Historic First: Japan, Russia and the Trans-Siberian

Paul Goncharoff

Paul Goncharoff

For those who have been reading the several opinion scribbles I have posted regarding Russia business and my take on it, you probably noticed a shift towards Russia’s Far East. Geopolitics aside, the pragmatic business reasons for the steadily developing infrastructure of Russia’s eastern regions is no mystery or enigma. It is happening and the pace is quite dynamic even while remaining largely unreported. It remains under the popular business radars of our English-speaking world.

Aside from the Russian North Sea Route, or the several massive bridge building projects that are now underway, the tried and true Trans-Siberian Rail route has achieved a historic “first” just this week, (again with geopolitics aside).

Two Russian companies (FESCO and RZD Logistics) inaugurated in the Port of Yokohama Japan the first non-test shipment of goods containers from Japan. This is the start of what will evolve to be a regular intermodal transit service from Japanese ports to European countries via the Trans-Siberian Railway, or what some are calling the Trans-Siberian Land Bridge.

The future of regularly scheduled transit of goods from Japanese ports, trans-shipped overland through Russia to Europe begins. The first shipment is scheduled to be delivered in Europe within 25 days. Once run-in, the transit time will be approximately 20 days from Japan port to receiving points in Europe. Japanese businesses hold high hopes they will be able to regularly access this new commercial potential before the end of summer, hopefully before the 4th Eastern Economic Forum on September 11, 2019 in Vladivostok.

Why is this a big deal? To put some perspective on this business, it is over 2 times faster than sending the same goods by sea as has been traditionally done, it is also less costly and safer. The movement looks like this: Containers from Japan arrive at the port of Vladivostok, then are transferred to rail platforms which will take them through Russia to Brest. There to be loaded onto rail platforms for European destinations via Poland.

The future of steadily increasing growth of container transit traffic through the territory of Russia is significant, with Chinese goods maintaining a dominant share. Nonetheless, with the new Japan route now opening there will be an inevitable increase in transit cargo from both Japan and Korea through the territory of the Russian Federation. This is a niche that will be filled in time, especially if one considers that the total volume of containerized freight between Japan and Korea with Europe is about 5 million 20-foot containers (TEU) per year, it is not a stretch of imagination that 250,000 TEU or more per year will be using this new trade path in the nearest future. This is without a doubt a major, yet largely ignored growth area for international business, but not for long.