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Made in South Korea

Shippers from the Republic of Korea have increased rail shipments in Russia
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Over recent years, the volume of South Korean freight traffic through the network of Russian Railways has shown steady growth. Last year Russian Railways transported 37.5% more freight than in 2020 in railway services with the Republic of Korea.  Transport market experts believe that shippers from the Republic of Korea are attracted by the cost, speed, reliability and environmental friendliness of railway delivery and forecast that the positive dynamics will continue.

As Gudok was told by Nikolai Dosegaev, head of the Department of Coordination of Transport and Logistics Activities of Russian Railways’ Corporate Transportation Service Center, the significant increase in traffic in railway services with South Korea shows the growing interest of customers to the multimodal transport using the infrastructure of Russian Railways.

"Thus, in 2021, 163,800 TEUs (20-foot equivalent) were transported via the Russian Railways network in railway services with the Republic of Korea, or 37.5% more than last year", says Nikolai Dosegaev. "At the same time, export shipments increased by 28.5% to 39,400 TEUs, while import shipments grew by 27.4% to 41,500 TEUs. The volume of transit traffic through Russia to the Republic of Korea increased by 42.5% to 15,900 TEUs, and the number of transit shipments in Russia from South Korea grew by 49.8% to 67,000 TEUs".

This significant increase in the volume of South Korean cargoes transported through the holding company's network in recent years is attributed to reorientation of cargo flows from the sea to the railway transport, says Andrei Tikhomirov, head of the Macroeconomics and Forecasting Methodology Department of the Institute of Economics and Transport Development.

"The growing sea freight rates have contributed to a sharp increase in the competitiveness and attractiveness of rail transport, not only in terms of the delivery time of containerized cargoes, but also in terms of the cost of transportation," says Andrei Tikhomirov.

According to Andrei Naraevsky, Deputy General Director for Development and Government Relations of Maersk LLC - Eastern Europe Region, it was in 2021 that the company recorded an increased demand from clients from Asia-Pacific countries, including the Republic of Korea. In the expert's opinion, the reason for that was the effect of post-Suez Canal capacity restrictions.

Alexei Bezborodov, General Director of InfraNews research agency, is sure that there are two factors, which can attract South Korean shippers to rail shipments. Firstly, the low cost of transportation, and secondly, the presentation events that Russian companies initiate to describe their services and freight delivery offers.

"The main factor for attracting Korean cargoes is short and predictable delivery time. In this regard, the possibility of creating routes through border crossings that are new to us will allow attracting additional cargo volumes," says Yulia Svirid, head of transit transportation sales at FESCO Integrated Transport (FIT, part of the FESCO Group). 
Today, to meet the growing demand of South Korean shippers for rail transportation, Russian logistics companies are introducing new cargo delivery services, as well as implementing measures to increase their own assets involved in intermodal transportation.

According to Vladimir Khlutkov, Director for Business Development in the Asia-Pacific Region of PJSC TransContainer, one of the company's priorities is to attract new shippers, including those from the Republic of Korea, both in transit traffic through Russia and in transportation within the Republic of Korea.

"We are developing intermodal transit traffic between Korea and Europe by diversifying existing routes and opening new ones," said Vladimir Khlutkov. "The key routes lie through the ports of the Far East. Then the cargo goes to Europe via Belorussia, St. Petersburg and Kaliningrad. Last September we organized our first shipment to Turkey via Far East and Novorossiysk".

In 2019, Russian Railways Logistics and FESCO Transportation Group organized several test shipments of cargoes from South Korea. Goods were transported by the Trans-Siberian LandBridge, a service of cargo delivery from APR countries to Europe. At present the service is provided on a regular basis. Its route passes through the port of Vladivostok and the Brest-Malaszewicze border crossing (Belarus-Poland).

 As explained by Yulia Svirid, the Trans-Siberian LandBridge was the first service to follow the route of Asia ports - Vladivostok Commercial Sea Port (VCSP) - Brest-Europe border crossing.

"Due to the advantages of this service, the short delivery time compared to the deep sea and the interest of Korean customers, we have established regular train shipments already in 2020," says Yulia Svirid. "The interest to shipments via Trans-Siberian Railway allowed us to organize three more new transit services in 2021. In 2021 FESCO transported more than 7,000 TEUs from Asia to Europe via VCSP, and the share of Korean cargoes in this volume is more than 30%".
It should be noted that this service is also attractive for Japanese shippers. Read more about it in "Japan is testing the Trans-Siberian Railway" at "1520. International":

Thus, in addition to the Trans-Siberian LandBridge, FESCO now offers its customers the FESCO Trans-Baltic Bridge service for shipments from ports in Korea, from where the cargoes arrive at VCSP and then proceed in a regular train to St. Petersburg with further delivery by sea to major European ports.

"Our customers also have access to the FESCO Finland Bridge service, which spans from Asia through the Russian Far East to Finland, as well as the FESCO West Gate Bridge going from Korean ports through the Russian Far East to Kaliningrad with further delivery by sea to Europe," says Yulia Svirid. "All services are also available in the opposite direction".

In addition, significant potential for the further development of Euro-Asian railway transportation is associated with the prospects for restoring the Trans-Korean railway services, which would give Korean cargoes direct access to the highly developed transport infrastructure of the Eurasian continent. The Khasan-Rajin project, which was implemented by Russian Railways in 2014 and includes the restoration of a 54-kilometer stretch of railway from the Russian-North Korean border to the port of Rajin, was conceived as a pilot stage in the reconstruction of the Trans-Korean Railway.

According to Andrei Tikhomirov, the Euro-Asian freight market, including Korea's trade and economic relations with European countries, will maintain positive dynamics. 
"Increasing the share of Russian railways in the Euro-Asian container transportation market should be promoted by the expansion of service geography, diversification of cargo routes, as well as ensuring the steadiness of cargo delivery," says the expert.
This opinion is shared by representatives of Russian logistics companies, which offer cargo delivery services to Korean shippers.
Thus, according to Sergei Lyovin, Deputy General Director for Commercial Activities of Russian Railways Logistics, given the heavy workload of sea lines, the volume of Asian cargoes on transit rail routes will continue to grow.

"Shipments via the Trans-Siberian Railway have shown their stability and reliability, especially against the background of the difficult situation in logistics in 2021. We are confident in further development of these services," sums up Yulia Svirid.

In addition, railways are also ahead in terms of environmentally friendly transportation, which is especially important given the accelerated decarbonization of the economy of the Republic of Korea as part of the Korean New Deal. For example, the transportation of one 20-foot container from East Asia to Central Europe by railway using electric traction causes the emission of 16 times less carbon dioxide into the atmosphere than by sea transport, 73 times less than by road transport, and 710 times less than by air transport.

Anastasia Baranets

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