURNS EAST As a result of the Ukraine war Russia’s transport logistics have undergone some profound shocks and are seeing a growing eastern emphasis. Oleksandr Gavrylyuk reports
8 The TransSiberian Railway is seen as vital to the growing emphasis on moving greater cargo volumes eastwards – massive investment is under discussion
The Kremlin’s devastating war in Ukraine and resulting international sanctions have dramatically changed Russia’s economic landscape as a whole and its transport industry in particular. Russia, which has dedicated three decades of its postSoviet history to fitting into the global economic system, now finds itself beyond its mainstream. Saint Petersburg, Russia’s key sea maritime gateway for the past three centuries, has, along with its other Baltic ports, lost the lion’s share of its container handling volumes. In the face sanctions, liner operators had little alternative other than to leave Russian trades. “Our Baltic terminals were almost paralysed in April, with just sporadic container operations,” comments Olga Gopkalo, a Saint Petersburg-based maritime transport analyst. “But even if the feeder lines decided to return, that would not improve the situation, as long as the European hubs, such as Rotterdam and Hamburg, refuse to work with Russia.” Having withdrawn from the Russian market, the international carriers have halved the volume of ISO boxes operating locally. Furthermore, the structure of container trade has changed - today exports account for 40 per cent of container activity, while the import share is now just 14 per cent. As a result, according to Vladamir Savchuk, Deputy Director of the Moscow headquartered Natural Monopoly Institute, the number of boxes leaving Russia each month is three times that moving in the opposite direction. This, in turn, is expected to result in an overall container deficit in the Russian market of up to 350,000TEU in 2022.
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Similarly, as the West has been closing its markets for Moscow’s commodity exports, Russia’s Baltic seaports have lost their significance as the main westbound gateway. At the same time, Russian traders have started looking for new markets and building up new logistics schemes. Thus, from March to June this year, according to Aleksey Shilo, Deputy Director General of the state-run monopoly Russian Railways (RZD), Russia’s exports of ferrous metals and fertilisers to Asian (and, above all, China) markets expanded by 20 per cent and 16 per cent year-on-year respectively. EASTERN EMPHASIS Growing international isolation has led to the Kremlin selling its mineral resources to China and India with a substantial discount or even below the actual cost of production. This year, Asia has become the largest importer of Russian oil, with Beijing and New Delhi purchasing it with a 30 per cent discount. “In general, we can now ascertain a clearly demonstrated redirection of export freight flows from the nation’s western to its eastern and southern ports, as well as overland rail terminals at the Russo-Chinese border,” highlights an official statement from RZD’s logistics branch. Last year, the total volume of trade between Moscow and Beijing reached the record-breaking figure of US$146 billion, up 36 per cent on 2020, as per the data released by Russia’s Foreign Ministry. Since March this year, with the launch of international restrictions, the trade turnover between the countries has somewhat decreased, but China remains the
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