Russia & the Baltics: transport trials ready to be overcome

Transport and logistics in the Baltic region is huge business; the Baltic’s geographic locale making it a key region for Russian and international cargoes. However, with the Russia’s ongoing dance of regulations and sanctions with the EU, the transportation environment is a little frosty.

But goods are goods and trade is trade. Whatever the political climate, the freight must flow.
 
As such, there are good reasons for logistics professionals to get excited about the Baltic’s Russia- focussed logistics activities. Let’s take a look at them now.

The Baltic Sea is one of the busiest sea routes anywhere in the world. As many as 7,600 tankers, 17,500 passenger boats, and 25,000 vessels navigate its water ways annually. It’s also a key region for rail cargo as well – and action in sector this is poised to expand.

Russo-Baltic trade dropped but recovery on the way?

With Lithuania, Latvia, and Estonia being members of the European Union, movement of certain goods between those countries and Russia is restricted. As such, trade levels have dropped off between Russia and its Baltic neighbours in recent years.
 
That meant less cargo traffic passing through major Russian ports, such as the Big Port of St. Petersburg (Russia’s chief Baltic facility).

However, hints of recovery were appearing across 2016 and the start of 2017. For instance, 50% of Russia’s total container trade came through its Baltic ports in 2016, representing 2 million TEUs. This was a 1.7% year-on-year rise against 2015’s traffic, when trade embargos were hitting their hardest.

During January 2017, container traffic grew 5% compared with 2016’s total – which is impressive as 11 working days are lost across the month in Russia due to national holidays.

Historically, Russia is a big trading partner for all three Baltic states. Lithuanian transport firms, for instance, generate revenues of roughly $1 billion a year thanks to transhipment of Russian cargoes. For Estonian and Latvian companies, the total value of goods moved (mostly exports) to Russia comes to approximately $300 million and $189 million annually respectively.

Baltic states preparing to capture Sino-Russian trade

China’s influence on Russian logistics is big, and getting bigger year by year. However, China’s desire to get more of its goods to Europe and beyond, as part of its “One Belt One Road” strategy is bound to have knock-on effects for freight movement between Russia and the Baltic countries.

Now, Lithuania, Estonia, and Latvia are mulling over relaunching the $5 billion Rail Baltica project. The development proposes 700 kilometres of new track, linking the three members’ capital cities and the Lithuanian city of Kaunas, to Russia and the rest of Europe.
 
The idea is to snare more trade from China, passing through Russia, as it makes its way to European destinations. As much as 12.9 million tons of cargo could pass along Rail Baltica once up and running. A launch date of 2026 is planned.

Russia moots its own Baltic rail road expansion

In order for Russian freight to penetrate deeper into Europe, Russian Railways (RZD) is exploring the potential of its own dedicated Baltic rail route, starting in Kaliningrad.
 
Kaliningrad, wedged between Poland and Lithuania, is a strip of Russian-owned land, which makes it an ideal base to reach deeper into European markets for Russian transporters.
 
“We are generating the idea of launching the Berlin-Kaliningrad-St Petersburg train, taking passengers in Berlin, going through Poland to Kaliningrad, and going from Kaliningrad via Lithuania and Latvia to St. Petersburg,” Victor Golomolzin, CEO of RZD subsidiary Kaliningrad Railway, said.
 
Golomolzin also added that discussions with Latvian, Lithuanian and Polish national rail companies over the potential for increased rail connectivity.

The Baltic becomes a test-bed of new technologies

Thanks to the Baltics status as a key maritime transport route, many international shippers use it to test new technologies.

For instance, Danish firm Unifeeder runs the world’s first LNG-retrofitted box ship in the Baltics as part of its Loop 1 corridor that links Baltic ports with the Netherlands and Poland. But that is not the only tech revolution heading to the Baltic Sea.

One Sea, a group of top marine and IT players, is set to completely digitalise shipping throughout the region. The goal is to move towards autonomous, self-propelled container vessels to remove the human element and automate essential processes.

"Our One Sea ecosystem is the natural next step in the digital transformation of the marine industry. Several new business initiatives in the autonomous maritime traffic have already been started and can be expected in the future. One Sea ensures a well-researched, tested and highly capable autonomous shipping network," Harri Kulmala CEO, of One Sea project member DIMECC, said.

Demand for hi-tech transport and logistics solutions is expect to heat up in the region, as Russia’s economic recovery kick starts a return to the freight levels seen prior to the EU embargo.

Baltic transporters: Meet Russia’s transport & logistics industry at TransRussia

The transport infrastructure and environment in the Baltic region is improving day by day, enabling smoother, cheaper transit times between it and Russia. With cargo traffic at Russia’s Baltic ports rising, and international firms using the region as a testbed for new tech innovations, demand for solutions, services, and more logistics aspects is heating.

In order to meet Russia’s top logistical decision makers, suppliers of transport and logistics services, or to demonstrate your produces and solutions to the Russian market, there’s one place to be – TransRussia.

The event is Russia’s biggest transport and logistics exhibition, designed to put international businesses needing transport services in touch with Russia’s logistics service providers.

Want to learn more about the show, or want to find out how you can take part? Contact our team today to get all the information you need on TransRussia.

 

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