During his speech, Konstantin gave a detailed overview of market trends in the “Southeast Asia – Russia” corridor and highlighted the weak points when choosing the Northern Sea Route as the main transportation artery.

Freight rate growth amid tonnage shortage:

-119 river-sea type cargo vessels will be built in 2024–2028 (according to GTLK).
-The number of vessels decommissioned annually is at least twice as high.
-Only 3 LNG carriers of ARC ice class out of 15 planned vessels have been built for LNG transportation in harsh natural conditions.
-Zero newbuilds of container ships, Handysize, and Panamax vessels..

If the market continues to experience such imbalance, freight rates will keep rising. Business activity and trade volumes are highly likely to shrink significantly — as has already happened, for example, in the Black Sea basin.

General Characteristics of the "China–Russia" Cargo Flow

We analyzed 50 of our most recent shipments and came to the following conclusions: the cargo flow mainly consists of equipment and spare parts transported in containers. The average transit time is currently 45 days, but the system has deviations and weak points.

When it comes to consolidated or oversized cargo, the average 45 days often turn into 75. This leads to delivery disruptions and losses for manufacturers dependent on equipment supplies, where the responsibility for delivery usually lies with the supplier. As a result, production downtime occurs due to delays in spare parts.

Infrastructure Challenges and Attempts to Address Them

The main entry points into Russia are land border crossings and Far Eastern seaports: Vladivostok Commercial Seaport, Vostochnaya Stevedoring Company in Nakhodka, and Vanino Commercial Seaport. The average monthly congestion at a single port in September was about 35,000 TEUs..One of the current solutions is accelerated container trains, which help relieve the flow. However, risks remain: bad weather, seasonal surcharge increases (Russian Railways may keep tariffs at the same level under any conditions). The market continues to face problems, often dealing only with the consequences rather than root causes.

"NSR" – an Attempt to Unload Russia’s Far Eastern Ports and Provide Rail Delivery to Clients

Firstly, the infrastructure of the ports in Russia’s northern regions still leaves much to be desired.. Even if foreign vessels are allowed entry into these ports, it is unlikely to reduce freight rates. Foreign shipowners are simply unwilling to compete in such a difficult market with laws and trends they do not fully understand. Those who are willing to enter will add risks of downtime, floating schedules, and poor infrastructure costs into their rates. On the other hand, an ice-class fleet suitable for year-round operations is 30–40% more expensive to build and operate, making it uncompetitive in southern seas. Solving this issue may involve a number of measures:

1)Developing a fleet with reinforced ice class, but at lower costs by applying new materials and technologies in shipbuilding.

2) Increasing the number of icebreaker escorts

3) Building repair bases and commissioning a larger number of supply vessels.

4) Creating transshipment ports and hubs, for example, in Kamchatka.

5) For shippers who need solutions now: consolidating cargoes from several exporters into one vessel lot.

Delivery of Oversized Cargo to Far Eastern Ports: Challenges and Solutions

Delivering oversized cargo to Far Eastern ports is often associated with significant challenges, particularly when moving large containerized shipments. Additional risks arise due to the shortage of technical and transport resources, such as special containers, rail platforms, and cranes.

The key factor when working with clients who request transportation of oversized cargo from China to Russia or the CIS is the development of an optimal route. For such projects, we often propose options without involving ocean lines and transshipment in Far Eastern ports. Tramp vessels or bulk shipments (on a part-cargo basis) allow us to reduce freight rates and avoid unnecessary time and budget losses, especially given the shortage of special equipment and cranes in the Far East. For example, during one of our projects, instead of the initial delivery plan via Vladivostok, we transported several oversized items by bulk carrier directly to St. Petersburg.

-No additional transshipment;

- No waiting for special containers on the sea leg;

- No waiting for rail platforms;

- Delivery time reduced by up to 30 days compared to Vladivostok.

Sincerely, Konstantin Grinevich and Glogos Project