Ukrainian authorities on Jan. 15 launched an experiment that may allow the country to bypass Russia completely when shipping goods to Asia.
A demo container train sent from the Illichivsk Port to Kazakhstan is now testing the new trade route. The train will arrive in Kazakhstan in 12 days. On its way, it will pass through Georgia and Azerbaijan, and cross the Black Sea and the Caspian Sea by ferry.
Until recently, Ukrainian goods were shipped to Kazakhstan via Russian railroads. But on Jan. 12, the Ukrainian government said that Russia had “de-facto” closed off the transit of Ukrainian goods via its territory by imposing a range of severe restrictions.
Russia’s moves put 5 percent of Ukraine’s export revenues at risk, as shipments to Kazakhstan, Azerbaijan, Mongolia, Kyrgyzstan and Turkmenistan became practically impossible.
The experimental train was sent by state railway monopolist Ukrzaliznytsya to test a longer and more costly transit route that bypasses Russia.
Moscow denies banning the transit of Ukrainian shipments.
A Kremlin decree which is to be in effect through July orders all Ukrainian cargoes destined for Kazakhstan to go through Belarus. According to the decree, all shipments must be identified and linked to the Russian GLONASS satellite system while transiting the Russian territory.
In response, Ukraine launched a new cargo train to Asia to bypass Russia. It will operate regularly in two or three weeks, Infrastructure Minister Andriy Pyvovarsky said.
The experimental train is carrying rolled metal products, consisting of 10 wagons with 20 forty-foot containers.
The 12-day train route to Kazakhstan is faster than an average delivery by sea, but longer and more costly than traditional transit via Russian railways. The two ferry crossings on the new route also mean that delivery times depend on weather conditions.
The new shipping route to China bypassing Russia (Courtesy of Ukrainian Infrastructure Ministry)
In future, the route will extend to the Chinese transport hubs of Guangzhou, Chongqing and Lianyungang.
“Our goal is to have a unified through rate (for shipments) and load the train to the maximum. Thus, we will significantly decrease the net cost of shipping Ukrainian goods,” Prime Minister Arseniy Yatsenyuk said on Jan. 13.
The train will go via the Trans-Caspian International Transport Route connecting China, Kazakhstan, Azerbaijan, Georgia, Turkey and Europe. This network of new roads, railways and ports is part of the Silk Road Economic Belt, a Chinese project named after an ancient caravan route from China to Europe that developed from the lucrative trade in Chinese silk 2,000 years ago.
Experts say the alternative path will help Ukraine diversify its routes of overseas trade.
“This will help to load Ukrainian ports more and give a boost to infrastructure development in new directions (including in the Caucasian and Central Asian countries),” Andriy Bezpyatov, the head of Dragon Capital’s analytical department, told the Kyiv Post.
He also noted that the volume of transported cargoes may be limited, as there is a risk that railway infrastructure in the Caucasus is not ready for the increase in rail traffic.
“It is likely that exporters will simultaneously work on the possibility of transiting goods via Belarus by train to limit the negative consequences from the Russian bans,” Bezpyatov said.
Tensions between Kyiv and Moscow have escalated since Russia began a military conflict in eastern Ukraine in 2014, a war that has claimed more than 9,000 lives since that time.
On Jan. 1, Ukraine’s free trade zone agreement with the European Union came into force. In response, Russia imposed a food embargo and raised tariffs on other Ukrainian goods.
In response to Russia’s food embargo, Kyiv restricted the import of 43 categories of Russian products as of Jan. 10. They include vodka, beer, cigarettes, meat, chocolates, dairy products, animal food and locomotives.
Russia also imposed transit restrictions for Ukrainian cargo going to Asia, although Kremlin said such transit is still allowed.
“The transit of goods to other countries though the Russia-Ukraine border has remained,” head of the Russian Federal Customs Service Andrey Belyaninov said on Jan. 12 to Russian Information Agency. “However, during the first 10 days of 2016, only 12 transit vehicles entered (Russia).”
The Ukrainian Economy Ministry published a statement on Jan. 15 saying Ukraine had appealed to the World Trade Organization over Russia’s latest trade measures, describing them as politically motivated and illegal.
Kyiv Post writer Olena Savchuk can be reached at [email protected]
