Gleb Stolyarov

MOSCOW (Reuters). Despite the explosive rise in shipping costs, Chinese companies are sending more goods to Europe via rail. However, this growth is creating bottlenecks that strain network capacity and creating bottlenecks.

As countries rush to replenish stocks and export finished goods after the pandemic, international sea ports have become clogged up. Rail is an appealing alternative.

Russian Railways, the state-monopoly Russian Railways claimed that total container traffic through Russia rose 40% to 782,000TEU in the first nine month of 2021 (twenty foot equivalent unit), and may reach a new record this year at 1,000,000 TEU.

At the start of this year, the shipping cost for goods by container rail from Asia to Europe was two times as affordable as that by sea. The rail company stated that it has fallen to 3.5 times.

The bulk of growth was along China-Russia-Europe, where transit volumes rose 47% to 5,68,700 TEU in the first nine month.

Transport analysts and operators say that the rapid growth of transport has revealed infrastructure problems which may limit transit flows.

According to Alexey Bezborodov of Infraproject (a consulting firm that analyzes data and trends in infrastructure and transport), these include staff shortages, including crane operators and managers.

He said, “No one expected such a dramatic increase in transit traffic in the years before the pandemic.”

Delo, a transport and logistics company, told Reuters that cargo flow was constrained due to low capacity along the main railway lines as well as bottlenecks close ports and border crossings.

Another source for container transportation cited delays in bureaucratic procedures and technical issues at border crossings, where containers must be moved from one train to the next due to differences in track gauge.

LONG-TERM PLANS

Long-term plans have been established by the government to expand rail capacity. It was directed by President Vladimir Putin in 2018 to raise container transit capacity to 1.7million TEU by 2024. This represents a 4x increase on 2017 levels. Reuters has seen a draft of Reuters’ transport strategy. It shows flows increasing to 3.7million TEU by 2035. This will increase Russia’s share of Asia-Europe cargo traffic by 15%, from 4%.

Russian Railways will invest 200 billion rubles ($2.8 billion), between 2019 and 2024, in the “Transsib 7 Days” project. This project aims to cut cargo transit time, from Russia’s eastern borders to the western border of the largest country, to one week. It is an improvement on the current 11-14 day average.

The project, which Russian Railways as well as the government finance from 2013, is larger and more expensive than 700 billion rubles. It aims to increase exports of metals, coal and other commodities to Asian nations by expanding Transsib and BAM lines across Siberia.

The monopoly explained that the money will be used to build and increase the station capacity, and strengthen the electricity supply.

Delo, a transport operator, said that it was pleased with the investments in response to Reuters questions. Representatives from the company stated, “But objectively and subjectively, these measures are not implemented as quickly as we would prefer.”

($1 = 71.3230 rubles)