The head of one of Russia’s largest transport and logistics groups says that prospects are bright for trans-Russia continental transport to compete with deep sea Asia-Europe shipping

London, 21.05.2014 – Ruslan Alikhanov, President and CEO of FESCO, one of Russia’s largest integrated transport and logistics group, will tell delegates at the upcoming TOC CSC Europe conference that Asia-Europe trade is experiencing a shift from the deep sea route to transcontinental transit through Russia.  

Speaking ahead of TOC Europe, which takes place 24-26 June at London’s ExCel Centre, Mr Alikhanov said that “the Asia-Europe route includes significant trade turnovers between Russia and Asia, which will increase due to recent political tensions in Ukraine.” The continental transit route is already twice as fast as deep sea transport, said Mr Alikhanov, and a number of improvements will further boost its competitiveness in coming years.  

These include the reconstruction of the Trans-Siberian railway and the Baikal-Amur railway, which will double their throughput capacity; a freeze in railway tariffs; and the introduction of technology optimisation for customs clearance and port processes, reducing cargo time in port. “There are excellent prospects for reducing the cost of transport by land, which will further strengthen the competitiveness of alternative routes,” added Mr Alikhanov.  

FESCO’s intermodal transport volumes grew 17% in 2013, to 244,000 TEU. The number of express container trains operated by the company increased by 34%, averaging 25 trains per week, and the company is now laying plans to boost this to 40 trains per week. Key routes include Vladivostok to Moscow, Novosibrsk, Khabovsk and Yekaterinberg, plus transit trains to Uzbekistan.  

Mr Alikhanov also told TOC that the balance of power in the Baltic and Russia region has changed drastically due to the expansion of port capacity in Russia. This includes investment in St.Petersburg’s Petrolesport terminal – Russia’s second largest - and the greenfield development at Ust-Luga, both operated by Global Ports Group, now co-owned by APM Terminals. Container traffic in the Far East Basin of the Russian Federation grew by 16% in 2013, he said, compared to a 1% reduction in Baltic ports.  

New Russian port capacity has led several ocean lines, including COSCO, Hanjin and Yang Ming, to create their own feeder carriers in the region, added Mr. Alikhanov. “These feeders are integrated into the overall transhipment structure of the global carriers and act as a cost centre for the deep sea operator. Thus, ocean lines reduce costs on the short haul. In light of this, independent feeder carriers that operate as profit centres face tough competition in terms of price and cargo overflow to the “pocket” services of global carriers”.  

Read the full interview with Ruslan Alikhanov at   Ruslan Alikhanov takes part in the Market Briefing Session on “Ports and Liner Shipping across Russia & the Baltics”, taking place on 25 June as part of the TOC Container Supply Chain conference at TOC Europe 2014, 24-26 June’ ExCeL Centre, London.

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