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For more than one hundred years, Russia enjoyed a monopoly on Eurasian shipping and commerce. Despite new logistical challenges, Russia remains central to the lattice of Eurasian commerce: Russian ports in the Far East are an important gateway to Europe for imported goods and raw materials, and the Trans-Siberian Railway remains a principal intercontinental shipping route for transit traffic from East Asia.
The most well-known alternative to the Trans-Siberian, the EU-backed TRACECA project (Transport Corridor Europe-Caucasus-Asia), was supposed to improve freight transport through western China, Kazakhstan, Uzbekistan, Turkmenistan, and then across the Caspian Sea to the South Caucasus and Turkey. But political instability, contentious interstate relations, and geographic barriers along the corridor make it a poor alternative to the Russian route.
Last year, news broke about a new corridor linking China and Europe via Kazakhstan, Azerbaijan, Georgia, and Turkey, prompting some analysts to question how Russia would react.
But this route is not a viable alternative to the Trans-Siberian either. Goods must be shipped by ferry between Kazakhstan and Azerbaijan and between Turkey and Georgia. This is extremely costly and logistically complicated. A railway between Turkey and Georgia would reduce transportation costs, but proposals to build one have been floated since 2012 and seem unlikely to be realized anytime soon.
Furthermore, cargo must cross four customs borders along this route, which creates additional logistical problems and costs. Georgian railway authorities estimate that it would take as long as fifteen days to deliver cargo to Turkey across the Trans-Caspian corridor.
Overland routes that bypass the Caspian Sea also leave much to be desired. In addition to complications stemming from multiple border crossings, containers must be loaded onto ferries to cross Turkey’s Lake Van, since there is no railroad circumventing it. In order to reach the carrying capacity of the Trans-Siberian Railway, Turkey would have to make colossal investments in infrastructure.
Kazakhstan has become a key corridor for transcontinental traffic because of its geographical location and its commitment to developing logistical infrastructure. Unlike Moscow, Astana has invested in its logistical sector and worked hard to attract transit traffic.
Kazakhstan seems to have found its transportation niche: its infrastructure is largely designed to accommodate the flow of Chinese goods westward, while transit traffic through Russia’s ports in the Far East and along the Trans-Siberian Railway comes primarily from South Korea, China, and Japan. Astana is currently implementing its “Bright Path” initiative, which is similar in ambition and approach to China’s New Silk Road project.
As a result, the amount of transit traffic from Asia to Europe via Kazakhstan has already exceeded the traffic from the Russian Far East. Indeed, Russia may lose its edge in East-West shipping and transport if it does not begin to invest heavily in infrastructure in the Far East.
Russia’s political disputes with Turkey and Ukraine have led Ankara and Kiev to choose shipping routes that bypass Russia entirely. The worsening of relations between Moscow and Ankara has resulted in goods being shipped through Azerbaijan and then ferried across the Caspian to Kazakhstan.
Similarly, the introduction of new regulations on the shipment of Ukrainian goods across Russian territory has made the delivery of cargo from Ukraine to Kazakhstan much slower and more expensive: Ukrainian shippers have decided to transport goods through Georgia, Azerbaijan, and then across the Caspian.
The existing infrastructure in the Caspian will not be able to meet the growing traffic demands. There are not enough ferries to handle the increased volume of trade and, as Azerbaijan is not a member of the Eurasian Economic Union, freight carriers will continue to encounter difficulties with customs and visas. Demand generates supply, however, and ferry services across the Caspian are sure to improve.
We are already seeing the signs of a new Eurasian trade regime. On January 14, Azerbaijan, Georgia, Kazakhstan, and Ukraine signed a protocol on the establishment of preferential tariffs for freight transportation along the Trans-Caspian corridor. Kazakhstan has also decided to build two “shortcut” railway lines, which will reduce the distance between the Chinese border and the Caspian port of Aktau by 700 kilometers. What’s more, Iran’s interest in expanding trade connections with the East may also lead to the development of transport corridors in the southern Caspian.
Though the majority of intercontinental trade currently flows through China, Kazakhstan, and Russia, the latter will soon see its share of trade from the Far East diminish if it is not proactive in developing its infrastructure there.
A route from China to Europe via Kazakhstan and Russia has far greater potential than routes across the Caspian or through Iran: shippers only have to negotiate two customs borders and can avoid using ferries. The China-Kazakhstan-Russia route is faster, cheaper, and logistically easier to navigate than any of the aforementioned alternatives.
Going forward, Moscow should focus on preserving its share of the transcontinental shipping market by ensuring that cargo moving from China to Europe goes through Russia. To do so, Russia must improve its logistical infrastructure in the Far East to make sure that transit traffic from China, Korea, and Japan continues to traverse Russia.
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
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