Russian Railways predicted a four-fold increase in container transit

03.28.2022

Transit transportation of containers via the Russian Railways network will grow to 4 million TEU in 2027. That’s almost four times what it was in 2021, and some experts consider such a plan «virtually unrealizable.»

Russian Railways expect to increase transit traffic to a maximum of 4 million TEU by 2027. This was stated by the company’s Deputy General Director Alexey Shilo at a briefing, as reported by RBC correspondent.

«This is an ambitious goal, we want to fight for this figure [4 million TEU]. We would like to reach it in 2025,» said Shilo. Now Russian Railways is preparing a program of measures to achieve this goal.

In 2021, the transit of containers through Russia increased by 43%, to 1.1 million TEU. A total of 6.5 million TEU were transported (most of which were domestic shipments). Over the last five years the volume of container transportation has doubled, the monopoly’s press service said.

More than 62% of the transit containers were transported by the UTLC ERA, owned on a parity basis by Russian Railways, Belarusian and Kazakhstan Railways. A total of 692,500 TEU were transported via the company’s services.

439,500 TEU (63%) were transported in the direction of Europe. 253,000 TEU (37%) were transported in the direction of China, and the transit of containers reached an absolute record in the history of Russian and Soviet railroads.

The company has no «super-objective» to increase the share of transit containers in total revenue, notes Shilo. But a significant increase in traffic will force Russian Railways to take a «slightly more serious» approach to shaping further actions. In 2022, the transit of cargo in containers will bring the company about 2% of revenues from freight transportation, said a representative of Russian Railways, but did not disclose specific amounts.

Transit of one container through the territory of Russia on average gives about 10,000 dollars effect for the Russian economy and the budget, said Sergey Shishkarev, main co-owner of Delo Group, in the interview with RBC.

What can stand in the way of achieving the goal

Market participants name several obstacles to quadrupling the transit of containers: 

  • The growth of containers transit up to 4 million TEU may be hampered by low capacity of border crossings, the slow operation of customs services and overloading of port infrastructure, says Dmitry Murev, CEO RZD Logistics.

  • Nikita Pushkarev, Sales and Customer Service Director of PJSC TransContainer, points out that a serious shortage of Russian Railways’ carrying and overload capacity has already become a constraint on growth in the volume of transit containers in Russia and neighboring countries.

  • A shortage of container platforms remains an acute problem, and there is a need for skilled workers, Murev says.

  • Epidemiological restrictions also hinder the development of the market, says Vyacheslav Sarayev, Head of the RZD Business Asset container operator.

  • Achievement of the 4 million TEU target will require, among other things, a partial relief of the Trans-Siberian Railway for container traffic.

Operation under a record load over 1 million transit containers in 2021 «has exposed many bottlenecks», admits Shilo. Their «debottlenecking» will require lots of additional investments, most notably in establishment of terminals in Kazakhstan and China. We will also have to develop checkpoints in Russia, Kazakhstan and China, as well as seek new route exit points to Europe, he said.

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