Useful connections

The past year was another important milestone in the creation and development of logistics routes that connect the countries of the new geopolitical landscape.

The intensification of trade and economic cooperation between Russia, East and South began long before 2022, Russian President Vladimir Putin said at VTB's Russia Calling investment forum on December 4.

China has become Russia's largest trade and economic partner long before this date. In addition, many economies of other countries in the global South and East are growing rapidly, trade turnover with them is increasing, and the development of international transport corridors (ITC) has accelerated as it has increased.

"Russia has been doing this for a long time, since the 2000s, bearing in mind the trends of global development, the development of the world economy. Calmly, step by step, but we have been doing it for a long time," the head of state explained.

The creation of new logistics routes is an inevitable process in such a situation. “Therefore, we are naturally oriented to the places where we see growth and where the number of our partners is increasing, without looking back at the shouts from the outside,” emphasized Vladimir Putin.

One of the national goals of the country, approved by the head of state, is to increase the volume of transportation through the ITC by 2030 by at least 1.5 times compared to the level of 2021. And the current year has become another stage of successful fulfillment of this task.

In the context of creating new global ITCs, the North-South corridor is of great importance. This was emphasized by the President of the Russian Federation: "This is a direct seamless movement of goods right from the Baltic Sea, from St. Petersburg to the Persian Gulf and the Indian Ocean.

This multimodal route is being developed in three directions in different countries for road, rail and sea freight transportation - western (from Russia via Azerbaijan), eastern (from Russia via Kazakhstan, Turkmenistan) and trans-Caspian (via the Caspian Sea).

On the Caspian coast of Iran, the branches converge at ports with access to the Persian Gulf countries and India. On the western branch, which transports 70% of ITC cargo, a new railroad section is being built in Iran, new railroad infrastructure facilities are being constructed in Azerbaijan and a new Samur-2 checkpoint on the border between Azerbaijan and Russia is being created with the participation of JSCo “Russian Railways”. By the end of 2027, it is planned to complete construction and installation works at the Samur station and Derbent border crossing, which will increase the carrying capacity of the corridor to 20 million tons.

In July 2024, a roadmap was signed with Iran, Turkmenistan and Russia for the synchronized development of the eastern North-South route. It is planned to increase the capacity of the corridor branch from 6 to 10 million tons per year by 2027 and up to 20 million tons by 2033. In January - October 2024, about 1.8 million tons were transported in the eastern direction of the ITC, according to the Ministry of Transport of Kazakhstan.

"RZD-Logistics has been rolling out the eastern branch line since 2022 with state support in the form of preferential tariffs and subsidies for exporters. As a result, new cargo volumes were attracted - up to 25% of the total ITC cargo traffic. This allowed to reduce the cost of container delivery along the eastern branch to $5.5 thousand in 2024 from $11 thousand in 2022.

Russia continued rolling out the eastern route this year as well: in May 2024, RZD Logistics dispatched the first full-size agroexpress along the North-South ITC from Yuzhnouralsky TLC. A train of 31 TEU with oat flakes and cereals arrived in India with the support of the Russian Export Center - via Sarakhs station (Turkmenistan) and further transit through Kazakhstan. After transloading to the 1435 mm gauge, the cargo traveled through Iran to the port of Bandar Abbas and then by sea to the port of Mundra (India). “The volume of AIC supplies in this direction can reach 100,000 tons per year,” said Alexander Sivertsev, Director for Container Transportation and Agrologistics of RZD Logistics.

To roll out the eastern route, Russian Railways and partners from Kazakhstan, Turkmenistan and Iran have agreed on unified reduced tariffs for containerized cargo from January 1, 2023. “To increase the attractiveness of the route (eastern route - Ed.) all participants of the ITC - Russia, Kazakhstan, Turkmenistan, Iran - have agreed to extend the single tariff rate for the next year, 2025”, - said First Deputy Director General of JSC “Russian Railways” Sergei Pavlov at the round table of KSTP within the framework of Transport Week - 2024. This was another significant event this year for the development of the North-South ITC.

The development of the trans-Caspian branch continues as well. The fleet is still insufficient for the growing freight traffic, but port and other land infrastructure is being developed, and interstate customs procedures are being simplified.

For the development of the Caspian section of the North-South ITC, in early December 2024, by presidential decree, Rosimushchestvo transferred a 25.5% stake in Astrakhan Port to Rostec State Corporation. The Iranian company Nasim Bakhr Kish - a subsidiary of the Iranian state company IRISL - owns another 53.06% of the port's shares, so Rostec's participation in the expansion and modernization of port infrastructure and other ITC programs is planned, according to the explanatory note to the document.

The construction of North-South infrastructure does not prevent the increase in cargo traffic in general along all directions of the route. "For 10 months we record the volume of traffic along the corridor about 10.5 million tons. This is slightly higher than last year's figures,“ said Dmitry Murev, Deputy Director General and Head of the Center for Corporate Transportation Services (CFTS) of JSCo ”Russian Railways".

In order to increase cargo transportation along the ITC, it is necessary to increase trade turnover between countries along the route, so it is important that the Eurasian Economic Union (EAEU) countries participate in this process. Thus, a significant event was the signing of a free trade zone agreement between Iran and the Union in 2024. The partners are also implementing the “Seamless Transit” project within the framework of the general transition of EAEU countries to digital technologies to increase trade turnover with the help of technology - introduction of electronic document management, reducing the cost of logistics and increasing the speed of delivery.

The ITC member countries are also discussing the introduction of unified tariffs on all ITC branches and the creation of a single logistics operator for container transportation along the North-South corridor.

The development of new ITCs is especially important against the backdrop of growing geopolitical risks and declining popularity of long-established routes. For example, cargo volumes through the Suez Canal have decreased due to the growing hostilities in the Middle East. As a result, many shippers have started to send their vessels to bypass Africa.

Against the backdrop of growing risks and the global economy's demand for safe transportation, ITCs with transit through Russia - via the Arctic route - have grown in popularity. "There is growing interest in routes such as the Northern Sea Route along the Russian coast in the Arctic. We have already exceeded transportation volumes many times over since the Soviet era, and this will grow further," Vladimir Putin said in his speech at the Russia Calling forum.

For this purpose, a number of programs are being implemented - construction of ice-class cargo ships and icebreakers, improvement of navigation and ice reconnaissance. These measures will reduce the cost of ice navigation and logistics, and speed up delivery along the Northern Sea Route.

Russia has already built the world's largest icebreaker fleet - 34 with conventional propulsion and 7 with nuclear propulsion.

According to the Russian President's assessment, efforts to create a safe and efficient trade route through the Arctic are justified. The climate is changing, the number of days for unobstructed navigation of ships is increasing. "And here we see the interest of very many countries, including and above all our Asian partners - India, China and many others - in using this route and working along this route. We have a whole program for the development of ports in this region, access roads and so on," the head of state said.

China as a key trading partner takes a very active part in rolling out the NSR.

Since 2022, China's OVP Shipping Line has been the first to develop direct container transportation via the NSR between China and Russia. In July 2023, another Chinese shipping company Newnew Shipping Line (NNSL) opened a regular container transportation service via the Northern Sea Route between Russia and China.

In June 2024, at the St. Petersburg International Economic Forum, the Chinese company Hainan Yangpu NewNew Shipping Co. Ltd signed an agreement with Rosatom to organize a year-round container line between Russian and Chinese ports via the NSR. For this purpose, it is planned to establish a joint venture to design, build high-ice-class container ships and jointly manage the Arctic container line.

And on July 5, 2024, another service - NNSL - was launched. The first railway express “Northern Sea Route No. 1” with containerized cargo for delivery to China via the Northern Sea Route departed from the logistics center near Moscow to Arkhangelsk. The route connects the center of Russia with Arkhangelsk and further along the NSR with the main ports of China - Shanghai and Ningbo. And in the opposite direction the Arctic Express delivers Chinese cargoes - to Arkhangelsk and further by rail to Moscow and St. Petersburg. The period of cargo delivery via this multimodal route is 20-25 days, which is twice as fast as via the Suez Canal.

This year the history of rolling out the route was enriched with other significant events. Following the May visit of Russian President Vladimir Putin to China, a decision was made to create three Russian-Chinese working groups: on navigation development, on security and on Arctic shipbuilding. Since this year, India has been actively participating in the creation of a convenient ITC through the NSR.

In October, the first two international meetings on the development of the Northern Sea Route took place almost simultaneously, with the participation of representatives of Russia and China, as well as Russia and India. Plans to increase cargo traffic and joint projects in the field of Arctic shipbuilding were discussed.

Belarus also decided to take part in the NSR transportation services. In August 2024 Belarusian products were first delivered through the Arctic to China, in late September 2024 the first containerized cargoes arrived in Belarus from China via the Northern Sea Route on a return flight. “We have already tried to transport cargo along this route - it works out well,” said President of Belarus Alexander Lukashenko, referring to the potential of transit of Belarusian cargo through Russia via other routes, except for ports in the Leningrad Region.

The effectiveness of Russia's efforts with its partners to develop the NSR is confirmed by statistics: from 2014 to 2023, cargo traffic along the NSR increased from 4 to 35 million tons of cargo and annually updates records. Cargo traffic along the Northern Sea Route in 2024 will exceed the new target of 38 million tons. According to Rosatom State Corporation (the operator of the NSR - Ed.), "final results are planned to be summarized in January. So far, we can only say that we are ahead of last year's cargo transportation rates.

Cargo deliveries are also growing in the East-West direction. Freight flows in the export and import directions through the ports of the Far East and land border crossings with China are increasing. Rail transit between China and Europe through Russia in January - September 2024 increased by 85.8% compared to last year and reached 342.5 thousand TEU. This was announced by Oleg Belozerov, the head of Russian Railways, on December 3, during the KCTCP meeting in Lonavala (India).


“By joint efforts of the Railway Companies of Russia, Kazakhstan and Belarus with our Chinese partners we provide the growth of transportation volumes in communication China - Europe - China”, - emphasized, in turn, the General Director - Chairman of the Board of JSC “OTLC ERA” Alexey Grom. According to the company's data, the volume of transportation including OTLC services at the end of 10 months amounted to 623.876 thousand TEU - it is 12% more than in the same period of 2023. And on the direction China - Europe - China, the volume of transportation increased by 83% and amounted to 329,876 thousand TEU.

The past year was an important milestone for the development of the Eastern polygon, a key link in this direction.

To ensure stable transportation along this direction, in May 2024, the government approved the start of the third stage of modernization of the BAM and Trans-Siberian railway infrastructure until 2032. The volume of works is planned in the amount of 3.7 trillion rubles on 24 sections: 12 of them on the Transsib, 10 - on the BAM.

As a result of the third stage, the carrying capacity of the Eastern polygon will increase 1.5 times - up to 180 million tons by the end of 2024, up to 210 million tons in 2030, up to 270 million tons - in 2032. JSCo “Russian Railways” is implementing all items of the infrastructure development program in this direction.