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ITE Transport and Logistics

Go east: Russia’s eastern transport corridors

The Far East of Russia has always been affected by its remoteness, presenting some big challenges for transport and logistics. Potential bubbles just below the surface in this area though, and major schemes are underway to boost transport links in Far Eastern Russia. Two of the biggest are the Primorye-1 and Primorye-2 international transport corridors – a pair of projects that have the power to transform multi-modal logistics region-wide.


Primorye corridors promise faster transit times & cheaper rates


Alexander Galushka, Minister for the Development of the Russian Far East, believes these international transport corridors herald a sea change in the region’s transport and logistics sector. Implementation of the twin projects could grow the region’s economy by 4%, and create 3,000 new jobs.

This ongoing development also signals larger freight volumes travelling on Russian railways – and boost bi-lateral trade with a vital trading partner: China. Trade turnover between the two neighbours totals around $100 billion annually. With both nations pledging to double this by 2020, the push to develop Primorye has gained rapid momentum in recent months.

Estimates from research firm McKinsey suggest China could save upwards of $1 billion a year on logistics costs by sending cargo along this route. For Russia, it means more cargo, and a chance for its Far Eastern regions to flourish economically.

How much cargo? Predictions vary, but it is estimated that an 45 million tons of cargo a year could be transported along both Primorye routes by 2030. An optimistic prediction from Alexander Galushka predicts containerised rail transport between the Far East and China could hit over 100 million TEUs annually – roughly 100 times the amount being railed between the duo at present – once fully operational.

23 million tons of the 45 million ton total is expected to take the form of agricultural produce, including soybeans and corn. The remainder would be made up of containerised cargo, transporting products such as construction materials.

Overall around $3 billion of joint Sino-Russian investment is planned for the project, covering construction of new track, the building of new logistical centres along the route, and port upgrades.
 

A look at the Primorye-1 transportation route


The first in the two corridors being developed in the Russian Far East is the appropriately named Primorye-1 multi-modal route. Primorye-1 connects the Free Port of Vladivostok, Russia’s main Pacific port, plus the ports of Nakhodka and Vostochny, to Harbin. Some cargoes will be loaded onto ships here, for transhipment to ports in South China, whereas the rest will be sent westward vial rail to international markets.

Harbin, capital of the Heilongjiang province acts as the staging area for Primorye-1. It has a strong industrial base, including food processing and automobile manufacturing, and is located relatively close to the border with Russia. 

Crucially, Harbin is landlocked. Vladivostok and other Russian ports are much closer than the equivalent Chinese maritime facilities, explaining why China has committed some $1 billion towards developing Primorye-1 and 2. 

Cargoes bound for the United States and Europe will travel along Primorye-1. This plays into one of Russia’s great strengths: its well established railway network. The Trans-Siberian railway, possibly the world’s largest engineering project at the time of its construction, ensures Vladivostok and the Far East’s most remote parts are connected to European Russia.
 
This allows millions of tons of cargo to reach the West in relatively short times and at lower costs compared with other transport modes – exactly what Russian and Chinese freight handlers are looking for. The Ministry for the Development of the Far East is naturally optimistic regarding Primorye-1’s freight potential. Ministry estimates predict the corridor will handle 50 million TEUs by 2025.

Primorye-1 has enjoyed several pilot runs since 2016. The first, featuring a train carrying 62 containers of timber, took place on September 30. The timber was loaded onto ships at the Port of Vostochny, before being shipped to Shanghai and Huangpu.
 

Primorye-2 signals greater transhipment potential for Russian Far East


Unlike its sister corridor, Primoryre-2 is expected to be dedicated to transhipment of goods bound for Chinese ports. Additionally it will also handle cargoes for Korea and Japan. The route originates in Changchun, another landlocked Chinese provincial capital with a strong industrial base, before passing through border city Hunchun. Here, the rail route takes corridors to the ports of Zarubino and Posiet.

As expected, Primoryre-2 is set to handle extensive volumes of cargo. Some 60 million TEUs are expected the travel along the route by the middle of the next decade. 

Test shipments are underway along Primoryre-2. April 2017 welcomed experimental shipping of Korea-bound cargoes from Changchun to Zarubino. Leonid Petukhov, Director General of the Far East Investment and Export Agency, believes this first small shipment only hints at the size of the cargoes to come.

Mr Petukhov states the corridor has the potential to handle up to 23 million tons of grain cargo, and 15 million tons of container freight, by 2030; a confident forecast that nearly outstrips even the most forward thinking ministry predictions.

Primorye-2 is the most convenient way to deliver cargoes from Northeast China to the Asian-Pacific region, says the Far East Investment and Export Agency. Changchun is 500 kilometres from  the Russian border, and it is only a 60km journey to the nearest port. Comparatively, China's Dalian port facility is over 1,300km away to the South.

To get ready for more cargoes, Zarubino is gearing up for a $3.5 billion investment program. While this is separate from the Primorye investment programme proper, it does herald how Russia is dedicated to boosting transport and logistics in the Far East. It will be transformed into “Big Zarubino”, mimicking its cousin the Big Port of St. Petersburg 9,000 km away in European Russia, in order to cope with greater freight levels.

Both Primorye-1 and 2 represents the potential Russia’s most remote regions hold for transport and logistics development – and plenty of reasons why Russia remains one of the transportation markets to invest in.
 

Discover the potential of transport & logistics in Russia’s Far East at TransSiberia


TransSiberia is a specialised exhibition for transport, logistics and infrastructure. The event is a unique platform for companies interested in the Far Easts’ transport and logistics market. 

Taking part in the show is your chance to get your products and services seen by a wide audience of international and regional specialists – and the perfect place to expand your Russian business operations.

If you like more information on the show, please contact us today to learn about how you take part.

 

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