The network is being prepared for growth

Russian Railways has set a goal of reaching 4 million TEUs in transit traffic by 2027. The basis of the future cargo flow will be shipments in the service between Asia and Europe. To achieve this, the holding company is implementing a number of infrastructure projects, including the modernization of the Trans-Siberian Railway and the creation of a network of transport and logistics centers, while private companies are seeking to increase terminal capacity. Alexei Bezborodov, General Director of the InfraNews research agency, tells "1520.International" about the attractiveness of the railway route through Russia for shippers not only from China, but also from South Korea and Japan, as well as about the growth prospects of transit volumes.

- Not so long ago, the parties involved in the transportation process faced the task of reaching the target of 1 million TEUs (20-foot equivalent - Ed.) in transit traffic. According to the results of 2021, this milestone has been passed, and now we are talking about an additional fourfold increase in this indicator. To what extent does it seem possible to achieve this result and why?

- The main prerequisite for the growth of transportation through Russia is the potential cargo base not only in China, but also in other Asian countries - South Korea and Japan. Today there are well-balanced commodity flows between them and Europe, with a volume of 1 million TEUs per year, both in terms of westbound shipments and in the opposite direction.

Mainly microchips, cell phones and components are shipped from the Republic of Korea, and biochemicals and pharmaceuticals are transported from Europe. And these are very expensive goods. Sea delivery from the Republic of Korea and Japan to Europe was more costly than rail transit through the territory of Russia even before the price hike. This is due, among other things, to more expensive insurance, the length of sea freight (the route from these Asian countries is 1.5 thousand km longer than from Shanghai) and smaller ships as compared with Chinese vessels. 

There is also an interest in transit on the part of Russian operators, for whom such transportation is a financially profitable activity. Perhaps, in the next year it will be possible to talk about creating private carrier operators, such as those currently existing in the neighboring country, Kazakhstan. However, even without them achieving the goal set by the holding company is quite realistic.

- Are there any transit clearance problems or infrastructure constraints that could be a deterrent to transit growth?

- The customs declaration process for such shipments is very easy. Technically, it is similar to the application that any ship-owner submits to the port of destination when the cargo leaves the port of departure.

If we talk about infrastructure, the existing sorting stations and terminals are quite sufficient to maintain the transit speed of cargo delivery at 7-10 days, even if the volumes increase 4 times. In this case, the construction of additional facilities is only necessary to give Asian customers an opportunity to take off a portion of imported containers, and for Russian customers to deliver export containers. This technology has not yet been perfected. The main terminals for such shipments are Vorsino (Kaluga Region) and the logistics center Bely Rast (Moscow Region).

The existing throughput capacity of the railway network is not yet ready for volumes of about 4 million TEUs; however, the holding company is implementing a number of projects to solve this problem - for example, the development of the Eastern polygon (Baikal-Amur and Trans-Siberian mainlines).

No less important is the construction of lines from Taishet to the north and from Tomsk to Nizhnevartovsk, the construction of the Northern Latitudinal Railway and ensuring access to Murmansk. Today there is a long route from the Urals through the Moscow and the south of the Northern mainlines to the Oktyabrskaya mainline. If we connect these sections, the access from the Urals to the world ocean will be cut in half. But this story is more for export shipments.

- Can, in theory, the route through Murmansk become in demand for transit?

- It surely can. From Shanghai to Boston (USA) there are 20 thousand nautical miles, from St. Petersburg – 4.5 thousand, and from Murmansk – only 3 thousand.

- The role of Russian Railways in the modernization of the transport network is certainly important. But are private companies interested in the infrastructure development?

- Today there are many projects of small overland terminals for shipment formation in Primorsky Krai. Their implementation will make it possible to create new "entry points" for cargo flow from South Korea and Japan, as an alternative to the existing points in Vladivostok. There is also room for the construction of new terminals in the west, particularly in St. Petersburg.

Our company, InfraProjects (which provides consulting, engineering, and project management services in transport infrastructure), also has orders from private businesses. For example, in a couple of months, the construction of a sea container terminal in Murmansk will begin, and there are projects in Irkutsk, Petropavlovsk-Kamchatsky, and Kaliningrad. Other countries participating in the transit service between Asia and Europe - Kazakhstan and Belarus - where we are designing terminals, are also interested in the infrastructure development.

In my opinion, the creation of a network of light terminals, which conditionally require several machines with a hydraulic hoist and jacks, could also be a promising direction.

The cost of such terminal is approximately equal to one reach stacker, and the turnover could be from 5 to 10 thousand containers a year. But so far no one is interested in it.

- Can alternative routes, such as the southern branches of the Silk Road or the Northern Sea Route, compete with the Trans-Siberian Railway?

- No. The route through Kazakhstan, Uzbekistan, Turkmenistan, Azerbaijan, and Turkey and on to Europe is hampered by the unfavorable state of Turkey's railway infrastructure. Notably, its modernization will take about 6-7 years without regard for the construction of new container terminals. The Northern Sea Route, in turn, is much more expensive and problematic than carriage of goods by rail.

Interview by Anna Yakusheva