MULTILATERAL COOPERATION IN THE FIELD OF RAILWAY TRANSPORT AND LOGISTICS IN THE NEA REGION

Anna K. Voronenko

Admiral Nevelskoy Maritime State, Vladivostok

Aleksandr N. Gavrilov

Admiral Nevelskoy Maritime State University, Vladivostok

Sergei M. Smirnov 

Admiral Nevelskoy Maritime State University, Vladivostok

Nikolai I. Pereslavtsev 

Admiral Nevelskoy Maritime State University, Vladivostok

Abstract: The article analyzes the experience of existing cooperation projects in the field of railway transport and logistics in Northeast Asia. Special attention is paid to the projects with the participation of the two Korean states and Russia. Specifics, shortcomings and problems were assessed; conclusions were drawn regarding the feasibility of new international mechanisms capable of responding to new global and regional challenges and adapted to the specifics of the NEA region.

Keywords: railway turnover, NEA, GTI, ITC, transport integration, regional transport network, spatial logistics, strategic partnership 

Authors’ Foreword

The article contains individual results of research studies conducted by the authors in 2018-2024, including within the framework of the GTI program. During the studies, a large volume of information from the media and scientific publications was analyzed, and representatives of government bodies and the railway community of Russia were interviewed.

INTRODUCTION

Russia’s geographical position objectively makes its territory a connecting bridge between East Asia and Western Europe. Historically, the main transport routes serving the trade between East and West (nobody had heard of the American continent at that time) passed further South – “Silk Road” through Central Asia and the sea route through the South China Sea, the Indian Ocean, bypassing the Cape of Good Hope into the Atlantic Ocean, the Mediterranean, North and Baltic Seas. Since then, the economic geography of the world has changed radically. The “Southern” sea route, which became significantly shorter after the construction of the Suez Canal, is currently the busiest transport communications line in the world. Its capacity is limited by bottlenecks, the occurrence of problems in which affects the entire system of global logistic chains. The reincarnation of the land-based “New Silk Road”, despite China’s efforts to promote its ‘Belt and Road’ mega project is facing serious challenges due to a number of political and strategic reasons. 

For the same reasons, the development of transcontinental transportation along routes passing through Russia and the adjacent waters of the Arctic and Pacific Oceans is becoming a priority task. In this area, the economic and domestic political interests of the NEA countries do not conflict, but complement each other. 

For Russia, the development of transport and logistics infrastructure and the increase in international transit traffic will contribute to the accelerated economic development of the Far East and Siberia, an increase in living standards for local residents and the improvement of transport connectivity over a vast territory from the Sea of ​​Japan to the Arctic coast. In contrast to the currently prevailing raw materials export-oriented economic model, the development of the transport and logistics industry is much more attractive for Russia for reasons of environmental protection, spatial development of sparsely populated and economically depressed territories and the possibility of real mutually beneficial integration into the NEA economic system. For the Republic of Korea, Japan and the PRC northeastern provinces, the possibility of transiting export cargo through Russian territory will make it possible to reduce delivery time and diversify supply chains, increasing their competitive advantages.

Modernization of the transport and logistics infrastructure in the southern regions of the Russian Far East, if it is carried out in coordination with neighbors in the region, will have a multiplier effect on the economy of NEA and will contribute to the stabilization of the political situation, the development of humanitarian ties and, ultimately, the promotion of regional integration that does not violate national sovereignty. In particular, the implementation of the concept of NEA unified transport and logistics network will contribute to achieving national reconciliation on the Korean Peninsula, accelerated economic development of relatively depressed territories in the Japan Sea basin.

 In general, the development of the transport and logistics system in the Russian Far East does not create competition for other routes of global cargo flows, but complements them. This especially applies to cargo transit via the Northern Sea Route. 

With regard to modes of transport on Russian territory, we should note that the Trans-Siberian Railway (TSR) retains a leading position in the market of trunk freight transportation. Being the longest rail route in the world, the TSR makes maximum use of the advantage inherent in railways – the cost of transportation is inversely proportional to the distance to the final destination.

At the same time, its capacity to ensure accelerated delivery of transit cargo from NEA to Western Europe is clearly insufficient today. The Baikal-Amur Railway (BAM) is of little help in this regard, since it is generally oriented towards the transportation of natural resources to the ports of Khabarovsk Territory. The planned large-scale modernization of both railways will allow them to increase their capacity and the rhythm of their work to some degree, but will not be able to fundamentally resolve the situation with international East-West transit. 

Two factors, one objective, the other subjective, complicate the development of rail transportation in the territory of the Russian Far East. The objective factor is hidden in the very nature of the railways: there is no universal rolling stock capable of equally successfully transporting liquid, bulk, general cargo and containers. The structure of cargo transportation on the TSR in the Eastern and Western directions is fundamentally different. Coal, oil products and grain are mainly transported to the East, while containers, vehicles and other general cargo are transported in the Western direction. Therefore, a huge idle run of rolling stock, uneven filling of access roads at individual stations, and a periodic shortage of the required cars on various sections of the road are inevitable.

The subjective factor is the current speculative situation in the cargo transportation structure with a disproportionate predominance of coal. Russian coal mining companies are rushing to take advantage of the favorable situation on the coal consumption market in the countries of East and Southeast Asia, for which they are buying up terminals in sea ports and massively increasing the transportation and handling of coal even at non-core berths. This creates a difficult situation for all participants in the transport and logistics market, including railway workers and port workers. The opportunistic reorientation to coal handling, advantageous in tactical terms, is capable of causing great damage to the normal development of the industry in the medium term. 

By early 2025, the dire predictions for coal exports were coming true…

Therefore, it is necessary to achieve the right balance between modes of transport, determine priority areas for the construction of new and modernization of existing industry infrastructure, apply flexible regulatory and tariff policies in order to stimulate positive trends in the transportation structure, and maximally implement digitalization and modern methods of creating seamless logistics schemes. It is almost impossible to achieve this exclusively within a national framework. The globalization of the world economy and trade is an objective thing, and no pandemic can cancel it. For this reason, as well as taking into account the inherent need for transport to work in conjunction with similar structures in neighboring countries and the increase in the share of international transit traffic, participation in the work of regional and international transport organizations is considered one of the priority areas. 

          OSJD and EARC: common features and differences

JSC “Russian Railways” (RZhD) is the owner and infrastructure operator of the Russian railway network, 100% of the company’s shares belong to the state. Therefore, RZhD represents the Russian Federation in almost all international initiatives. At present, JSC Russian Railways cooperates with the following organizations: Council for Railway Transport of the CIS Member States, Organization for Cooperation between Railways (OSJD), ESCAP, ITC UNECE, International Union of Railways (UIC), International Railway Committee (CIT), Coordinating Council for Trans-Siberian Transportation (CCTT), BRICS Business Council. 

It is worth noting that OSJD is a vertically integrated structure created in cooperation with countries with a 1520 mm rail gauge (primarily the countries of the former USSR), and aimed at harmonizing and increasing transportation by creating a single Eurasian logistics space based on railways, which covers territories from the Baltics to Vietnam. This organization is quite structured, has existed for 65 years, and has successfully survived several serious political cataclysms during this time, thereby proving its viability and relevance. [1]

The East Asian Railway Community (EARC) initiative, as far as we understand, emerged for other reasons, in completely different historical and economic conditions, and has a mission that is not limited to purely technical issues of railway transport operation. The idea of ​​creating EARC was initially voiced by the President of the Republic of Korea Moon Jae-in on August 15, 2018.

Retrospective analysis gives grounds to assume that the EARC concept, which combines elements of technology, economics and politics, was chosen as a logical development of the strategic vision by RoK leadership, corresponding to the growth of its role and authority in the world. Moon Jae-in, upon assuming the presidency, initially turned to regional issues, announcing the “Nine Bridges” strategy at the Eastern Economic Forum in Vladivostok in September 2017. However, this concept was too vague, sought to include everything possible, and was also not transformed into specific action plans. 

The EARC initiative, judging by its name, is declaratively regional and specialized in nature, but its goals go far beyond the NEA and the railway industry. Its emergence was largely due to a certain euphoria from the rapidly accelerated inter-Korean dialogue since the beginning of 2018 and the triumph of the Pyeongchang Winter Olympics. EARC is aimed at integrating the railways of the NEA countries, primarily the restoration of the Trans-Korean Railway (TKR) and its connection with transcontinental roads passing through the territory of Russia, China and Mongolia. In addition to railway projects, the EARC concept provides for support for a number of other multinational integration projects, including those not directly related to the transport sector. [2, 3]

Despite the fact that both the OSJD and the EARC initiative are aimed at intensifying cooperation in the field of railway transport through multilateral cooperation, the OSJD format does not allow for taking into account the specific features of the NEA region. 

The Russian view on the problem of restoring the TKR

As part of the implementation of agreements on the creation of a railway corridor connecting the North and South of the Korean Peninsula, in accordance with the Moscow Declaration of 2001, RZhD implemented the Khasan-Rajin project in 2008-2014, which included the reconstruction of a 54-km section of the railway from the Khasan station (Russia) to the port of Rajin (DPRK) and the construction of a transshipment terminal in Rajin. The overall capacity of the Khasan-Rajin project is designed for 5 million tons of cargo per year.

Initially, the idea of ​​the project implied that with its help the Republic of Korea could obtain:

– direct and fast transit access through the DPRK territory to the Northeastern provinces of China;

– access to transcontinental transportation of goods to Europe along the TSR;

– opportunity to diversify foreign trade exchanges and reduce dependence on traditional partners. 

In turn, the DPRK will have additional sources of foreign investment through transit payments to expand production capacity and raise the living standards for its population. 

The TKR restoration could benefit for Russia in the following ways: 

– firstly, the launch of multilateral trade and economic cooperation within the framework of TKR project would reduce the degree of military and political tension in the strategically important region near its borders. In addition, Russia will ensure the possibility of a permanent economic, and in the future, geopolitical presence there;

(End of introductory fragment)