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Round table on the Korean Peninsula was held by MSU(N) and GPPAC

Maritime State University together with Global Partnership for Prevention of Armed Conflict (GPPAC) convened an online roundtable on the Korean Peninsula on August 13. Scholars and NGOs from China, Japan, South Korea, Russia and the US took part in the discussion. The presentations by Korean speakers covered issues such as prospects of economic and social development of the DPRK in the conditions of the ongoing pandemic, Moon Jae-in’s policy and Inter-Korean relations. 

The very fact that round tables of such a kind are only possible in virtual format shows how pandemic has changed our world, way of life and communication. Not to mention negative impacts of ongoing pandemic on global economy, policy and international relations. It is impossible to find a country, which was not affected by global economic recession due to pandemic. As for the DPRK, its economy had been problematic and developing slowly due to the sanctions and pressure even before the pandemic. So it is logical to suggest that in the present situation when the borders are closed and all foreign trade is curtailed, the DPRK suffers from the economic crisis. It is evidenced, for example by mentioning another Arduous March by the country’s state media. Previous Arduous March of the end of 90s led to the grave economic crisis and even human losses. Of course, the DPRK could achieve some successes in its economy for the two last decades and could become less reliant on the external aid. At the same time since the DPRK closed its borders with China last year it has become deprived even of that modest aid. Voluntary self-isolation and natural disasters resulted in the food crisis in the country. Lack of advanced disinfection equipment and sanitizing frames on the borders makes it risky for the DPRK to open the borders even for the humanitarian aid. 

As for ROK, it can be considered one of the most successful country in terms of overcoming the pandemic. However, uncertainty remains around new president and administration who will assume the power in the country next March. This issue is especially important because new president in ROK usually declares a new course towards the DPRK and Inter-Korean relations. Since all the previous approaches to the DPRK reached impasse, the need for a new course is especially urgent. At the same time breakthrough in Inter-Korean relations does not solely depend on South Korean president. There are many other factors like domestic policy considerations in the DPRK, interests of China and allied relations between the US and ROK.

“Rosatom” Proposed to Develop a Large Container Transportation Corridor Based on the Northern Sea Route Waterways

August 5, 2021

The nuclear icebreaker fleet and all projects on the Northern Sea Route (NSR) are developing “even faster than we planned,” said Mr. Alexei Likhachev, Director General of the State Atomic Energy Corporation “Rosatom”, at a working meeting with Russian President Vladimir Putin on August 4, 2021. He addressed the President with a proposal to develop a large container transportation corridor based on the NSR waterways (as follows from the transcript of the working meeting published on the Kremlin’s website).

“We … see very serious growth in all three areas: this is the actual icebreaking support of our export projects – oil, gas, coal, metallurgical; this is, in accordance with your instructions, an increase in domestic cabotage, that is, transportation within our huge country, within the territory, along the Northern Sea Route; and we are counting on a large increase in transit, ”said Alexei Likhachev.

He stressed that Russian projects in this area are of great interest in the world. This is facilitated by the growth of world trade, and incidents like the one that happened in the Suez Canal.

“And we would like, with your consent, to start developing a large-scale container transportation corridor on the basis of our Northern Sea Route project. On the one hand, we will use the entire infrastructure of the NSR that has already been created, we are already spending money on it – both budget money and state corporations’ financial assets”, suggested Mr. Likhachev.

“On the other hand, this is a completely new level of business, a completely new level of economic positioning of both the “Rosatom” state corporation and our entire country. Moreover, this is an objective benefit for the world economy. In this sense, we see certain possible deficiencies in icebreaker support, we have prepared appropriate proposals, and we will present them to you today”, he noted. “Rosatom” is the unified infrastructure operator of the Northern Sea Route in accordance with the “NSR Infrastructure Development Plan until 2035”, approved by the government of the Russian Federation.


FESCO Started Seasonal Cargo Transportation to Chukotka

August 3, 2021

FESCO has started seasonal cargo transportation from the ports of China and the USA to Chukotka as part of the FESCO “Arctic Line” (FAL) container liner service.

The first ship departed on August 1 on the route Taitsang (PRC) – Provideniya – Pevek – Provideniya – Yantai (PRC). It will transport over 14 thousand tons of cargo, reported the FESCO press service. The operation of the line will be provided by multipurpose ice-class vessels ‘FESCO Ulysses’ and ‘FESCO Paris’, which will make four voyages from July to October inclusively and will deliver about 45 thousand tons of cargo. In China, the ports of call of the line are Qingdao, Taitsang and Yantai, in the USA – Everett, and in the Far East of the Russian Federation – Provideniya, Pevek, Vladivostok, Vostochny.

More than 1 thousand TEUs, as well as about 10 thousand tons of flotation concentrate was transported in 2020 in the framework of FAL. It complements the existing service of the FESCO “Anadyr Direct Line” (FADL), connecting the port of Vladivostok with the ports of Chukotka – Anadyr and Egvekinot.

FESCO Transportation Group Is one of the largest private transport and logistics companies in Russia with assets in the port, railway and integrated logistics business. FESCO’s diversified portfolio of assets allows for door-to-door delivery of goods and controls all stages of the intermodal transport chain. The group owns the Vladivostok Commercial Sea Port, the “Transgarant” railway operator, and the “Russian Troika”, an operator of fitting platforms. FESCO operates dry terminal complexes in Novosibirsk, Khabarovsk and Tomsk. The Group manages about 50 thousand containers; the fleet of fitting platforms is more than 7 thousand units. The Group’s ship assets include 18 transport vessels, which mainly operate on its own sea lines.


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.


Sakhalin authorities intend to complete the reconstruction and expansion of the port of Korsakov by 2026

June 23, 2021

In total, there are 11 checkpoints across the state border in the region.

The Sakhalin authorities intend to complete work on the reconstruction and expansion of the port of Korsakov by 2026, Governor of the Sakhalin Region Valery Limarenko told TASS.

“The plan of expansion of the operating port of Korsakov includes a container terminal, a passenger terminal, a mixed dry cargo terminal, and a seafood terminal. It is planned to complete the implementation of the project and put it into operation by 2026”, the head of the region said.

According to the governor, in total, there are 11 checkpoints across the state border of the Russian Federation in the Sakhalin region. One of them is located at Yuzhno-Sakhalinsk (Khomutovo) airport, 10 others are in seaports and terminals, including those on the Kuril Islands. “The existing infrastructure of cargo checkpoints meets the needs for export and import, including hydrocarbons and coal. At the same time, passenger checkpoints require reconstruction in order to provide high-quality services to passengers and for the comfortable work of state control bodies – border service, customs, and so on. This applies to checkpoints at the seaport of Korsakov and at the Yuzhno-Sakhalinsk airport”, Limarenko said.

In early June 2021, Deputy Prime Minister of the Russian Federation, Yuri Trutnev, said that the lag in the construction, reconstruction and equipping of checkpoints across the border of the Russian Federation on the territory of the Far Eastern Federal District negatively affects international economic relations and the implementation of investment projects. He demanded that the regional authorities pay attention to these objects in their respective regions.

At the end of September 2021, Valery Limarenko announced the plans to create a large logistics hub of the Northern Sea Transport Corridor on the basis of the port of Korsakov. As part of the project, it is planned to increase the total cargo turnover of the port from 1.6 million tons in 2019 to 30 million tons by 2030, including container traffic – from 1 million tons in 2019 to 24 million tons by 2030. It is also planned to implement a project for bunkering ships with liquefied natural gas (LNG) in the port area.


Coal to Japan makes up one third of all traffic volumes on the Trans-Siberian Railway

June 17, 2021

JSC “Russian Railways” has provided figures on foreign trade traffic between Russia and Japan at the Russia-Japan Business Dialogue session held on June 5 at the St. Petersburg International Economic Forum. Bilateral traffic constitutes a significant part of the entire freight operations of Russian railways.

“In 2020, the volume of foreign trade traffic between Russia and Japan reached a record 50.2 million tons, which is 5.4% more than in 2019. Export of Russian coal to Japan of 48 million tons is almost a third of all traffic volumes on the Trans-Siberian Railway”, said Sergei Pavlov, First Deputy Director General of Russian Railways. In January-April this year, the growth of transit container traffic in communication with Japan amounted to 88% compared to the same period last year.

At the beginning of this year, a representative office of Russian Railways was opened in Tokyo. Its tasks include promoting the holding’s transport and logistics services, strengthening investment, technological and scientific and technical cooperation.

Development of the project of the end-to-end logistics service TransSiberian LandBridge is worth paying special attention. The project ensures the delivery of cargo from Japan to Europe twice as fast as by sea, without increasing its cost, S. Pavlov noted. In November-December 2020, within the framework of test container traffic on the Transsib, the dispatch of a full-set container train with Japanese cargo to European consignees was successfully implemented.