Russia needs new BAM and Transsib
The recently launched first-ever railway bridge across the Amur River, coupled with a road bridge, has greatly accelerated the transportation of goods to China. However, this is not enough to redirect Russian cargo from Europe to the East. Russia, in fact, will need to build a second BAM and a second Trans-Siberian Railway.
Cargo transportation between Russia and China continues to grow, thanks in part to the expansion of infrastructure. A milestone event was the opening in the summer of an automobile, and in November of this year, the first ever railway bridge across the Amur River.
The railway bridge across the Amur has become a new transport corridor between Russia and China. Prior to that, there were three railway crossings in the Far East. The largest checkpoint is in Transbaikalia, it accounted for up to 70% of cargo going to China. There are two more checkpoints in Primorye.
The new artery across the Amur expands infrastructure opportunities and facilitates the transportation of goods to China. In particular, the distance to the northern provinces of China is reduced by more than 700 km compared to existing routes. Container trains launched across the bridge make it possible to speed up delivery by up to 15-20 days, Alexei Dakhnovsky, Russia's trade representative in China, said.
The railway bridge connected the settlements of Nizhneleninskoye, Jewish Autonomous Region, and Tongjiang, Heilongjiang Province, China. The Russian Direct Investment Fund, together with Chinese partners, financed more than 70% of the entire budget for the construction of the Russian part of the bridge.
The new bridge was necessary for the growth of cargo traffic, including for the increased export of Russian coal to China. Because of the EU coal embargo, Russia had to redirect coal flows to Asian countries. And China became the main buyer, because the use of Russian coal for electricity generation turned out to be more profitable than liquefied natural gas (LNG). Russian coal, in addition, is sold at a discount, which makes it even more profitable than buying, for example, Australian coal.
As a result, Russian rail routes to China were overwhelmed with coal exports. We are talking about record volumes - in August, Beijing received 8.54 million tons of Russian coal. Moreover, China would most likely buy even more Russian coal if there were no transport restrictions.
Deliveries of Russian coal to India are also growing. In the first nine months of this year, the Indians purchased almost 6 million tons of thermal coal from Russia, three times more than a year earlier. The Turkish sales market also looks promising.
Experts in the review of the consulting group "Business Profile" indicate that in order to enter new sales markets and reorient supplies from West to East, it is necessary to create new logistics routes, since the load on the existing ones has almost reached its maximum. In particular, an additional 25 million tons of coal will be redirected to the eastern direction this year, also using ports located in the Azov-Black Sea basin.
This year (for 10 months) in general, Russia and China managed to increase their trade turnover by a third. It amounted to 154 billion dollars. The partners are already pretty close to the $200 billion target set by 2024. However, in order to implement it, bridges across the Amur alone will obviously not be enough.
“The main weak point for the growth of exports to China by rail is the insufficient capacity of Russian railways. There is potential for developing freight traffic to China by rail, but for this Russia needs, in fact, to build a duplicate of BAM and TransSib, which will take a lot of time.
Therefore, there are "plugs" with trains clogged with coal. They cannot travel for several weeks - there are not enough ways to pass several trains at once,” says Artem Deev, head of the analytical department at AMarkets.
Another bottleneck, according to him, is the lack of locomotives, cargo containers, tanks, freight cars. Now Russian Railways is even reducing the number of produced tanks, as there are not enough funds for their production.
But simultaneously with the construction of new infrastructure to the East, it will be necessary to expand the factories for the production of freight trains, which also requires investment and time. According to the forecast of the Ministry of Energy of the Russian Federation, in order to maintain the level of coal production and export as much as possible, in the future until 2030 it is necessary to invest 1-1.2 trillion rubles in the development of infrastructure and import substitution of equipment for the industry.
The program to increase the capacity of BAM and TransSib is designed for ten years. “Only by this period, Russia will be able to increase the volume of exports to Asia in such a way as to completely replace the falling volumes of Europe. This is not only coal, but also timber, oil, oil products, etc.,” Deev believes.
Russia traditionally imports cars, construction and agro-industrial equipment, various components, raw materials and materials for our industries, as well as consumer goods (clothes, shoes, household appliances, toys) from China. That is why a number of infrastructure projects in the Chinese direction are currently being implemented.
“Today, 65 projects worth $106.2 billion are being implemented in Russia, and 5 projects worth $5.8 billion are being implemented in China.
The Europe-Western China project is also important, for the construction of which financing in the amount of 655 billion rubles was planned. Including the construction of a bypass road around Togliatti and a bridge across the Volga, as well as the project of the Meridian toll highway, which will connect Russia and China, and will cost 600 billion rubles. The project is considered exclusively as a transit one and is practically not focused on the needs of domestic Russian carriers,” notes Associate Professor of the Department of Economic Statistics of the PRUE. Plekhanova Olga Lebedinskaya.
In general, more than 70 projects totaling over $120 billion are under discussion at the Intergovernmental Russian-Chinese Commission for Investment Cooperation.