I am pleased to see
this type of initiative underway. The
Trans Siberian is effectively the primary Asian rail trunk line and adding
effective outlets in this region can only boost local economic expansion and
effective transshipment.
I expect that we will
eventually see these long haul lines switched over to an air pad based rail
haulage which we have discussed in the past.
That would allow real speeds approaching one hundred miles per hour and
perhaps half of the dead weight of present hardware. Such a system, though needing a major
investment on roadbeds which needs to happen anyway, would likely cause a sharp
drop in haulage costs.
Air pad systems
eliminate the majority of friction drag to the point that downhill portions
necessarily generate energy to be stored and used later. So while present costs are still a problem
there is still the two thirds time advantage that often matters as well as the
fact the cargo is often already on rail to start with.
Adding
a Korean port to present links to Chinese ports as well as Vladivostok clearly
opens up Russian outlets in ways that are beneficial economically and
politically. Let it be said that the
Russians are now playing the trade game as adroitly as the Europeans and
Americans ever did. Welcome back!
Putin Builds North
Korea Rail to Circumvent Suez Canal
By Ekaterina
Shatalova & Nicholas Brautlecht - Oct 15, 2013 1:00 PM
PT
http://www.bloomberg.com/news/2013-10-15/putin-builds-north-korea-rail-to-circumvent-suez-canal.html
Vladimir
Putin is
inching closer to his goal of turning Russia into a major transit route
for trade between eastern Asia and Europe by prying open North Korea, a
nuclear-capable dictatorship isolated for half a century.
Russia
last month completed the first land link that North Korea’s Stalinist regime
has allowed to the outside world since 2003. Running between Khasan in Russia’s
southeastern corner and North Korea’s rebuilt port of Rajin, the 54-kilometer
rail link is part of a project President Putin is pushing that would reunite
the railway systems of the two Koreas and tie them to the Trans-Siberian
Railway.
That
would give Putin partial control over links to European train networks 8,000
kilometers (5,000 miles) away. The route is as much as three times faster
than shipping via Egypt’s Suez
Canal,
which handles 17,000 ships a year, accounts for about 8 percent of maritime
trade -- and is increasingly beset by pirates and political instability in
Egypt and Syria.
“Shipping
companies face higher costs to secure their cargo,” said Thomas
Straubhaar,
director of the Hamburg Institute of International Economics, in an e-mailed
response to questions. “The rail route will get attractive if Russia increases
efforts to ensure a secure and reliable transport on the long stretch between
Asia and Europe. Customers don’t want their Porsche to be stolen along the
way.”
OAO Mechel (MTLR), Russia’s biggest supplier of
steel-making coal, will be among the customers in the first stage of the North
Korea project, sending shipments eastward to Asian consumers, according to
Moscow-based Russian Railways. The Rajin facility also can be refitted to move
Asian goods westward to Europe. Mechel’s press service in Moscow declined to
comment.
Faster
by Rail
Shipments
to and from western Europe and Rajin will be delivered in just 14 days,
compared with 45 days by ship, OAO Russian Railways Chief Executive
Officer Vladimir Yakunin told reporters in North Korea
Sept. 22.
Getting
the two Koreas to work together on the railway and a long-stalled plan to build
a pipeline to supply both Koreas with Russian natural gas is fraught with
financial and political hurdles, said Fyodor
Lukyanov,
head of the Council on Foreign and Defense Policy research group in Moscow.
They stem from North Korea’s nuclear weapons program and lingering animosity
from the 1950-1953 Korean
War.
“Russia’s
position is to get North Korea involved in profitable projects to make them
realize that cooperation is better than isolation,” Lukyanov said by phone from
the Russian capital.
Nuclear
Developments
North
Korea is under United Nations sanctions for its atomic program. Six-nation talks
that were designed to remove nuclear weapons from the peninsula were abandoned
in 2009, when it detonated another device. The Koreas are technically still at
war, having ended their military conflict with an armistice rather than a
formal peace treaty. In 2003, the two countries opened a highway through their
demilitarized zone, one of the most heavily armed borders in the world.
“The
Korean project is strategically important for Russian Railways,” said Igor
Golubev, an analyst at OAO Promsvyazbank in Moscow. “But it shouldn’t expect
fast returns on its investment because at this point I doubt global companies
are willing to risk sending cargo via North Korea.”
While
Russian Railways says time savings will make up for the higher costs compared
with the Suez route, the services train operators already run between China and Europe are too costly,
said Michael Tasto, an economist at the German Institute of Shipping Economics
and Logistics. They thus lack the capacity to take major market share from
container-shipping companies such as A.P. Moeller-Maersk A/S. (MAERSKB)
Niche
Product?
“The
rail route is faster but more expensive, so it will probably become a niche
product,” Tasto said by phone Oct. 7. “Cargo trains are not mass-transportation
vehicles like container
ships.”
None
of that has stopped Russian Railways and its partners in the European Union and
China from developing new links between the world’s two largest exporters,
touting the routes as alternatives far removed from the political instability
in Egypt and the wider Middle
East.
Far East Land Bridge, a Russian Railways venture,
opened a new service between Suzhou in eastern China and Warsaw on Sept. 30.
The first shipment, of “electronic and technology items,” will make the
7,600-kilometer journey in 14 days, linking with the Trans-Siberian via
Mongolia and reaching Poland through Belarus, the Vienna-based company said in
a statement Oct. 7.
Direct
Link
Russian
Railways and its counterparts in China and Germany in August introduced a
direct link between Hamburg and Zhengzhou in north-central China that takes as
little as 15 days and travels through Kazakhstan, Russia, Belarus and Poland.
“Our
goal is a daily service,” Ruediger Grube, CEO of Deutsche
Bahn AG,
said after 51 shipping containers of goods from China arrived in Hamburg by
train Aug. 2.
The
Russian and German rail operators opened an 11,000-kilometer service between
Chongqing in southwest China and the German transport hub of Duisburg via
Kazakhstan, Russia, Belarus and Poland in 2011. The travel time varies from 16
days to 23 days, according DB Schenker, Deutsche Bahn’s cargo unit.
Major
customers include Bayerische Motoren Werke AG, which ships auto parts west to
factories in China, and Hewlett-Packard Co. (HP), which transports computers the other
way.
While
the Chongqing line is focused on shipments between Europe and China, the Korean
link caters to traffic between Europe and the rest of eastern Asia, Russian
Railways said. China, Japan and South Korea together account for about a
quarter of the global economy.
Korean
Support
Putin
has urged South Korean President Park Geun Hye, who assumed office in February,
to work with North Korea on relinking their rail networks, most recently last
month at the Group of 20 summit in St. Petersburg. Park publicly affirmed her
commitment to reunifying the Trans-Korean when she met with officials in Busan,
South Korea’s largest port, in July.
Putin
plans to make his third state visit to Seoul for talks with Park in
mid-November, Chosun Ilbo reported Oct. 1, without
saying where it got the information. Dmitry Peskov, Putin’s spokesman, declined
to comment on the report.
North
and South Korea resumed cross-border rail service in 2007 for the first time in
56 years amid a mood of detente, though North Korea closed it down after 18
months and hasn’t reopened it since.
“I
have personally dreamed of a railway that starts at Busan and reaches Europe
via Russia,” Park told Putin at the summit, according to the website of her
presidential Blue House office. “It is an important agenda item for the new
government to strengthen Eurasia cooperation.”
To
contact the reporters on this story: Ekaterina Shatalova in Moscow at
To
contact the editor responsible for this story: Denis Maternovsky at
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