Out of reach: exports to APR stuck in infrastructure

- The Far East Basin is turning into Russian logistics’ key basin. However, its development used to feature a single-minded focus: coal used to account for the bulk of cargo while handling of containers intensified only after the pandemic-related surge of freight rates on traditional deep sea routes between China and Europe.

Russian Railways says it has failed to redirect at least 12 million tonnes of export cargo to the eastern routes this year due to the lack of facilities for handling of mineral fertilizers and grain in the Far East ports.

In our opinion, the problem is not only and so much in port facilities but in insufficient capacity of railway approaches to the Far East ports.

First of all, coal is still in demand: amid the fall of deliveries to Europe due to sanctions, coal exports are being redirected to the APR markets and, consequently, to the Far East. The state will give priority to coal since social and economic wellbeing of some regions, namely Kuzbass, depends on it. Nobody wants to see the situation with miners banging their helmets to repeat as it was in 1990s in the center of Moscow.

Secondly, conversion of port facilities, especially those intended for dry bulk cargo, can be conducted quite quickly while expansion of railway capacity is not that easy.

Our conclusion seems to be obvious: it is necessary to focus the efforts on expansion of railway infrastructure. If it is sufficient, the ports not be slow in coming.