Covid And Blockchain Issues Impacting Russia-China Cross-Border Vehicular Trade
Lorries and containers delayed for weeks as different operating procedures clash
Serious delays are interfering with Russia-China cross-border deliveries as new anti-Covid protocols, rapidly growing bilateral trade volumes and insufficient infrastructure are holding up vehicle container deliveries and pickups along the China-Russia border checkpoints.
At the main Manzhouli-Zabaikalsk border in Inner Mongolia, as of yesterday (January 18) Russia’s Ministry of Transport said that about 400 tractors and 2.5 thousand road trains (a tractor and a semi-trailer) are backlogged.
Russian logistics companies have stated the problem has been created by new rules for crossing the border creating congestion, established by the Chinese customs due to enhanced Covid restrictions. These have placed limits on the number of vehicles allowed to pass through together with changes in the cross-border protocols, which were introduced with little advance warning for Russian drivers and their logistics agents. The slow pick up of new blockchain technologies in Russia is also having an effect.
The Chinese now require that the Russian carrier crosses into China, leaves its trailer and returns to the Russian side. After the unloading or loading procedure, the Russian carrier returns to China the following day and takes back the trailer with the cargo. This has had the effect of immediately doubling the traffic volumes. An issue is the lack of facilities and immigration protocols for Russian drivers to overnight in China, the high volumes, and the ever-present threat of Covid transmission, infections, quarantine, and health security issues.
This is also affecting EU supplies as trucks cannot enter China, deliver, then reload in one easy operation. They must go in, unload, exit China, and then rejoin the queue to get back into China to load up for the return journey. The impact has been to reduce the actual capacity at the Manzhouli-Zabaikalsk border from what was 300 transits daily to just 70.
In total, Russia and China have seven border crossings suitable for vehicles, but due to Covid restrictions, only four of them are currently operational: Manzhouli-Zabaikalsk, Suifenhe-Pogranichny, Dongning-Poltavka, and Hunchun-Kraskino. Of these, the Manzhouli-Zabaikalsk crossing is the most in demand, as it is located at the closest point to Russia and Europe, attracting a significant proportion of Russia-China road cargo carriers.
The problem is being dealt with; however, Russia and China face a compounding problem – trade volumes are rapidly increasing. The Russian Ministry of Transport said that it is working with the Association of International Road Carriers (ASMAP), to take steps to resolve the situation . Interaction is being conducted directly with the Chinese side, as well as through the channels of the Russian Foreign Ministry. Also, Russian road carriers are being encouraged to use auto-registration and automated issuance of electronic transit declarations (ETD), which can reduce the time of customs operations. Training of both drivers and Russian logistics companies in new technologies is to be stepped up.
Russia’s Federal Customs Service is also redistributing customs post officials depending on the existing load on the inbound or outbound direction, the Ministry of Transport added. The measures taken by the Russian side, in conjunction with the observance of the procedure for submitting applications for the inclusion of vehicles in the list for departing Russia, as well as the orderly protocols for crossing the border, will ease queuing and prevent further accumulation of vehicles at the entrance to the checkpoint. In the meantime, logistics companies are looking at multi-modal solutions using air, sea, and rail as alternatives.
Russia Briefing is written and produced by Dezan Shira & Associates. During these uncertain times and sanctions imposition, our firm assists Russian companies relocate to Asia, and provides financial and sanctions compliance services to foreign companies operating in Russia. We also provide market research and advisory services to foreign exporters interested in Russia as the economy looks to replace Western sourced products. Please contact us at firstname.lastname@example.org or visit us at www.dezshira.com.