Modern Era International Transportation

In 2022, the entire transport and logistics industry experiences the effects of international economic restrictions. Major market players are bound to reconsider the established system of Euro-Asian logistics and established transit routes, said Sergey Pavlov, First Deputy General Director of Russian Railways, at a session with North-South ITC: Moving Forward at the TRANSTEC forum in St. Petersburg.  

According to the 10 months’ performance in 2022, about half a billion tons of cargo have been transported in international traffic (export, import, transit) through the national railroad network. “Including 3.3 million TEU were transported in containers, with a deviation of less than two percent from the previous period,” said Sergei Pavlov. 

“The focus on the East provoked a dynamic growth in volumes on certain routes. First of all, the traffic with our key partner, China, reached a record high of over 100 million tons (taking into account operational data for November). Cargos transported to Turkey, the UAE, India and other countries has also increased significantly. Cargo flows are mainly confined to three directions: North-South, Azov-Black Sea and Eastern routes,” said Sergey Pavlov. 

These trends reflect the interests of national producers and exporters, which force the transport sector to adapt the system of Euro-Asian logistics. The effective rail transport management system created in the past years, as well as the measures taken to develop infrastructure, introduce advanced technologies and diversify transportation routes make it possible to switch cargo flows to new directions.

Gennady Bessonov, General Secretary of the International Trans-Eurasian Transportation Coordinating Council (TETC), told 1520 International that the main international container lines have suspended accepting new orders for transportation to/from Russia since the sanctions were imposed. The largest transport hub of St. Petersburg today is actually excluded from the container transport logistics. “Accordingly, we are refocusing on the ports of the Far East and land border crossings,” he added.

The expert highlighted that against the background of a downward trend in the volume of international, including transit, freight in some directions, this year priority is the import-export cargo shipment, which contributes to the construction of new logistics schemes.

“Russian operators are redirecting cargo flows from the Northwest to the East and South, launching new container services through the ports of Istanbul and Novorossiysk, from the Chinese ports of Taisang and Ningbo to Russian regions through the Port of Vostochny, from Vietnam to Russia through the port of Vladivostok” said Gennady Bessonov.

Pavel Ivankin, Chairman of the Expert Council of the Institute for the Study of Rail Transport Issues, emphasizes that despite the sanctions, Russia still has the main transit route - East-West ITC - the basis of which is the Trans-Siberian Railway.

In turn, Ulian Evteev, Senior Expert-Analyst of the Institute of Natural Monopolies Research (INMR), stated that part of the transit traffic going along the East-West axis was redirected from the Trans-Siberian Railway to the Trans-Caspian corridor, which bypasses Russia.

“However, it is difficult to call this corridor a full-fledged alternative to the Trans-Siberian Railroad, because its infrastructure is not ready for such an increased flow, and the cost of such delivery is much higher,” said Ulian Evteev. 

The expert highlighted that one of the main drivers of the transit traffic market through Russia is export shipment from Belarus, which is forced to redirect its cargo traffic from the ports of Ukraine and the Baltic States to the Russia due to sanctions. 

“The volume of transit cargo from Belarus increased by more than 2.5 times over 10 months of 2022 as compared to the same period last year. It is noteworthy that the geographical coverage of export from Belarus and Russia is undergoing structural changes - the focus is on the development of relations with the Middle East and Asia, so the prospects of the North-South corridor are quite obvious,” added Ulian Evteev.

Main International Routes

Sergey Pavlov, First Deputy Head of Russian Railways, also said that for each corridor a list of activities and projects was formed. Among the main projects of the holding is the development of the Eastern polygon. Carriage capacity in this direction has already exceeded 144 mln tons, and it will amount to 158 mln tons by the end of this year.

Efficient border infrastructure, which development is a priority for both Russia and foreign partners, offers the smooth flow of goods in international traffic. Coordinated cooperation becomes the basis for 24/7 operations. This year, Makhalino - Hunchun and Samur - Yalama railway checkpoints have been switched to this format. Carrying capacity of border crossing points is being increased and new crossing points are being opened. In November, Nizhneleninskoye - Tongjiang traffic was launched. 

At the end of March, a new terminal was put into operation at the Zabaikalsk station. This is additional infrastructure that ensures accelerating transshipment from narrow to wide gauge. Given the growth in traffic, the priority is the introduction of digital technologies and the development of new logistics solutions. 

“In terms of infrastructure development on the western route of North-South ITC, Russian Railways is implementing a project to transfer the Russian section of the Derbent-Samur-State Border corridor to an alternating current traction system, as well as developing the Derbent railway station,” said Sergey Pavlov.

All barriers for further development of the western branch of the corridor have been identified, and solutions are being developed at the intergovernmental level. The target is 15 million tons of cargo through the western branch of the ITC. 

The top manager emphasized that the eastern branch of North-South ITC is also being developed, which offers the unbreakable rail link between Russia and Iran via Kazakhstan and Turkmenistan. In the summer of 2022, a pilot shipment to India was performed, and in October, a regular container service was launched along this route. 

Another important advantage of the eastern branch of North-South ITC is its connection with the latitudinal routes, which provide additional opportunities for the development of the transit potential of freight traffic to the east. Thus, the eastern artery of the corridor is of great importance for trade and container traffic of EEU countries in communication with Iran, Pakistan and India.

Prospects for Transit Routes

Sergey Pavlov, First Deputy Head of Russian Railways, noted the prospects for the development of transit through North-South ITC.

“Over 10 months, 5 times more containers than during the same period a year earlier (although in absolute terms - 2.5 thousand TEU) were transported in transit traffic along North – South ITC. The potential of the corridor is significant. Its implementation will be facilitated by the construction of the missing section of the western branch of Resht-Astara on the territory of Iran. Currently, the project is being developed by the relevant agencies,” noted Pavlov.

In turn, the eastern route of the North-South corridor is competitive and in demand, as it is fully functional due to the inextricable rail connection between Russia and Iran via Kazakhstan and Turkmenistan.

Representatives of the Russian Railways holding are dealing with the railroad specialists of these countries to offer customers a regular and comfortable service that meets the needs of cargo owners for high-quality and reliable transportation. An offer of competitive tariff conditions is being developed, which should further promote the inflow of cargoes to this route.

Pavel Ivankin, Chairman of the Expert Council of the Institute for the Study of Rail Transport Issues, added that new transit railway routes will depend on foreign political circumstances, since the freight market changes depending on the situation. According to the expert, in 2023 new transit corridors will possibly appear, if the North-West direction is used.

Gennady Bessonov, in his turn, pointed out that Russian transport and logistic companies, headed by Russian Railways, annually work out different options to diversify freight traffic through the holding's network, which implies a more active use of transport opportunities.

“For example, it could be the direction through Mongolia or through border crossings with China. The direction through the Azov-Black Sea basin will be more actively developed and strengthened,” concluded Gennady Bessonov.

Olga Shelkova