Webinar recap: three updates for the Silk Road situation
– 21 September 2023 –
War in Ukraine has made the transit route via Russia a delicate choice. Legal-wise, most of the products can still be transhipped via rail crossing Russia; in practice, European companies remain critical and hesitant to do so. Can the Middle Corridor continue serving the market? Opinions vary, and we summarised three key takeaways from last week’s RailFreight webinar in case you missed it.
Yerzhan Nauruzbayev, Director of the Business Transformation Center at KTZ; Irakli Danelia, Central Asia & Caucasus Region Business Development Manager at Maersk; Dmitrij Hasenkampf, General Manager of Sales and Business Development at RTSB and Miłosz Witkowski, Railfreight Director at PFC, joined the webinar and discussed how the Middle Corridor could reshape the current Silk Road situation.
Russian route matters
“Transport to China via the Middle Corridor does not make sense for European customers”, Witkowski said. Logistics-wise, the Middle Corridor crossing the Black Sea and Caspian Sea makes sense, but the transit time still lags. Hasenkampf shared that his company could deliver a Middle Corridor transit time between China and Europe from 45 to 70 days. Thus, for containerised traffic, the Middle Corridor still isn’t the most attractive option, given the almost identical or even longer lead time between the Middle Corridor and the Europe-China ocean route, needless to mention the price difference. “The containerised volume through the Middle Corridor dropped a lot compared to last year”, Danelia said. As a result, the market still relies heavily on the Russian route, though the volumes there have also dropped a lot.
Different stories in Middle Corridor
Though the Middle Corridor’s contribution to containerised traffic seems minimal, the corridor contributes to the overall volume of goods transportation, especially bulk products such as grain, metal and ore. “Export from Kazakhstan to Turkey, for example, has increased by five times, and import to Kazakhstan has increased by 25.2 per cent in this corridor,” Nauruzbayev added. KTZ recorded an 85 per cent increase for the first seven months this year compared to the same period last year.
Peace as the solution?
KTZ is confident in developing the Middle Corridor as a reliable logistic solution. Ports are planned to be deepened to make the ships navigable in the declining Caspian Sea water level, and joint ventures are announced for new terminal constructions. How much those efforts could divert the traffic from the Russian route is another practical question in the free market. Witkowski said peace between Russia and Ukraine might solve the current situation since traffic could return to pre-war levels. However, the sanctions will most possibly last longer than the war. Thus, the Middle Corridor will remain relevant for quite some time.
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