By Rhod Mackenzie
The global reversal of Russian trade from west to east and south has taken place, the Federal Customs Service ( FCS) stated. The sanctions have helped boost trade with countries including China, India, Turkey and Azerbaijan. However, the drastic change in logistics have inevitably led to a number of new problems. Russia is on the verge of a new infrastructure boom, which is necessary for the further growth of the trade.
“It can be stated that the global reversal of our trade to the east and south has already taken place,” Ruslan Davydov, acting head of the FCS, said at a meeting with Prime Minister Mikhail Mishustin.
The customs service has upgraded the checkpoints on new routes so that they are not "bottlenecks, as it sometimes happened." “Five checkpoints have been switched to round-the-clock mode. The staffing level has been increased by 950 units, and we plan to transfer another 200 to the Far East direction. We are trying to minimize the load on the business at checkpoints, ”Davydov listed.
Previously, Davydov told which countries have replaced our trade with Europe. First of all, it is China, followed by India, Turkey and Azerbaijan. At the same time, trade with European countries has plummeted. So, has trade with the Netherlands which has fallen sharply - before this country was in the top three due to the transshipment of oil through the port of Rotterdam. Significantly decreased is trade with Germany, although this country remained in the top 10.
Due to sanctions pressure on Russia, the full export data is not fully disclosed.
Trade with China grew by a third back in 2022 to a record $190 billion. Deliveries from China amounted to $76 billion, from Russia - $114 billion (Chinese customs data). This year, the trade turnover is likely to exceed $200 billion. This $200 billion goal was set previously by senior management, but was not expected to be reached before 2024. Now we will see such a high figure this year.
Last year, Russia dramatically increased the supply of oil and petroleum products to India from virtually zero. As a result, in 2022, trade between the countries exceeded $35 billion, the Deputy Prime Minister Denis Manturov said. At the highest level, the goal was to reach the lower level of $30 billion and much later - only by 2025. But the sanctions brought Russia and India closer economically much faster. A new record is expected this year. In the first five months, the countries have already traded more than $27 billion, according to the Indian side. This is a record figure. For the first time, Russia was in third place among India's trading partners. In a year, trade turnover could easily double to $60-65 billion, while maintaining such growth rates.
True, there are difficulties here. Russia was able to increase exports to India, but India still exports very few goods to Russia, not even reaching $1 billion out of $27 billion in trade. This imbalance creates problems. For example, selling oil and oil products for Rupees has turned out to be a bad idea. This is a limited convertible currency that is not traded on the Moscow Exchange, and its exchange in large volumes requires the permission of the Indian regulator. As a result, rupees began to “hang” in Indian banks. If there were significant imports from India, then rupees could be spent on buying Indian goods. But imports are scanty. There is no such problem with China: oil is sold for yuan, which is traded on the Moscow Exchange, and these yuan are then used to purchase Chinese imports. Therefore, we are already agreeing with the Indians on the transfer of trade operations in yuan.
With Turkey, trade almost doubled to more than $68 billion in 2022. This is the maximum result in the history of economic relations between the two countries.
Previously, countries also planned to reach the level of 60 billion only by 2025. The main growth in exports to Turkey, of course, also comes from oil, oil products and gas, but non-resource non-energy exports are also growing. In 2022, it grew by 19% to $10.5 billion. For example, Russia supplies Turkey with wood, cellulose, timber processing products, as well as chemical industry products - plastics, rubber, etc.
In January-February 2023, Russia became the leader in terms of exports to Turkey, surpassing even China and Switzerland, according to the Turkish Institute of Statistics. In exchange for our products, Turkey sends products of its own chemical industry, Turkish vegetables, fruits, textiles and electronics to Russia.
Here, too, there is an imbalance in trade, although on a smaller scale than with India. Russian exports to Turkey doubled to $58.8 billion, while Turkish imports to Russia showed a 62% increase to $9.3 billion. With this result, Türkiye ranked second among importing countries.
Trade with Azerbaijan has increased by a quarter to $4.1 billion last year, the Russian Deputy Prime Minister Alexei Overchuk noted. This year it expects growth to $5 billion. The first results of the year confirm this forecast. Already in January-March, the two countries traded more than $ 1 billion, an increase of almost 70%, according to the customs of Azerbaijan.
On the one hand, the growth of trade cannot but rejoice, but on the other hand, there are logistical problems.
“Due to unfriendly actions and the departure of international logistics companies from the Russian market, a bias has arisen: the ports of the NWFD, historically focused on deliveries to Europe, suffered the most from the rupture of global logistics chains, and two other directions - Azov-Chernomorskoe and Vostochnoe - on the contrary, turned out to be are overloaded due to a sharp increase in turnover with friendly countries,” the press service of the Russian Export Center (REC) notes.
Therefore, it is the southern and eastern directions that require close attention and expansion of their capabilities under the unexpectedly collapsed huge export-import flow.
Work is underway to develop priority transport corridors. One of such important corridors is the “North-South”. Recently, an agreement was signed on the construction of a section of the railway in Iran, which will help organize a direct railway connection on the western route of the North-South ITC, providing the shortest transit access to the ports of the Persian Gulf and South Asia, the REC notes. And in the Northwestern Federal District, work continues to load port capacities by increasing the capacity of the merchant fleet and creating integrated deep-sea services to target countries.
“It is very important not to slow down the pace of improving the infrastructure of the two busiest directions - the Azov-Black Sea and the Eastern.
Here it is worth focusing on expanding road and rail approaches to ports, developing a network of rear terminals and optimizing the administration of cargo flows with neighboring countries,” the REC points out.
Work is being carried out simultaneously along several international transport corridors, which will increase the volume of transportation, reduce time, simplify border crossing, and therefore reduce costs for business, said Dmitry Baranov, a leading expert at Finam Management.
In particular, work is underway at the Eastern Railway Range, the development of railway approaches to the seaports of the Azov-Black Sea basin, the development of the Novorossiysk transport hub, the construction and reconstruction of facilities at the Temryuk seaport, as well as railway and automobile checkpoints throughout the country.
For example, in the spring we completed the modernization of the Tikhoretskaya station of the North Caucasian Railway, located at the intersection of the Volgograd-Krasnodar and Rostov-on-Don-Mineralnye Vody lines.
“This station is of great importance for increasing the transportation of goods to / from the ports of the Azov-Black Sea basin. Modernization will allow additional transportation of about 8 million tons of cargo per year,” notes Baranov.
From September, the time of crossing the border in Zabaikalsk (on the border with China), Bugristoye (on the border with Kazakhstan) and Chernyshevskoye (on the border with Lithuania) will be reduced, as the system of electronic reservation of the date and time of approaching them will work there.
After the Verkhniy Lars checkpoint was upgraded, the traffic intensity was increased from 300 to 1,400 trucks per day.
On the border with Azerbaijan, a large-scale modernization of the Yarag-Kazmalyar checkpoint is underway, after which the throughput will increase to 1,400 vehicles and up to 5,100 people per day.
Until the end of 2027, the border crossings included in the North-South ITC will also be modernized. These are sea, railway, automobile checkpoints, among them Upper Lars, Novo-Filya, Tagirkent-Kazmalyar, Karauzek, Makhachkala, Derbent.
Much more needs to be done to develop freight transport.
“First of all, it is necessary to improve and expand the infrastructure, not only transport, but also energy, communications, logistics, etc. It is also necessary to continue to simplify border crossing procedures and customs clearance. It is important to reduce paper workflow, convert everything into a “figure”,
this will speed up clearance, reduce costs, facilitate foreign trade and foreign travel of people. The proposed measures may require a lot of time, but they are worth it, the benefits from them will be greater, the volume of foreign trade of the Russian Federation with other states will grow, and human contacts will be strengthened,” Dmitry Baranov believes.
“Bottlenecks” in Russian logistics are, firstly, the lack of a tanker fleet, secondly, difficulties with cargo insurance under sanctions, and thirdly, the need to re-create the infrastructure for the supply of raw materials, for example, to India, where it is difficult to build an oil pipeline or gas pipeline. However, the infrastructure needs to be expanded. It doesn't have to be about building pipelines. You can export goods and raw materials by rail or road, Russia just needs to create its own analogue of the Chinese Silk Road and provide convenient transport corridors for trade with neighboring countries,” said Natalya Milchakova, a leading analyst at Freedom Finance Global.
In her opinion, it would be nice to build high-speed railway lines from Russia to China, that is, to do exactly what the USSR was so afraid of, as well as expand the network of high-quality roads and, of course, use the geographical advantages of Russia, the supply of goods and raw materials through the Northern Sea route.
This article originally appeared in Russian at vz.ru