Elena Buturlim14:35, 10.03.24

Logistics companies are taking a fresh look at routes through Russia following the decision by most major shipping lines to redirect flights from Asia to Europe.

Demand for moving goods from Asia to Europe by rail via Russia has surged since the start of the Red Sea crisis , boosting revenues for the country’s state-run rail monopoly, the Financial Times reported , citing data from logistics companies and rail operators.

Germany’s DHL said requests to ship cargo along the Russian rail corridor jumped by about 40% after container ships began being diverted along the longer route in December. RailGate Europe said demand was up 25-35%, while the Netherlands’ Rail Bridge Cargo said rail freight traffic through Russia was up 31% this year, the publication said.

Logistics companies are taking a fresh look at routes through Russia following the decision by most major container shipping lines to reroute flights from Asia to Europe that usually pass through the Suez Canal through the Cape of Good Hope. The decision came after Iran-backed Yemeni rebels- The Houthis have launched a campaign of attacks on commercial shipping in support of Palestinians in Gaza,” the authors write.

It is indicated that such redirections increased the delivery time of goods between China and Northern Europe by 7-10 days, to 50-55 days. DHL said delivery times by rail via Russia between Chengdu in China and Duisburg in Germany range from 25 to 30 days.

Logistics companies including Switzerland’s Kuehne & Nagel and Denmark’s Maersk have said they are avoiding rail routes through Russia following Russia’s full-scale invasion of Ukraine.

Russian Railways, which operates most of the trains, is state-owned and has long been seen as closely linked to the Kremlin, journalists say. EU sanctions include an almost complete ban on road freight transport to and from Russia and Belarus. There are also restrictions on Russian Railways’ access to some financial services. However, there is no ban on moving goods by rail across the country.

Michael Aldwell, head of maritime logistics at Kuehne & Nagel, said there was “greater demand” for moving goods from Asia to Europe by rail in the current environment. However, he stressed that the company has “completely” ceased operations on this route from 2022.

Most cargo from Asia to Europe is transported by rail; DHL calls the route the “Western Corridor”, which goes through Kazakhstan to Russia and on to Belarus. Some cargo travels along the “northern corridor,” crossing the border directly from China into Russia east of Mongolia, the publication said.

Some logistics companies offer a “southern route” that bypasses Russia and passes through Kazakhstan, Azerbaijan and Turkey. But it takes longer than a container flight between China and Europe.

In September, Maersk began offering customers the ability to ship goods by sea to the Georgian port of Poti and then further into Central Asia via a southern route.

RailGate Europe said it had no dealings with Russian Railways and instead booked services through operators such as Germany’s Deutsche Bahn. The latter confirmed that it now acts only as a “travel agent” for cargo traveling through Russia. At the same time, Rail Bridge Cargo stated that its goods are “primarily” transported by Russian Railways, the authors write.

“Russian Railways, which is owned by the Russian state, maintains a near-monopoly on train operations on Russia’s large rail network. This means that Russian Railways pay both for transporting goods through Russia and for access to its network,” the FT notes.

(C)UNIAN 2024