• 2022 March 5

    From Whom: Vitaliy Chernov


    About: New reality: the eastern vector of logistics

    The current situation, despite the shock effect, has only accelerated what has been happening over the past years: the turn of Russian foreign trade, and hence logistics, to the East. Moreover, this happened not so much because of geopolitical events, but due to rapid growth of the economies of China, India and other Asian countries. Now, amid the Western sanctions, we can predict the growth of container imports from the countries of the Asia-Pacific region. In the context of high deep sea freight rates and the refusal of a number of Western container lines to work with Russia, it is advisable to take this import through the ports of the Far East and deliver it by rail transport to the European part of Russia. Another option is delivery to Turkey (or ports of other countries that have not imposed sanctions against Russian flagged ships) with further transportation to the ports of Russia’s South Basin.

    Among the main obstacles are the insufficient capacity of railways, especially in the Far East, as well as the refusal of a number of container lines to work with Russia.

    If we talk about the railway, then as recently as last autumn and winter, a rather heated discussion was held regarding the carrying capacity of railway approaches in the direction of the ports of the Far East. Unfortunately, the reconstruction of the RZD Eastern Polygon site lagged far behind the needs of the Far Eastern marine terminals, which were developing rapidly. According to market participants, due to the insufficient capacity of the railway, the investments by businesses in the development of terminals cannot pay off.

    Although it was mainly about the supply of coal through the Far Eastern ports, however, due to the surge in freight rates for sea container transportation caused by COVID-19, market participants began to invest in container capacities as well. A striking example is the container terminal in the Port of Vostochny, the expansion of Commercial Port of Vladivostok, the modernization of Vostochnaya Stevedoring Company... Now it is clear how much these capacities are in demand there. There can be only one solution here: it is necessary to expand the capabilities of the railway infrastructure at an accelerated pace.

    As for container lines, one should not fall into alarmism here either: those who left the Russian market can be replaced by operators from countries that have not joined the sanctions, and such work has already begun. For example, there is the russian transportation group fesco, there is the chinese COSCO, etc. - in reality, Russia is not in isolation.

    In the future, of course, it is necessary to create our own container lines, for example, as part of the development of navigation along the Northern Sea Route, the possibility of building several container ships was considered. DP World joined the project for the development of container transportation along the Northern Sea Route, which planned to create transshipment maritime hubs in Murmansk and Vladivostok. It should be noted that DP World is managed by the world's largest investor and developer Dubai World, owned by the UAE Government, which also did not impose sanctions on Russia.