By Nat South for The Saker Blog
This is the second part in a series that looks behind the scenes, at particular aspects of trade, shipping and transport involving Russia. This analysis was partially written back in spring 2018, before taking academia seriously for a while.
Historically & to this day the US depends on the Mahan theory of sea route control and control of significant maritime chokepoints for power projection. Hence, the US hegemon relies heavily on its heavy outstretched military muscle, especially the use of any of the 11 carrier groups as part of this infrastructure. This is connected to traditional maritime trading routes.
We are seeing an ascendency of Chinese military projection in the last decade, within increasing Chinese naval presence in those areas traditionally dominated by the US Navy. The New Silk road as embodied by the Great Belt & Road Project will also inevitably change military dominance, (as China is building its third aircraft carrier and launched its 29thType 054A frigate in January).
Without repeating the articles by Pepe Escobar on bigger geopolitical and economic picture on the New Silks Roads (here and here), I will concentrate on some the ‘cogs’ that will underpin the Belt and Road Initiative (BRI). The BRI started with a large-scale international economic forum was held in Beijing in May 2017. More than 100 countries, many heads of states attended, including President Putin. The forum kicked off a whole series of projects world-wide, with long lasting & far-reaching socio-economic impacts.
Similarly, the newly created Yuan petrodollar could create a seismic shift by eventually pushing out the US dollar monopoly and eventually lead to the demise of the status quo of the US dollar as a global reserve currency. The US dollar is the weak link in Washington’s US unipolar vision of the world, as well as focus of military power. De-dollarization has been underway for a while in order to create an alternative economic order.
Part of the change in trade routes, primarily driven by China, is the development of rail networks for containerised trade as well as planned High Speed rail trade routes (as mentioned in Pepe Escobar’s article) connecting China to Europe, through a combination of several intermediary countries, including central Asia. These networks are known as:
- East-West international transport corridor
- The North-South international transport corridor
- Middle Corridor (EU- China, circumventing Russia with banned products).
Of course, the US is acutely aware of this and it is doing everything that it possibly can to throw a few “spanners in the works” in some of the Middle East and central Asia segments. This can be seen as part of a long-standing geopolitical tussle, as outlined in Sir Halford Mackendrie’s ‘Heartlands Theory’, for ultimate control of the Asia-Europe trade corridors.
The key railway projects
The new ‘silk route’ takes mostly high-tech and consumer goods to Europe, replacing the long-gone original silk routes that thrived up the 15th century. As such, rail has become more competitive in speed and cost in the last of couple of years. This trade is offset by the huge trade imbalance resulting in empty containers transhipped back to China.
Just to think of the implications of a more efficient rail infrastructure, when you consider that the average freight journey has already been shortened by 20 days to 12 days. Yet, freight by rail is subsidised both by China and the EU, (mostly on railway infrastructure and operations). It can be argued although rail freight is very small compared to shipping, smaller than air freight, where it represents the smallest percentage, but shows the fastest growth for any of the sector.
When you think that 8 years ago, there were hardly any freight train service from China to Europe, now more than 35 Chinese cities are connected to around 34 European cities, on 57 different routes, with a total of 6,200 trains in 2017 alone. These statistics are significantly increasing month by month. Some of these freight services don’t go through Russia, but a majority do.
Some of the train routes are more symbolic in nature, (such as the first China-Teheran route in 2016), but it does pave the way for further development of rail freight, within Europe and in central Asia. Other routes have become more commercially viable & trains run more frequently in the last year.
Germany is onboard and a key BRI player, with around 400 trains travelled between Germany & China in 2015, (acting both a terminal and a feeder hub for other countries). A twofold increase of 100,000 containers is projected by 2020. To cite one example: 12 trains left Zhengzhou to Hamburg every week in 2017. Many European states have expressed interest in participating in BRI linked projects or are exploring new trade ventures based on the momentum of the BRI. Similar rail connections are planned in Scandinavia, but several are currently subject to a deal of soul-searching and dithering over security and safety due to the nearby Russian border.
“Last year, the volume of container freight rail traffic on the Central European route to Asia was about 350,000 TEU and the forecast for 2020 is already 1 million TEU.” Let’s look at the figures in another way, by comparing the above TEU forecast with one mega containership of around 18000 TEUs. A lot less shipping transits will be needed if this forecast is achieved.
Cargo traffic can vary from block trains to trains with “less-than-container-load” (LCL) shipments. Block trains are those where one producer hires all of the cargo wagons.
| ROUTE (via) | DISTANCE | DURATION |
| Northern route: Russia | 13,000 km | 14-16 days |
| Southern route Russia & Kazakhstan | 10,000 km | 10-12 days |
| By sea – Suez Canal transit | 30 – 45 days |
The Russian link
The geopolitical implications of the BRI for Russia are huge. The development of coastal & inland transport infrastructure is growing, with 11 major projects started by Russia alone in the first year, as part of the Eurasian Economic Union package of initiatives. Several of these were mentioned in President Putin’s March speech. These projects involve:
- construction of new and modernization of existing roads,
- creation of intermodal hub centres,
- development of key transport networks such as new rail lines.
Nearly all of these projects fall under the scope of the BRI.
One of the themes mentioned by President Putin in his 4th March speech, was the inadequate railway capacity, especially in the Asian part of Russia. Most people reading or listening to this part probably didn’t notice the significance of this or simply got bamboozled by the videos on hypersonic cutting-edge missiles and nuclear-powered torpedoes.
There are dozens of Russian projects to improve the West-East-West lines and inter connectivity between major port hubs and Asian ports. Similarly, Russia is participating in joint venture with China to upgrade and add in the necessary hard infrastructure. In other words, a lot of investment, dialogue, finance and political will. To this end, Russia implemented a National Railway Development Strategy, as the cornerstone for numerous projects. Most of these are focused along the Trans-Siberian & BAM, with the aim of improving flow of cargo traffic. Here is a selection of the projects:
- Amur bridge project (Russian-Chinese border) to reduce the line by 700km;
- Construction of rail bypasses through major cities;
- The additional of a second rail track in various localities;
- Salekhard-Nadym Railway
http://www.belkomur.com/apxport/bpic/arch1.png
There are also major projects being developed or proposed to add to the overall rail capacity, one such project is the Belkomur Railway (Arkhangelsk-Syktyvkar-Solikamsk – Perm Line, to improve the efficiency from White Sea deep-water ports, (which will be another future article) and the Urals industrial heartland. This will provide an alternative transport that shortens the distances between the Urals and the Barents & While Sea areas of Russia by up to 800 km.
Another large-scale initiative is the Northern-Latitudinal-Passage, also in the Arctic, to ultimately connect Arkhangelsk to Surgut by rail, including the Sabetta line, (Yamal LNG project as mentioned in the first article), thus opening up gas & oil shipments to either Europe or Asia. It will also connect two other Arctic railway lines, the Northern Line from Arkhangelsk and the line between Nadym and Tyumen.
The validity & implementation of these projects are highly dependent on getting the necessary funding.
Deeper inland hubs
None of these upgrades or new building projects would work effectively, if there isn’t work in parallel on upgrading inland intermodal container hubs and the development of LNG – oil hubs too. One example is Kleshchiha, which is a railhead logistics complex in the city of Novosibirsk. It is an import/export hub for containers between China/ Busan, South Korea & various parts of Russia. The overall terminal capacity will be increased from 116,000 to 242,400 TEUs. Handling capacity will be doubled, from 42 to 83 wagons.
Another planned intermodal project, located in Republic of Tatarstan, at a convenient intersection between the North-South and East-West transport corridors. The Svijazhsky Multimodal Logistic Centre will facilitate cargo traffic between direct rail route, road, and river transport in the region. Moving eastwards, there is the planned Terminal Logistics Centre “Primorsky” at Ussuriysk. By joining the BRI initiated dots, Russian transport links will enhance trade and also potentially the livelihoods of those living and working across vast remote locations.
Summary
Although China-Europe rail freight may have a negative impact on air cargo, it will not significantly change for the foreseeable time the huge amounts of containers (TEUs) shifted by containerships. Some of sea-freight and a lot of airfreight might end on rail lines, depending on the location of the production of goods. Having said that, rail does offer a faster option than sea freight, an option that simply didn’t exist before 2010. Significantly, the rail option also usefully by-passes maritime chokepoints such as the Malacca Strait, Bab el Mandeb and the Suez Canal.
Rail freight offers a compromise between light/fragile air cargo, (expensive) and the slow cargo route of heavier cargo by sea, (cheapest), as such it is especially attractive to the electronics and automotive manufacturers, (still giving them an average time saving of 2 weeks).
China is making moves to shift some industrial sectors further inland from the coastal industrial hubs which will help employment, mitigate the urban overpopulation & chronic pollution hotspots. These production centres link into the road & rail transhipment hubs, which will serve to strengthen the viability of the international transport corridors.
On the diplomatic front, the development of transcontinental freight corridors, (rail & road) is a win-win situation for China, (echoing Escobar’s article) as it permits countries to work together on transport & economic integration. Importantly, China as both an economic powerhouse & a land power on the Eurasian landmass, recognises Russia as a natural power. Certainly, the new Silk Road has the potential to bring Siberia out from the geo-economical cold metaphorically speaking. This all leaves the US out in cold instead.
Nat South
Very informative piece of research. Thanks.
Between the massive infrastructure building and the new availability of products, many regions of Asia, long bypassed and stagnant, should see phenomenal economic growth. Instead of the 21st century being the “end of history” and an “american century”, this will most definitely be a century where Asia, and Africa, will take centre stage.
Indeed
The BRI is a means for these countries to see themselves as trading partners, with a diffuse network. The political and economic elements will to support are slowly catching up too, but it will take a long time.
In a way, this article helps to shed some light on the hugeness of it all, which can also in a certain way be linked to the political madness taking place the US and EU re Russia ‘cyberattacks’. It is a foil by the West, swinging at Russia from all angles, because they are getting the rug pulled from under them. Result = more sanctions. My feeling is this isn’t just about Russia but also getting at China in an effort to hinder, complicate matters.
Surely, vot tak. As far as I can see the developments in that area, there is (still) a huge difference between east and south – China and Central Asian countries. While in China they are having a mind blowing standard (read the last impressions from Babushka), in Central Asia there are areas which are stagnating at a Middle Age level. There is the question of Time : how fast want the planners to develop these parts (that wouldn’t be easy – it will take several decades), or, if they consider to “temporarily jump” over those countries (or geographic territories) simply by constructing the railways and all other necessary infrastructure related to the railways but not beyond that – this, in case the Time aspect has a political and tactical value. And, of course, there are the unexpected (or rather very expected) issues related to terrorism – or, in other words – to various risks which the (now free and so, “market oriented”) private or even state-owned companies will have to deal with. Looking at the map, there lies a Huge landmass between the developed China and Southern-Russia-Europe (if we take the southern route, it more questionable – west Europe-west China in blue on the map above)
One should remember what happened in the US West. Train companies were sold right-of-ways through federal land that was literally empty except for bisons and Indians. The companies themselves built the railroads on speculation and sold off land rights along the ROW’s. The result was an explosion of development along the new railroads.
Of course, that model depends on a capitalist economy and private investment. Almost everywhere in East, Central and West Asian that economic model is exactly what is lacking. If the Chinese and Russians can find a way to import capitalism to those countries, the results might be extraordinary.
Yes, I know the people who post here are doctrinaire Marxists (old, orthodox school, and especially Escobar), but the opportunity exists nonetheless.
Yes, the famous film “Once Upon a Time in the West” comes to mind. The difference tough is, that in this issue the railway has to be developed in many different countries in Central Asia and a lot of various things have to be taken in consideration. Without a massive investment from China, it wouldn’t be possible, the fruits will come, but in a longer term and for that, peace and tranquility is needed. Is there any assurance for that ? seeing so much malevolence from the Empire, it won’t be an easy job.
I
I’ve no doubt the zpc/nwo will use every means at their disposal to do to Central Asia what they have done to Afghanistan, Iraq, Libya and Syria. I’ve also no doubt that Russia/China are savvy to their methods of chaos creation and will defeat them.
A good example of Russia defeating the zionazi-nazis is in Russian Central Asian Republics, where rapid modernization was matched with good counter terror work.
As the Central Asian nations are brought up to speed, it will become more difficult for the terrorist enablers to work their bs. The rail and road building (communications) will facilitate their modernization and see that window for zionazi-nazi disruption closing.
In a way, the multipolars are using much of the american strategy employed right after WW2 to secure dominace for western fascists, nazis and zionazis. But they are taking it that one essential step further. Not just raising the living standards for a select few, but for the rest, as well.
Yes and the American railroads used Chinese labour to lay the track
The financing of those railways depended on the “China trade”, by the Boston Brahmins.
The profits of the opium trade literally financed five trans-continental railways and most of the Eastern seaboard industrialization. This literally led to the destruction of China, where 25% of the population became opium addicts. There was no free trade in China. It was at the point of a gun or canon.
The model should better be called gangsterism. It depended on the genocide and disenfranchisement of the rightful owners of the land where the railways passed. Capitalism as a model had very little to do with it.
1- “A twofold increase of 100,000 containers is projected by 2020.”
2- “Last year, the volume of container freight rail traffic on the Central European route to Asia was about 350,000 TEU and the forecast for 2020 is already 1 million TEU.”
There is a contradiction here. TEU is synonamous with a 20-foot container. Maybe these are different routes or whatever. It is not at all clear to this engineer.
No contradiction, on figure is for Germany only (all routes in) the other is for all of Europe via Central Europe (not just Germany).
Especially now that Italy seeks a place in BRI:
https://gbtimes.com/italy-eyes-chinese-belt-and-road-investment
People are seeing the reality of China’s success, inter-eurasian trade is the only way forward and realising the Dollar is finished along with the disgusting Imperialist politics that supports it.
The message is spreading- even in the Baltic Fascist states. The party Социал-демократическая партия known as Harmony for short, just won the election in Latvia. They may have a referendum on NATO. They will surely end the discrimination against Ethnic Russians in that sad country which buillds monuments to SS death squads and knocks down Patriotic War memorials. The anti russian in Europe hysteria originated from the propaganda of Anglo Saxons, western banks (IMF) and Zionists. But people can see the silk road is the future.
Anon, do you suggest that “Harmony” party uses Russian name? How about the “governmental anti-Russian propaganda”? Obviously there is huge population that thinks of itself as Russian in order for that party to have a chance at being elected. Perhaps the anti-Russian tide is slowly reversing and the chickens will come home to roost.
I want to mention that there is now running a regular container service by train between Madrid (Spain) and Yiwu (China) . Yiwu is the the lar5gest manufacturer of that type of goods which are typically sold in “all for one-€ ” shops. This train is the longest regular railroad connection between two points of the map.
https://www.abc.es/economia/20141209/rc-china-madrid-linea-tren-201412091902.html
It started in 2014.
For the people who are not abled into the spanish language here a link :
https://www.youtube.com/watch?v=8CANbZCnaUE
Extremely educational article, which also explains (indirectly) the noise (threats) coming out of U$, showing that it’s not only about the petrodollar, but control (making money) of the movement of goods, it also explains the South Sea moves on China.
It’s like the War of Troy redux, because this is what it was all about. The only problem is that the weapons are more destructive nowadays.
Again excellent job.
Maybe I need to explain what I meant.
The city of Troy was gouging it’s Greek brethren for the right to transport goods through the Dardanelles to the Greek cities on the Black Sea (yes this was in 1200BC, actually Troy was destroyed eight times, but only one was told by Homer). For those interested he spoke and used Aeolic dialect of Greek Language contrary to Wikipedia which spreads dis-info about Greek dialects, because for example Greeks from Pontus on the south side of Black Sea used and are using Doric dialect. Never mind though.
Today, we have all those “Huge Multi-National Sea Transport Corporations” looking at losing Billions upon Billions of Dollars in transport fees, which are going to go to Russia for the land transport.
This can’t be allowed to happen, hence we are looking WWIII straight in the eye.
Yes, that aspect will be another article of my on maritime choke points.
Hi Nat,
As you may have heard, the US recently concluded the USMCA trade agreement with Canada and Mexico. It has been reported that this new agreement will in practice give the US the power to veto any trade agreement that either Canada or Mexico may wish to pursue with China. The US is expected to demand a similar agreement with the EU, Japan, and other major economies as part of a broader strategy to isolate China. How do you think this will impact China and Russia’s effort to integrate the Eurasian land mass through the BRI/EEU project?
I’ll need to research that aspect a bit more deeply. Thank you for sharing that.
My initial take that it the US won’t get what it wants, we are always seeing the fur fly so to speak over steel and other goods. The EU will dig its heels in (certainly Germany would). If the EU plays to the US’s tune, anticipate further disintegration of the EU. BRI is too important to be sidelined by the EU.
The clause in USMCA says:
– Each country should notify the others when it proceeds to establish free trade agreement with a ‘non-market’ economy
– A country may withdraw with half a year notice if it opposes
First, the only requirement is to notify. Second, what is ‘non-market’ economy? There are lots of definitions and, who is to decide what is non-market? This is a red herring. Third, under NAFTA each country has right to withdraw with half a year notice. USMCA carry it forward. But under NAFTA a country can withdraw for whatever reason; USMCA restrict that reason to under this clause.
In practice, each country can establish separate trade rules with all other countries without a broad free trade agreement, which then do not even need to notify. There is no implementational restrictions on anything. If U.S. does not like it can always leave with notice but that the same in NAFTA. In the end this clause is put in by American ideological BS.
I doubt this clause could if China joined the TPP or Canada joined the SCO.
Some extra information I heard from German:
It takes about 6 – 7 days for the cargo train from China to reach Europe, but it takes up to ca 5 – 7 days for the train to proceed from the Eastern Europe to finally reach German port in the North. If the administrative procedures and regulations in the part of Europe can be harmonised/streamlined, the travel time could be cut down at least by half, IMHO.
Another information from China: The cargo trains used to be fully loaded when went to the direction of Europe but less loaded when back to China, which added the costs of transportation costs. Now the cargo trains are much more loaded with wines, olive oils and other European goods when going back to China. This is a really win-win situation now for all parties involved.
Yet there is still a huge trade imbalance, with more empty containers and ships in ballast transit the Northern Sea Route eastwards.
Not so sure about 6 days to reach Germany though, as it is not just about administrative, duties and paperwork, but physically changing trains, (boogies, drivers, traffic routing). Sure the EU has administrative redtape a go-go (more so due to the sanctions). Same with Russia and China, this is slowly being discussed and gradually streamlined.
Pick a decade. Any decade. You’ll find brass band announcements by Russian or Soviet authorites of impressive upgrades to rail infrastucture. And corresponding exposes on how terrible the existing state of affairs it.
Ignoring that todays crapola was yesterdays state-of-the-art. How long have those Russkies had railways? Why can’t they get their act together? Maybe stop with throwing sand in peoples eyes and get with making something of serious and lasting quality. Something that isn’t left to deteriorate and fall apart. Like normal.
Like the Kerch bridge?
I think you might find things are changing, because business is vital. Public-private partnerships for Yamal, so Gazprom is the key component in that particular rail project in Yamal-Nenets.
Other projects such in Amur are taking place because (drum roll) as I stated in the article investment by China.
Summary: not like normal.
Any thoughts about developments in Kaliningrad? I was there last summer. I think this is one of the most underrated, yet historically rich lands in the world. I heard that China is planning to rebuild ( or upgrade) the port over there but I’m not sure how credible this news is.
Kaliningrad (former Königsberg) today is obviously a Russian territory, a very precious one, strategically very important. That is a part of Europe which has to be developed by the Russians – and I may say – with the help of Germany.Historically, Kaliningrad of today is a special region, her status-quo being made after world war two (everyone know this from history). Germany lost, Russia won. Both countries have to make that part of Europe to be an example of cooperation in a new prism in the wake of that ugly past which lead to so many sufferings. China, has nothing to do there, it would be some sort of interference in a sad past of Russia and Germany.
Thanks for your comment. It makes sense that Russia and Germany should develop this region together. Lots of Germans from Kazakhstan are also resettling in this area, and most of them do not plan relocating to Germany. Would be interesting to see this territory in 10/15 years from now.
Thanks for the great analysis. Economy is based on logistics. When The Silk Road (again, after 1,000 years) achieves a Mediterranean the world will be a different place. I’d love to know about the plans to complete railways from Iraq/Iran across Syria. Obviously this is something that The Usual Suspects will do all possible to avoid. But it’s hard to see how to see they’d prevail, in the long term.
This is the real empire killer, not just the US, but a network of eventual interdependence that is incompatible to any future economic imperialism. China may dominant, which it will, but it cannot own this network and it cannot sanction it without having part of it threatened by the victim. It is like a gas pipeline, a moving thing, which if hampered becomes a major system problem for all that are connected into it.
Thanks for the article, this is the first time I have seen the growth factor revealed, there is a long way this can go in growth and in technical development before it peaks, a very long way.
It is imperative that both South Korea and Japan sign a peace treaty with their former adversaries, North Korea and Russia respectively. By doing so, Seoul could link a rail network with Vladivostok through the DPRK. Russia has offered to link its northern island of Hokkaido with Russia’s Sakhalin Island with a bridge, and Sakhalin is connected with a bridge to the Russian mainland; thus Japan would have a land connection with Russia and the Trans Siberian Railway to Berlin.