THE ROLE OF THE RUSSIAN FAR EAST IN THE DEVELOPMENT OF COOPERATION WITH ASIA-PACIFIC REGION AND IMAGE PROMOTION OF RUSSIAN “PIVOT TO THE EAST” POLICY:  MARITIME TRANSPORT ASPECT

Peter Yu. Samoylenko

Far Eastern Federal University, Vladivostok

Russian Society of Political Scientists, Moscow

Abstract: The article examines the features and prospects for the formation of modern international logistics image of the Russian Far East, when the role of transit logistics in the Euro-Asian direction through the easternmost Russian mega-region is constantly growing. The author notes that the formation of the international transport image of the Russian Far East has both historical roots and prerequisites, as well as modern reasons.  In today’s conditions, when the regional transport complex is in a state of transit cargo turnover reorientation from European ports to the Asia-Pacific totally new and advantageous features for the formation of the Russian Far East international image appear. A separate aspect is the Arctic projects and the prospects for a revival of merchant shipping along the Northern Sea Route. It should also be noted that in these processes the role of the modern high-tech economy and innovative solutions is very significant, therefore logistics complex gradually becomes the “calling card” of the entire region.

Keywords: “Pivot to the East” policy, Russian Far East, Asia-Pacific region, Northeast Asia, sanctions, Arctic, Northern Sea Route, international security, logistics, international image, transport, shipping, marine education, technology, maritime ports, transport corridors

Historical background

Due to its geographical location the Russian Far East has always been considered as a convenient way for transit international logistics. In the second half of the 19th century, the first military posts and seaports and together with them the first elements of transit logistics began to appear. Naturally, at first the cargo flow was rather small. But as we know now, already at that time the well-known Vladivostok businessmen: Yankovsky, Gek, Nansen and others were already working actively on the development of cooperation with China, Korea and Japan.  The main commodity export items were bio-resources – timber, seaweed, grain etc. The introduction of the “porto-franco” regime (1862) has significantly raised the role of maritime transport and seaports and the importance of logistics. Then the Trans-Siberian Railway has been constructed, the freight traffic from the Russian West to the Far East (and the importance of transit transport corridors, in general) increased even more. 

We can say that in the 20th century the entire history of the region’s development turned out to be connected with transit logistics.  Sea ports, ship repair and shipbuilding facilities were actively built and expanded. Commercial fishing was gradually developing, and soon became to be “built-in” into the system of international trade relations with the countries of North-East Asia.  

During the Second World War, through the territory of the Far East – Primorsky Region, Chukotka, Kamchatka, Yakutia – there was a flow of lend-lease cargo from the US for Russia. After the War the active development of largest seaports as transit logistics points began in the Far East: Nakhodka, Vostochny, Korsakov, Petropavlovsk – Kamchatsky, Magadan and others. This trend is clearly manifested at the beginning of the 21st century  [6].

To the author’s opinion, speaking about the historical trends in the development of the Russian Far East as a transit transport region, the following ones may be designated:

– Sea ports and coastal infrastructure have historically played one of the main roles in the region’s development;

– Marine and railway transport were always considered as a single communications network with access to Asian export-import markets;

– The region’s economy has always been linked to international cooperation, including both land and sea logistics, as well as inter-modal transport;

– The image of the region has always included the idea of “frontier” and the defense of Russian land and sea borders;

– Marine  transport and fishing traditionally were very important for the image of Far Eastern regions – Primorye, Sakhalin, Magadan, Kamchatka and Chukotka.

Today’s situation

Due to the regional geo-economic conditions [15], the development of the modern Far East is impossible without transit logistics [7]. The Far East occupies about 40% of Russian territory and includes at the same time only about 6% of its population. 

The rather harsh climate and vast territory initially make it highly unlikely to  achieve a high population density in the Far East. Moreover, the economic profitability of this goal has always been in question since the very beginning of the region’s development. At the same time, the region has obvious advantages in terms of geographical position, and these advantages should be used in its development. First of all, these lands contain a large number of mineral deposits as well as water and marine biological resources. Another area are the probabilities of transit and spatial logistics, which provide the chances for  development of the regional economics as a whole [8, 9].

Currently implemented “Eastern Vector / Pivot to the East” policy involves the active development of mining and manufacturing industries in the region and the export of products from such enterprises to the countries of the Asia-Pacific and the world as a whole. 

Another promising field is tourism, the development of which is also impossible without existence of logistics corridors and effective transport network within the region [1].

Thus, from the point of logistics, the current tasks for the region are the following: 

– Active development of transport infrastructure, both transit and external as well as internal transport corridors, roads and railways [17];

– Reduction of costs for internal and transit logistics by connecting industrial facilities and centers of economic activity with logistics networks [2.3];  

– Maintaining and increase of the region’s population, including high-quality migration from the Russian West;

– Development of domestic and inbound tourism;

– Education and popularization of marine, fishing, logistics, transport and engineering professions. As for education, we should take into account not only the current demands of the region’s economy, but also the trends of international logistics and changes in the global economic and trade systems;  

         Arctic

The Arctic is considered today as an absolute priority in logistics transportation processes from Europe to Asia and vice versa. Statistics confirms the importance of this transport corridor. For example, cargo traffic along the Northern Sea Route (NSR) in 2023 increased to record level of 36 million tons (in 2022 there were 34 million tons). According to experts, in 2024 and 2025 cargo traffic should increase to 80 million tons and it is quite achievable. Especially considering that the loading of NSR in new economic realities can be done in alternative ways that were not previously possible. 

The main cargoes transported along the NSR in 2023 were liquefied natural gas (LNG) and oil. Moreover, LNG from only one project – Yamal LNG – has a share of more than 50% in the total volume of cargo traffic. All these cargoes are of export nature [5].

The NSR also can be used for transportation of grain, timber and equipment supplies. In the near future, the first line and after it the second line of another Arctic LNG-2 plant, each of lines with a capacity of approximately 6.6 million tons should begin operations. This will add about 13.2 million tons per year to the load on the NSR.

At the same time, there is also “end-to-end transit” along the NSR, which includes only a small share of total traffic volume. It is characteristic that of the 2.1 million tons of transit cargo that passed through the NSR in 2023, about 1.5 million tons were oil transportation. And this is oil sent not from Arctic ports, but from the Baltic to China. Why? The route along the NSR is shorter. The other variant is the way from Baltic ports to China through the Suez Channel and the Red Sea. Is it convenient when the Middle East situation is regularly close to war? With all this in mind the NSR may become in future a good alternative.

To the NSR cargo flow may be added grain and timber as well as equipment for Arctic projects. It does not mean that the increase up to 80 million tons a year will be provided, but this is a goal to strive for, and reserve capacity must be ensured.   

Speaking in general, the above-mentioned goal may be achieved not only by exports but also by development of Arctic regions’ economy, population growth and even tourism.   Only transit and targeted transportation of cargo volumes, necessary for Russian polar regions  in 2024 will amount to 16.8 million tons [5].

The Arctic provides about 10% of Russia’s GDP and up to 20% of exports. This is not a big percentage. Polar territories occupy 28% of Russia, but 2% of its citizens live here.  Experts note that, for example, in Murmansk, the population has halved since the 1980s, while the local port handles about 80% of the cargo of the entire Northern Sea Route [4].

The prospects for hydrocarbons traffic along the Northern Sea Route seem quite optimistic. Oil and gas enterprises confirm their plans for geological exploration and production in the Arctic and sub-Arctic regions. In particular, by 2030 it is planned to transport 57 million tons of hydrocarbons along the NSR: about 20 million tons of oil, 4 million tons of gas condensate and 32 million tons of liquefied natural gas (LNG). In addition, significant growth of copper and coal transportation is expected. 

China shows a great interest in the NSR. The Chinese shipping company “New Shipping Line” requested ROSATOM to escort and support their passages along the NSR. They bought several low-class Arctic vessels and by 2023 shipped about 100 thousand tons of cargo through the polar routes. Final points of destination were the ports of China as well as Arkhangelsk, St. Petersburg and Murmansk. This is an example how international business does not wait for difficult political decisions but takes advantage of new opportunities.

Transit volumes are also growing. They returned not only to the level of 2021 (2 million tons), but also showed a new historical maximum – 2.129 million tons. In 2022 there happened 47 transit transportation passages, in 2023 this number achieved 80. According to experts [14] transit cargo flow is a marker of demand, its growth from the point of marine logistics is the most important result.

In general, it should be noted that Arctic projects require detailed study, and their implementation will require long-lasting and systematic efforts.

Port modernization

Current trends in the development of Far Eastern port industry, as it was earlier, look very positive [10]. Thus, in 2019 cargo turnover of Far Eastern ports increased by 6.5% and reached 213.5 million tons. Transshipment of dry cargo has grown most significantly (by 7.8%, to 135.3 million tons), bulk of which comes from coal. As well, container transportation shows not bad  growth rates – by 6.4%, to 1.8 million TEU. Transshipment of liquid cargo also increased ( 4.3% – up to 78.2 million tons). By the way, in 2019, volume of transshipment shipment was going up in all more or less large ports, excluding Prigorodnoye on Sakhalin, focused on liquefied natural gas (LNG) [16].

The fastest growth rates were demonstrated by Vladivostok ports – Commercial Sea port  (transshipment of containers) and Sea Fishing Port, besides, here Kozmino Oil Terminal may be added [11, 19]. In Vanino, Nakhodka and Vostochny, which are mainly focused on coal, the growth was more moderate.

As it was expected, the COVID year 2020 was more difficult, but showed similar trends. Despite all problems, cargo turnover increased by another 4.6% and amounted to 223.2 million tons. Transshipment of dry cargo continued to grow (by 8.5%, to 146.8 million tons), while Western restrictions on production and export of Russian oil resulted in a decline in transshipment of liquid cargo (by 2.3%, to 76.4 million tons). The reduction occurred in the oil port of De-Kastri, but in other ports transshipment increased, especially in Vanino and Vostochny. The growth of container turnover also continued, amounting to 7.5%. Import transportation turned out to be slightly larger than export transportation (609.1 and 550.3 thousand TEU, respectively), and the volume of international transit was small (73.8 thousand TEU).

Based on the above we see that Far Eastern ports successfully fulfill two demands at the same time, both for export and import transportation. As for transit transportation through the Russian territory, it becomes the most important, (though but not the most obvious) task and goal.  Currently, the probability of investments is mainly associated with the construction of new coal terminals and the renovation of old ones. This trend is directly related to  export demands of  Russian largest coal companies, but their implementation is still blocked by objective limits caused by the throughput of both ports and railways. Therefore, this is the main unknown factor when we begin to discuss periods  and  time frames in  the development of Far Eastern port facilities. There may be a lot of various statements but much less real steps [12]. Today, the construction and renovation of coal transshipment capacities in the port of Vanino, Sukhodol, Vostochny and Nakhodka are being continued. The problem with strategic investments to Port Vera is under resolve, there are prospects for transshipment volumes in Vera up to 20 million tons.

There is a trend for active engagement of ports oriented on the coal export not only from Siberia (Kuzbass) but also from Far Eastern regions with coal deposits. For example, the Sakhalin port Shakhtersk is rapidly growing. Russian “Eastern Mining Company” plans to make in near future in Shakhtersk considerable investments. Even today the shipments made by the company have increased by 21% to almost 11 million tons. By 2026 the volume is expected to increase to 20 million tons. The Beringovsky port in Chukotka is also growing, where coal transshipment in 2020 increased by 30% and exceeded 700 thousand tons. 

One way or another, the demand to renovate and expand the capacities of the Russian Far Eastern ports is directly connected with the plans of Russian coal traders.  On the one hand, there is an increase in coal transit transportation from Kuzbass (Siberia). On the other hand, Far Eastern regions also add to the growth of export volume.

Processing of grain cargo also seems promising. The Far East is also capable of making its contribution to the development of Russian grain exports. In the Primorsky Region there appeared a project of the port in Trinity Bay (in Russian – бухта Троицы) with the plans to establish here a grain terminal with capacity of 10 million tons per year. This is one of the key projects in the international transport corridor (ITC) “Primorye-2”.

As well, there are plans to build fishing ports in the Far East, because Russian fish producers here faced with enormous problems caused by temporary export suspension to China. For example, “Eurasian Fish Center” company intends to launch a new fish port complex in Vladivostok, with a turnover of 360 thousand tons.

 As for South Korean investors, they propose to build Podyapolsky fishing port on the eastern shore of the Ussuri Bay, with a capacity of 1.2 million tons. All this is related to fish processing. Therefore, we can suppose that for further export of processed fish to neighboring Russian and foreign regions will be growing. 

Each port complex is important not only in itself but also as point of growth for the economy of corresponding territories. A good example is  new oil port in the village of De-Kastri on the shore of the Tatar Strait in the Khabarovsk Region. It is here that “Rosneft” (Russian oil and gas company) plans to build its LNG production plant.

Another positive effect is the revival of Far Eastern shipbuilding, which found itself in a deep crisis after the USSR collapse. “Zvezda” shipyard in Bolshoy Kamen (where the construction of tankers and icebreakers, including for the needs of the Northern Sea Route) is becoming now the new leader of the industry.

According to Russian experts, in addition to “raw terminals” in the south part of Primorye Region there may appear a need for new container terminals.  Besides, Russia might take part in marine transit transportation of Chinese goods between Northeast China (Dalian, etc.) and ports on Eastern coast (Shanghai, Guanzhou, etc.). Nearly 15-20 years ago  the former project of  Zarubino port renovation was created to  implement this task and this idea may be useful again [18].

The Far Eastern port industry is gradually being involved into the state priority plans for  development of the Northern Sea Route and the Arctic as a whole. Russian president declared by his decree to expand the volume of cargo transportation along the NSR up to 80 million tons by 2024. Due to different circumstances this goal hardly may be achieved. Nevertheless, the NSR development is a chance for Russian Far Eastern ports, for example, in Kamchatka and in Sakhalin. These ports got a probability to obtain in near future transportation hubs. In Kamchatka, this process has already started – together with the construction of NOVATEK’s LNG terminal in Bechevinskaya Bay, (Kamchatka east coast, it is planned to reach its design capacity of almost 22 million tons of LNG after 2026).   A less obvious plan has been announced – to construct in the port of Korsakov (Sakhalin) a container hub with a capacity of up to 1 million containers per year. It is expected that the cargo turnover of this port will rise  from today’s 1.5 million tons to 30 million tons per year. The process of the NSR development also includes the ports of Chukotka with their own prospects: Beringovsky coal port and port of Pevek.

Thus, the trend towards renovation of the Far Eastern port infrastructure manifests itself quite clearly, and if above mentioned projects are implemented, they will significantly affect the formation of the Far East’s international logistics image.

Forecast and development scenarios for the medium-term future (until 2030)

When we discuss different ways of situation’s development it should be noted that these ways depend on a huge number of of market  (economic competition on world markets and its influence on world logistics) [18] and non-market factors (Western anti-Russian sanctions). 

In addition to above-mentioned, there are objective trends which increase the chances for the Russian Far East to  obtain the status of international transit logistics route. 

These factors  include the following: 

– The key partners of the Russian Far East in the Asia-Pacific have always been the leading economies of Northeast Asia – China, Japan and South Korea. This is also evident in the region’s culture – the citizens know and often prefer ethnic dishes (Korean, first of all), buy and widely use Japanese cars, make tourist trips to China;  

– Multimodal transportation (sequential movement of goods by several types of transport) is also, from  historical point of view, an important part of Far Eastern brand. Here, in Primorye, transcontinental railway route from Europe to Asia runs into Pacific Ocean and all cargo is reloaded for further shipment on marine vessels. And vice versa – Asian goods are loaded to railway cars and then are being delivered to Europe. This transit strategy introduced in the 1970s, becomes again very significant for the  region, taking into consideration Western sanctions against Russia; 

– Since 1950s the ports of Primorsky Region traditionally play an important role in  delivery of necessary fuel, consumer and food products to Russian polar territories and implementation of Arctic projects;

• In modern conditions, in order to obtain the status of an international transit logistics hub, Primorsky Region needs to develop transport-logistics complex as a modern and competitive sector of the economy; 
• Today Asia-Pacific Region is recognized as the world’s “most dynamically developing region” with concentration of the so-called “Asian Tigers” – China, Japan, South Korea, Vietnam, Malaysia, Indonesia, India. All of them are increasing export-oriented industrial production and are consumers of a large number of different natural resources. Thus, this creates a constant growing demand for transit logistics through the Russian Far East territory and in the future – along the Northern Sea Route;
• World population is rapidly growing. It automatically involves an increase in the consumption of natural resources and finished products which may be delivered to necessary places with the use international transport logistics (including the Russian Far East ports and the Northern Sea Route);

– The Russian Far East territory is promising for organizing “inbound”  (especially ecological) tourism. This provides additional opportunities for the region’s development, “qualitative” growth of incoming tourist traffic and “loading” of logistics corridors;

– The demand for resources and products that are exported from the Russian Far East or through its territory – timber, coal, metal, seafood, energy – is stable and, at least in the medium term, is unlikely to change significantly. This also gives reason to anticipate  high level of utilization for logistics capacities;

-For the last years Northeast Asia countries expand the directions of ready products, so  the volumes of transit import cargo flow, mainly associated with the container goods, are also gradually increasing in volumes;

-Russia is seeking to promote the system of end-to-end logistics both through the continent (Asia-Europe and vice versa) and along the Northern Sea Route because in case of success it’ll  make a significant contribution to the development of Siberia, Far East and all country as a whole. 

Thus, considering the above mentioned  factors, we can talk today about the following development prospects for the Russian Far East international logistics image in the period until  2030:

Positive — swift and efficient creation of the Russian Far East’s lasting international reputation  as a network of international transportation hubs in the Euro-Asian region, including  both transcontinental and Arctic routes (Vladivostok, Nakhodka, Vostochny, Petropavlovsk-Kamchatsky, Magadan, Korsakov);

Optimistic – rapid and high-quality formation of a sustainable international image of the Russian Far East as a set of international transport hubs in the Eurasian direction, including both transcontinental and Arctic directions (Vladivostok, Nakhodka, Vostochny, Petropavlovsk-Kamchatsky, Magadan, Korsakov);

Passive (Basic) – the image develops gradually, and the recognition of the Far East as a transit logistics region is formed only due to individual ports and knots in the entire transport network (Vladivostok, Nakhodka, Vostochny).

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