Single gauge system to make Russian Railways an Asian shipping competitor

A major transformation of Russia Railways is underway with the operator hoping to become a more competitive option for companies liking to ship products from Asia to Europe.

The Atlantic and Pacific oceans connected by a railway going across Russia – it’s now almost a reality, with a single gauge track which will soon stretch10 thousand kilometers from Vladivostok to Vienna.

Russia has the second largest rail infrastructure in the world, and it will be likely to get a significant jump in transport volumes if when it can offer Asian producers an effective service on a unified gauge system.

Currently sea transport from Asia to Finland takes 50 days, Trans-Siberian rail could cover the distance in 7 days.

At the moment the rail carrier cannot charge enough money to make the route profitable as cargo volumes are still too small according to Pyotr Baskakov, Head of Transcontainer.

"Railroad and sea transport just cannot compete if we speak of routes from Shanghai or Japanese ports, to Hamburg. However this is not so if we speak of deliveries from central China to western Europe. European car producers, BMW and Audi for instance, they produce cars in China, and they need to ship components there. They are now looking closely at our services. So when the flows of goods in both directions become equal, the competition between rail and sea transport will intensify."

Erik Soderholm, Senior Vice President of VR Logistics says that in order to balance the cost of traveling in each direction, rates on the East bound route need to be lowered.

"Finnish exporters are paying about half of what the Trans-Siberian offers in rates, if they will go by ship. The problem is that the goods coming out from Finland is bulk – its paper, timber, and that kind of products – which is really sensitive to freight. The imported goods are normally expensive goods, like electronics, and so on. And therefore there can be a bigger difference in rate westbound than on eastbound."

The crisis year saw cargo transport in Russia dropping 15% to 11.5 million containers. Volumes on the Trans-Siberian route fell an even sharper 30%. The recovery this year has been strong but much still needs to be done to make Russian railways a true bridge between East and West.