New large-scale border crossings with China: is Russia’s plan feasible?

07.13.2022

«Russia will complete the reconstruction of 41 border ports by the end of 2024, including 22 ports in the Russian Far East, which is the largest port construction plan ever.» Russian Minister of Transport Vitaly Saveliev said. In addition, Aleksey Chekunkov, Minister of Development of the Russian Far East and Arctic, stated last month that the Russian government is studying the possibility of opening more border crossings between Russia and China in the Far East. The news comes from the China-Russia Information Network.

Behind the large-scale engineering construction is the surge in freight demand and the shortage of capacity. Chekunkov explained that, currently, Russia has a serious shortage of transportation capacity in railways, border ports and ports, and the annual shortage of transportation capacity exceeds 70 million tons. Under the current situation, the Sino-Russian trade volume has increased, and the flow of goods has shifted to the south and east, and this shortage is likely to double.

Russian Deputy Prime Minister and Presidential Plenipotentiary to the Far Eastern Federal District, Yury Trutne, said that the shortcoming of the capacity shortage lies in the two main railways, the Bea Railway and the Trans-Siberian Railway. He said: «It is estimated that there will be 258 million tons of cargo transportation demand in 2022. The amount we cannot complete may reach 100 million tons, which is expected to bring losses of over 23 billion euro to the national economy. Therefore, it is urgent to solve the problem of transportation capacity.»

Reconstruction works

Russian officials did not disclose specific information on the large-scale port construction. In early June, a consortium of Gazprom Bank and construction company BTS-Most sent a letter to Russian President Vladimir Putin proposing to extend and rebuild the Baikal-Amur Line (BAM) and Trans-Siberian Railway to strengthen connections with Asian countries and boost trade.

However, the proposal has not yet received a substantive response. Port reconstruction may be the first step in improving railway infrastructure, or it may turn out to be another empty promise from the Russian government. After all, the interests behind such a huge project are complex and difficult to construct.

Cargo flow diversion

According to data from the General Administration of Customs, from January to May 2022, the trade volume between China and Russia reached 65.81 billion US dollars, a year-on-year increase of 28,9 per cent. Among them, Chinese exports to Russia increased by 7,2 per cent, and imports from Russia increased by 46,5 per cent. Experts predict that the trade volume between the two countries may exceed 1 trillion yuan this year.

RZD Logistics stated that its general trend to adjust the flow of goods is to increase the import and export of goods to the South (transiting the Caspian Sea/Black Sea, North-South International Freight Corridor) and the Far East. In addition, not long ago, RZD reached an agreement with the Chinese Railway Company to gradually increase the number of trains passing through border ports. (See history article) It remains to be seen whether Russia’s infrastructure can keep up with these developments.

Analytics on topic
Article
04.14.2022
Logistics from China to Europe: Transport Routes, Duration, and Costs
Whether China is still the “workbench of the world” has become a matter of debate among experts. Still, China produces a great many products that have their market in Europe: be it microelectronics or forklifts. And that means that logistics between China and Europe is in high demand. Here you will find an informative survey of China logistics.
Article
05.05.2022
What is the China-Europe Railway Express, and how much pressure is it under from the Ukraine crisis?

The China-Europe Railway Express, or China Railway Express (CRE), is key logistical cog in President Xi Jinping’s Belt and Road Initiative. It provides an alternative to container shipping for transporting Chinese manufactured goods to Europe via Russia.

Source: South China Morning Post