Monthly Archives: July 2021

It Is Important for the Amur Shipyard to Enter the Asia-Pacific Markets – Mikhail Mishustin

July 28, 2021

Russian Prime Minister Mikhail Mishustin visited the “Amur shipyard” (ASZ, Komsomolsk-on-Amur, Khabarovsk Territory, part of the United Shipbuilding Corporation). He examined the ships under construction in the slipway shop and on the pier. Addressing Mr. Vladimir Kulakov, ASZ director – general, PM noted that it is important to enter the markets of the Asia-Pacific region. This was reported by the press service of the Russian government.

“Of course, we need to make our combat vehicles not only for the Army, but also for the Navy. You can handle it. You construct small missile ships and corvettes. To date, the required maintenance for these ships has been put into operation. However, it is very important … to diversify the production line. In the segment of civil shipbuilding, these are, in particular, search and rescue vessels. You are already doing such projects. In addition, ferries as well. Quite serious projects that make it possible to connect Sakhalin with the mainland on the Vanino – Kholmsk line. In fact, it is the most important element of transport accessibility and transport logistics. In general, the production of such vessels may be interesting for our relations in the Asia-Pacific region. It is very important, of course, to enter this market, to make appropriate proposals”, said the Prime Minister.

The Amur Shipyard was put into operation in July 1936. Over its 85-year history the plant has produced more than 300 ships and vessels for various purposes. 57 nuclear submarines, 41 diesel-electric submarines, 56 surface warships were built for the Navy. The intermediate repair of eight submarines and two floating technical bases for recharging reactors conducted. 155 vessels and ocean engineering structures including icebreakers and icebreaker-type vessels, dry cargo ships and rescue vessels for servicing the oilrigs were built for civilian customers.

Today, PJSC “Amur Shipyard” is the largest full-service shipbuilding enterprise in the Far East of Russia.

The enterprise has begun a comprehensive reconstruction of its production facilities, aimed at a qualitative and quantitative increase in production volumes.


From China to Europe: ‘Silk Road’ Cargo Transportation

July 21, 2021 “Kommersant.RU”

Today, this transport corridor connecting China with the EU countries is actively developing, the volume of cargo transportation is constantly increasing. At the same time, all types of transportation and, in particular, automobile transportation, are complicated by a number of factors, which were described by representatives of Russian transport companies.

Trade disputes and delays at border crossing points (BCPs)

Vladislav Martin, Head of Rail Transportation in the EU and China Regions of the AsstrA Group:

 – China’s logistics has continued to develop for more than a year. At the end of 2020, we saw the consequences of this process: China ousted the United States from the position of the main trading partner of the EU – the total trade between the EU and the PRC amounted to 586 billion euros. The European Union exported goods and services to the PRC for 202.5 billion euros (+2.2% in annual comparison) and imported goods for 383.5 billion euros (+ 5.6%). Foreign trade turnover with the United States fell to 555 billion euros, with exports falling by 13.2% and imports by 8.2%. In addition to the coronavirus crisis, trade disputes between China and the United States and Europe, in which all parties imposed customs duties, had a negative impact on transatlantic trade.

    In recent months, we have seen an active increase in the number of road transportation on the China-EU route. We can say that demand exceeds supply, but the situation in this market is perhaps as unstable as in the market for sea, rail and air transportation. It has become simply impossible to guarantee the delivery time, in some places delays at border crossing points can be from 10 to 30 days, and therefore the attractiveness of vehicles is completely leveled. In some cases, the transit time may be the same or even exceed that of sea transport. At the same time, the tariffs for delivery by sea or by rail are one and a half times lower than road. Of course, all this has an extremely negative impact on production planning and the organization of supply chains in general.

    The reasons for the instability in the Chinese logistics market are quite simple. For container trains, this is a large workload at BCPs, associated with an increased volume of traffic, as well as a low level of exports from the EU countries to China. The situation is aggravated by the fact that Chinese companies give priority to returning empty containers to China, reducing the priority of exports from the EU. This entails difficulties with the return of railway fitting platforms at the borders of China with Kazakhstan and Russia.

    In the case of road transport, the main reason is the epidemiological situation. At some BCPs (for example, Pogranichny-Suifenhe, Pokrovka-Dunning and Turiy Rog-Mishan), only 20-40 vehicles pass dayly. At the same time, the throughput capacity of, say, the Kukuryki-Kozlovichi automobile BCP between the Republic of Belarus and Poland in two directions is about 2 thousand trucks a day.

    However, there are other negative factors affecting transportation by all modes of transport. For sea and rail shipments, the main, but not the only ones, are the lack of containers, high demand, overbooking (lack of seats on ships) and a number of others. As a result, the schedule of containerships departure is more and more delayed and postponed. As for the railway, there is no less problem – border crossing. Delays at the Erenhot-Zamyn-Uud, Manzhouli-Zabaykalsk, Alashankou-Dostyk BCPs can be up to 7 days. The border crossings, located even further to the East, are even more loaded, since they serve the flows of cargo not only to EU, but also to Russia and Belarus.

    The “factor of the Suez Canal”, which exacerbated the already difficult situation in the container transport market, still continues to exert influence. There is no reduction in freight rates, and seats on ships and trains are sold at lightning speed at any price. New negative factors are also emerging: the recent blockage of the Yantian port led to another logistical collapse, even more serious than the accident of the ‘Ever Given’ in the Suez Canal.

    Due to the fact that deliveries to the Russian Federation from China by rail could last for 40 or 50 days, some customers redirected their cargo flows to the sea and, in particular, to the port of Yantian. A new coronavirus outbreak in the southern province of Guangdong (one of the main points of global trade) has led to the closure of this port in Shenzhen from May 25 to May 31. Yantian was partially opened in early June, but only at 30% of the total capacity. The companies immediately tried to transfer their cargo flows to the ports of Shekou and Nansha, which led to their overload. In this regard, there were large delays in both deliveries and dispatches – up to two to three weeks. The problems with the availability of empty equipment in China must also be considered. Two huge container ports – Shenzhen (the third largest container port in the world, handling 13.3 million TEU a year) and Guangzhou (the fifth largest container port in the world, handling 15.6 million TEU a year) were almost completely blocked. According to average estimates, the consequences of this blocking, if mitigated by the end of the summer, will be felt at least until the end of 2021.

    The problem here also lies in the fact that rail transportation cannot be a full-fledged alternative. The current level of supply can hardly meet the market demand, and additional services will not be able to cope with the load. Those containers that are already in Yantian cannot be moved to another port, in particular due to strict Chinese legislation: customs documentation is issued for leaving a specific port, and it is almost impossible to make changes or issue a new document.

    Restrictions on the movement of trucks and lockdowns in areas around the ports of Huangpu and Foshan also affected rail transport. Warehouses located in the southern region of China have also come under insulation, making it difficult to find vehicles to leave. Hong Kong took over part of the cargo volume, but this did not improve the situation. Legal restrictions make it difficult to transport goods from China to Hong Kong for further transit to other countries, for example, to Poland. Drivers require a negative COVID test to enter all these ports, which also does not make life easier for transport companies.     The above situation will cause further delays in deliveries and their rise in prices for various scarce groups of goods: microcircuits, electronics and similar products, as well as others. Rates are set to rise and no improvement is expected anytime soon. It is likely that the situation with the blocking of the port will affect sea supplies and sea freight rates even more than the incident in the Suez Canal. Of course, this will also have an impact on the increased demand in the field of road and rail transport, however, unfortunately, the supply on the market does not meet the requirements of the customers.


The Khabarovsk Territory Is Considering a Project to Build a Large Port in the North of the Region

July 21, 2021

Investors are considering the possibility of building a port in the north of the Khabarovsk Territory, where a private railway will be constructed. This was announced by the Acting Governor of the Khabarovsk Territory Mikhail Degtyarev during a direct line.

“One of the companies plans to build a private railway to the Pacific Ocean, to the Sea of ​​Okhotsk, to the Chumikan region, not to Chumikan settlement itself, in any case, just nearby.

To build a seaport with 30 million tons capacity, in a deserted place, without harming the environment. A major investor, we certainly support this project, because these are jobs, these are cargoes, this is the generation of huge money and taxes to the region”, Degtyarev said.

The railway, according to him, was tentatively named as “Pacific”. This will be the northernmost railway line.

In early July, the proposal of the “ElgaUgol” company to build a railway line from the ‘Elginskoye’ coal deposit to the Okhotsk Sea coast was disclosed. Mr. Oleg Belozerov, the head of “Russian Railways” announced this during a meeting between Russian President Vladimir Putin and the government. “Russian Railways” are currently considering this project. The ‘Elginskoye’ coal deposit located in Yakutia is one of the largest in the world. The reserves of the deposit, according to the JORC classification, amount to 2.2 billion tons of coking coal.


Transit of Russian Coal via the DPRK Has Resumed

July 20, 2021

In the face of high coal prices, Russian exporters decided to return to delivering coal to North Korea, despite the need for mandatory coordination with the UN agencies and the potential risks of sanctions. In the first quarter of 2021, for the first time since 2018, 15 thousand tons of coal were supplied from Russia to the DPRK, which were then probably redirected in transit to China via the port of Rajin. Analysts remind that in conditions of a shortage of transshipment capacities in the Far East, Rajin has its advantages, but not for all exporters they outweigh the fear of sanctions.

High coal prices and a lack of export capacity in the east of the Russian Federation have led to the resumption of Russian coal deliveries via the DPRK. According to statistics from the Eurasian Economic Commission (EEC), in the first quarter of 2021 Russia delivered 15 thousand tons of coal worth $836.700 to North Korea by rail. Based on the available statistics, Russia previously exported coal to the DPRK from 2011 to 2017.

The point of these shipments is to use the North Korean non-freezing port of Rajin with annual throughput capacity of 5 million tons, in operation since the end of 2013, for further export of coal. Railway communication with the port is carried out along the Khasan-Rajin railroad line. From the port, coal can be delivered to South Korea and China. The project is managed by the “Rasoncontrans” joint venture, 70% of which is owned by the Russian side (represented by “Russian Railways”), and 30% by the DPRK.