INDUSTRY REPORTS

Russia Considers Connecting Rail Through Baltics & Kaliningrad To Berlin

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baltic_sea-mapRussian Railways is considering launching a passenger train along the route St. Petersburg – Kaliningrad – Berlin, passing through Latvia, Lithuania and Poland en route, Victor Golomolzin, the CEO of Kaliningrad Railroad, part of Russian Railways told journalists last week.

The route, which is currently connected, yet remains unused, will require some upgrading to bring it to contemporary standards. At present the most viable option for travelers wanting to reach the Baltics or Berlin is either to fly or take the bus, a lengthy journey. The Kaliningrad region is Russia’s westernmost region and an enclave on the Baltic Sea.

“We are generating the idea of launching the Berlin-Kaliningrad-St Petersburg train, taking passengers in Berlin, going through Poland to Kaliningrad, and going from Kaliningrad via Lithuania and Latvia to St. Petersburg,” Golomolzin said. He said that discussions are continuing with the Governments Railway companies of Latvia, Lithuania and Poland over the potential for increased rail connectivity.  Continue reading…

Russia Opens Up Northern Sea Route For Gas Supplies To Asia

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russian-shipThe development of the Arctic Northern Sea Passage has taken a major step forward with the Russian supertanker Christophe de Margerie en route to South Korea. Sailing the Northern Sea Route with a load of liquefied natural gas from Norway, the shipment is a major step for Russia’s Sovcomflot to enter the global gas transportation market. Sovcomflot has 128 tankers and 13 LNG transport ships. This is about four percent of the global gas transporting fleet, however Russia’s share of this market is currently increasing. It means that Russia was now pitching itself as an important transporter of European gas to Asia.

The Christophe de Margerie does not need icebreakers to sail along the Northern Sea Route as it is able to cut through two meters of pack ice. Additionally, Russian companies intend to add value to raw gas. Gazprom has announced it is to build an LNG plant on Sakhalin Island in the Russian Far East as well as a facility in the Baltic Sea.
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Russia Completes Rail Link Around Eastern Ukraine

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russia-ukraineRussian Railways has completed the construction of a rail link that keeps away from the Lugansk region of Ukraine, bypassing the country entirely. Service is expected to start in September.

A test train of a locomotive and freight cars has already run through the completed stretch, Russian Railways have said. The construction of the rail link between Zhuravka – Millerovo began in 2014, after the deterioration of relations between Russia and Ukraine. The new 137 kilometers stretch runs entirely within Russian territory in the Voronezh and Rostov regions.

This will increase the line’s capacity and ensure the security of freight and passenger traffic, Russian Railways said. “It will provide stability of passenger and cargo transportation, and most importantly – to reduce the economic and technological risks that could arise when the route goes through Ukraine. This includes stop and delay of trains, delivery time delays, and traffic violations.” Continue reading…

Russia, China, Announce USD13 Billion Wide Body Passenger Jet JV

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comacRussia and China have announced the signing of a USD13 billion Joint Venture company, the China-Russia Commercial Aircraft International Corporation (CRAIC), set up to compete with Boeing and Airbus. The license to operate in China was granted in Shanghai on Monday. The JV is between the Commercial Aircraft Corporation of China (COMAC) and Russia’s United Aircraft Corporation (UAC), with COMAC chairman Jin Zhuanglong saying the joint venture will develop wide-body aircraft and aims to produce “competitive” long-haul planes for the world’s aviation market.

CRAIC will be responsible for research, manufacturing, marketing, sales and services of its aircraft. According to an agreement by COMAC and its Russian partner United Aircraft Corp (UAC), 280-seat jets with a range of 12,000 kilometers will be prioritized.

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Russian Economy Diversifying As New Agricultural Trends Lead The Way

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The Russian economy, long criticized for being too dependent on oil and gas exports, has shown signs of responding to planned diversification as Q1 Russian export trade figures are released. Commenting on these, Pavel Kadochnikov, President of the Center for Strategic Research (CSR) has highlighted fast growth in the agricultural sector especially, and including items such as corn, soybeans, confectionery and chocolate.

“New export positions have recently emerged, such as corn.” said Kadochnikov. “We normally exported a value of USD100 million and now the it is USD860 million in the First Quarter. Soybeans and soy products export was USD15-17 million and became USD330 million in 2015 and USD530 million in 2016… We sold honey worth USD14 million in two years; confectionery and chocolate sales were USD40 million and USD60 million. These are sound export positions. They are growing and have sources and prospects”

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Understanding Russia’s e-Commerce Market

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1The e-commerce market in Russia is constantly growing. The volume of cross-border trade in Q1, 2016, grew more than twice compared with the same period in 2015. In 2017, Russian buyers will spend 37 percent more via foreign online stores than in the past.

According to AKIT, the association of e-commerce companies, online sales volume in Russia grew by 15 percent by the end of 2016 – up to RUR 850 billion compared to the previous year. Among the main market drivers behind the growth of internet commerce is the increase in internet users and their competence, and the reduction of mobile internet costs. The key factors limiting growth are Russia’s negative economic situation and the decline of purchasing power. According to experts, the potential for the Russian e-commerce market is enormous. The online segment currently makes up a modest 4 percent of all domestic retail, which can be compared to 12 percent in the UK. The Russian online market is therefore not yet saturated, and the biggest players have not entered.

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Russia Becomes World’s Largest Supplier of Crude Oil

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russia-oil-flagRussia has taken over from Saudi Arabia as the world’s largest supplier of crude oil, according to the Riyadh based Joint Organisations Data Initiative. Russia pumped 10.49 million barrels a day in December, with Saudi Arabia just behind at 10.46 and the US third at 8.9 million barrels. Iraq came up in fourth place with 5 million barrels.

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LinkedIn Banned in Russia

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By Marina Romanova

linkedin-banned-in-russiaSince Friday, November 17 LinkedIn is officially blocked for around 6 million Russians, who have accounts in the world’s largest job searching engine. Russia’s Roskomnadzor communications watchdog, told Interfax news agency on Thursday that the website would be blocked within 24 hours, and a number of Internet service providers appeared to have immediately begun blocking the website, according to media reports.

LinkedIn, which has its headquarters in the United States, is the first major social network to be blocked by Russian authorities, setting a precedent for the way foreign Internet firms operate.

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Kazakhstan to Set Up its First Cargo Airline

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By Marina Romanova

kazakhstan-cargo-airlineAccording to the national railway operator, Kazakhstan Railways is setting up a cargo airline in partnership with national carrier Air Astana. The first national cargo airline will begin to operate in 2017 with China, Europe, Iran, Russia and Turkey among its first destinations.

The new transportation project aim is to strengthen Kazakhstan’s competitiveness in the world. The Kazakhstan railways described the project called Rail-Air as a “new product of intermodal transport by rail and air transport.” It is expected that cargo airline will become “an alternative to the existing, but slower supply chain Sea-Air from South East Asia to Europe via Dubai”, said the railway operator.

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Severstal to Export Chinese Steel to EU to Avoid the Utmost Anti-dumping Tariffs

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By Marina Romanova

severstal-to-export-chinese1Russian steelmaker found the way to lower the effect of severe anti-dumping duties levied by the EU on Russian steel in August 2016. According to Vadim Larin, chief executive of Severstal, Russia’s fourth-largest steelmaker, the firm is exporting Chinese cold rolled steel to the European Union instead of Russian one, because EU anti-dumping duties on the Chinese product are much lower.

The levies against Russia range from 18.7 percent to 36.1 percent and those against China range from 19.7 percent to 22.1 percent, depending on the company. Among Russian exporters, Novolipetsk Steel is subject to the maximum rate of 36.1 percent, Severstal faces a 34 percent levy and Magnitogorsk Iron & Steel Works has an 18.7 percent duty. Among Chinese exporters, Shougang group faces a 22.1 percent rate, while Angang Steel is subject to a 19.7 percent duty.

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