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Joint Site of Ministries of Foreign Affairs of BRICS Member States
Thursday, January 26, 2017

Chinese Exporters Turn to Russian Ports

Shippers moving goods from northeastern China to international markets are turning to Russian ports to capitalize on lower costs and shorter transit times compared to Chinese ports such as Dalian and Yingkou.

As a result, more than 20 contracts to move Chinese containers via Russian ports were signed during a recent gathering of shippers, shipping companies, and government officials in the Russian port city of Vladivostok.

Those signing the contracts were convinced by the overall 17 percent savings made possible by routing shipments from Heilongjiang and Jilin provinces through the Russian ports of Vladivostok and Zarubino rather than Dalian for transshipment at South Korean and Japanese ports. The price through the Russian ports, including rail, ranges from $330 to $370 per container, while through Dalian prices range from $400 to $450.

Shipments from Heilongjiang province to Vladivostok are about 25 percent cheaper than to Dalian and travel 186 miles fewer, saving between two and a half and three hours of transit time, while moving goods from Jilin province to Vladivostok is about 28 percent to 30 percent cheaper, according Kiril Orlov, head of the transportation company Russian Vezet.

One of the largest contracts signed at the event was between Russian Vezet and auto parts distributor Rossysko-Kitaysky Optovaya Company for 10,000 twenty-foot-equivalent units in 2017. The Chinese shipper of clothing and industrial products National Importer and Exporter of Light Industry Products will send 7,000 TEUs to eastern Russian ports this year and the Russian-Chinese Trade and Industrial Company is sending 5,000 TEUs.

These figures hint at the growing demand on Russia’s Primorye 1 and Primorye 2 transportation routes, which link China and Russia by rail. That demand growth is being helped along by Russian government subsidies, promised service improvements, and discounts for block trains passing through the Suifenhe-Grodekovo border crossing offered by Russia’s monopoly, RZD, according to Nikolai Maklygin, head of Far Eastern Railways, a branch of RZD.

“We offered customers transportation on a fixed schedule, which provides transportation from the Chinese city of Suifenhe to Vladivostok or Nakhodka-Vostochnaya in 13 hours,” Maklygin told JOC.com. “In 2017, transshipment traffic through the Grodekovo crossing point should increase three times.”

Traffic hauled across the Chinese-Russia frontier by Far Eastern Railways rose 13.5 percent year-over-year in 2016 to 11.5 million tonnes (12.7 million tons). At the Suifenhe-Grodekovo railway border crossing, traffic rose fivefold year-over-year to 2,900 TEUs.

Helping to fuel this growth is that China’s domestic rail network connecting the country’s northeast with ports in central and southern China is at a saturation point, with demand exceeding supply by 20 percent, according to conference participants. The resulting scarcity and operational challenges make using Russian railways and ports to access international markets that much more attractive to shippers.