The TransSiberian Railway Route: Connecting East Asia and Europe by Rail

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The Trans-Siberian Railway Route Connecting East
Asia and Europe by Rail

• Hisako Tsuji
• Senior Fellow
• Economic Research Institute for Northeast Asia
  (ERINA)
• Presented in the WORLDNET Seminar
• Beijing, May 8, 2008

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Contents

• Overview of the Trans-Siberian Railway route
• Trans-Siberian Railway
• International Container Transport on the
  Trans-Siberian Railway
• Mechanism and characteristics
• Maritime and rail transport portions
• History of TSR International container transport
  to/from East Asia
• From transit to bilateral transportation
• Reflecting booming Russian economy after 2000
• The new business model of the TSR route
• Project Cargo
• Future business development opportunities for the
  TSR route
• Issues concerning the TSR route

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The Trans-Siberian Land Bridge Network
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Overview of the Trans-Siberian Railway

• Russias main artery linking European Russia and
  Vladivostok
• Distance from Vostochny
• Moscow 9,314km, St. Petersburg 9,713km, Brest
  9,839km Buslovskaya 9,874km
• Branch lines
• To DPRK, China, Mongolia, Kazakhstan
• Infrastructure
• Broad gauge (1,520mm) along its entire length
• Broad gauge is also used in CIS, Baltics,
  Finland, Mongolia
• Electrified along its entire length
• Double-track is completed except the Amur River,
  near Khabarovsk plans to make it double-track by
  2009
• Transport performance and capacity
• Transport performance (2005) 72.2 million tons
• Spare capacity is around 30
• Volume of container transport (2006) 424,021 TEU
• Speed
• Average speed for freight transportation
  45-55km/h, 1,200km/day
• Minimum transit times from Vladivostok to Moscow
• 7 days by a passenger train, 11 days by a
  container block train

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International Container Transport on the
Trans-Siberian Railway

• International Multimodal Transport System
• Marine transport Russian port Russian railway
  railways in various countries
• Numerous players forwarders are in charge of
  control and combine various charges
• Shorter distance compared to the Deep Sea route
• Japan Moscow ½ of Deep Sea route
• High-speed services using block trains
• Faster than the Deep Sea route for transport from
  Japan/ROK to Finland, East Europe and
  destinations in Russia/CIS
• Japan Moscow 20-25 days by the TSR, 40-45 days
  by the Deep Sea
• 3 routes can be used from East Asia
• Russian domestic
• Central Asia
• European transit

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The Maritime Transport to Vostochny PortApril,
2008-Busan is the actual hub port of East Asia,
and fairly large volume of Japanese and Chinese
containers are transshipped at Busan
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The Maritime Transport to Vostochny Port
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Vostochny Port Container Terminal
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Rail Transport

• Block Trains
• Formation 100 150TEU
• 80f wagons (40f x 2 containers) x 38 152TEU
• Length Max 1,000m
• Transit times 11 days to Moscow from Vostochny
• Major operators
• TransContainer, Russkaya Troyka, F.E. Trans,
  DVTG, Eurosib
• Major routes from Vostochny
• Moscow, Novosibirsk, Taganrog (Hyundai), Izhevsk
  (KIA), Naberezhnye Chelny (Ssang Yong),
  Uzbekistan (GM Daewoo), Ulyanovsk (Isuzu)
• Major European routes
• Berlin Moscow, Latvia Kazakhstan
• Ordinary Trains for small lot cargoes
• Tracing information can be obtained on a daily
  basis

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Block Trains Departing Vostochny Port
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Four Eras in the History of TSR International
Container Transport (1) (2)

• (1) Land Bridge era 1970s-1980s
• Transit cargo from Japan to Europe and Middle
  East, established in 1971
• Soviet Union set low transit charges in order to
  secure foreign currency about 30 lower than the
  Deep Sea
• Benefited from the unstable political situation
  in the Middle East
• 1983 Container volume reached 110,683 TEU
  (filled only)
• (2) Period of chaos 1990s
• Service deteriorated after the collapse of the
  Soviet Union
• The route lost its economic competitiveness
  versus the Deep Sea route
• The Deep Sea rate declined due to technological
  progress and market competition

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Transit Cargo Originating in or Destined from
Japan 1971 2006 (filled containers only, data
from TSIOAJ)
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Four Eras in the History of TSR International
Container Transport (3) (4)

• (3) Recovery period From 2000 onwards
• Booming Russian economy and active demand for
  imports
• Growth due to increase in export cargo shipped
  directly or via Finland transit from the ROK and
  China to Russia
• Electrical appliances, consumer goods,
  automobiles
• Improvement in rail services
• Congestion on competing routes
• Outdated Port of St. Petersburg and crowded
  Finnish route
• (4) From transit to Russian import/export 2006
  onwards
• Sharp decline in Finland transit cargo due to the
  abolition of preferential charges for transit
  cargo
• switching to the Deep Sea route for transport to
  Finland, or being exported directly to Russia
• Local production in Russia by automobile
  manufacturers from the ROK is accelerating ? TSR
  route is used for shipments of production parts

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Volume of International Containers Handled at
Vostochny Port - About 30 of total or 75 of EB
were empty containers
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TSR Cargo Volume by Direction (filed containers
only) - WB EB 88 12 (2007)- Problems
include the development of EB cargo and the
effective use and return of empty containers
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TSR Container Volume Handled at Vostochny PortBy
Country (filled containers only)ROK China
Japan 68 29 3 (2007 est.)
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Transit versus Bilateral Transit is vanishing
after rail fare increase in 2006
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Component of Bilateral Cargo handled at Vostochny
Russian imports (including imports of Central
Asia) are jumping up
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A New Business Model of the TSR Transportation
Targeting Project Cargo

• Focused on production parts delivery of FDI
  companies
• ROK Hyundai, KIA, GM Daewoo, Ssang Yong, LG
• Japan Isuzu, Toyota, Nissan, Suzuki
• Europe FIAT, VW
• Fast and on-time delivery by block trains
• Avoiding congested St. Petersburg Port or Finnish
  route
• Russian operators supply containers
• TransContainer, Russkaya Troyka, F.E. Trans etc.
• Smooth customs clearance assuming certain volume
• A single document for clearance of an entire
  train
• Competitive rate assuming certain volume

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Future Business Development Opportunities of the
TSR route

• Project cargo from Japan is expected
• Toyota started production at St. Petersburg (Dec.
  2007)
• conducted 4 trial shipments using the TSR route
• Nissan and Suzuki will start production at St.
  Petersburg in 2009
• Komatsu will start production at Yaroslavl (2010)
• Project cargo from European manufacturers will
  grow
• Chinese cargo to Russia and Europe
• Via Manzhouli/ Zabaikalsk, Mongolia, Kazakhstan
• Delivering cars from Japan/ROK to Russia and
  Kazakhstan using the TSR
• RailTransAuto plans to develop Zarubino Port as a
  vehicles transshipment terminal
• Finnish route has been used for delivery of new
  cars to Russian market from Japan/ROK but is
  crowded and time consuming

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Increasing Japanese export of passenger cars to
Russia looking for alternative export routes
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Issues Concerning the TSR Route

• Price competitiveness
• TSR is higher than the Deep Sea from Japan to St.
  Petersburg and Moscow
• Competitive rate will be the key for reviving a
  transit transportation, connecting East Asia and
  Europe
• Seamless service
• Need to simplify customs clearances and introduce
  EDI
• Service for small and medium-sized consignors
• Project Cargo model is focused on large
  consignors
• Infrastructure
• Port facilities, capacities of forming block
  trains
• Risk management
• Hyundai uses alternative route (Deep Sea) in
  parallel to pitch the two routes into competition
  and also offset the risks

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Thank you !