Eurasian Transport Hub for the Silk Road Economic Belt to be Built in Outskirts of Moscow

By Marina Romanova

Russia and Kazakhstan plan to build a 400,000 TEU international logistic center ‘Central Dry Port’ in Moscow suburbs, Russian daily Kommersant reports. Russian firm Coalco Development and KTZExpress, subsidiary of Kazakhstan’s Railways, signed an agreement on this project on October 5th.

The construction site of the logistics hub handling containers passing along the “New Silk Road” (China – Kazakhstan – Europe) and Trans-Siberian corridor will be situated in Domodedovo district of Moscow region on a 60 hectare plot of land at Russian M-4 “Don” highway. Container and transport terminals, warehouses of low-temperature and dry containers are planned to be built there.

“Joint implementation of the project is an important contribution to the process of conjugation of the Eurasian economic integration and the construction of Economic belt of the Silk Road,” Oleg Belozerov, the CEO of Russian Railways said to reporters.

According to the Kommersant, the investments into the project will reach US$169 million with ten years of scheduled payoff period. The first stage of the project with the capacity of 150 thousand TEU a year will be launched in 2019.

Equity holding structure of the project was approved earlier this month, but the parties did not disclose it yet. A source familiar with the situation said to the Kommersant that parties may acquire a share in the capital on a fifty-fifty basis.

The facility will have the capacity to process up to 400 thousand containers by 2024, Kanat Alpysbayev, CEO of KTZExpress, said on the sidelines of the XIII inter-regional Forum of cooperation of Kazakhstan and Russia, which took place in the Independent Palace of the Astana city on October 3-4.

“For Russia, Kazakhstan is a strategic partner and ally. Our cooperation is multifaceted and comprehensive, and growing steadily in all directions,” Vladimir Putin said during opening ceremony of the Forum.

Kazakhstan is gradually becoming one of the biggest transit hubs on at least three Asia-Europe directions: between Europe and China; from China through Turkey to the Caucasus countries; and between China, Russia, India and Gulf countries, Askar Mamin, president of JSC “NC” Kazakhstan said to the joc.com.

According to the national rail operator, containerized cargo passing through Kazakhstan between Asia and Europe is on track to hit 1.7 million 20-foot equivalent units annually by 2020 after volume through the key hub rocketed 34 percent year-over-year to roughly 47,000 TEUs in 2014. The number of container trains transiting Kazakhstan increased 57 percent to 1,290 from 2014 to 2015.
So far, the nation most important logistics hub was the Kazakh-Chinese terminal at the port of Lianyungang and Central Asia’s largest dry port of Horgos.

While door-to-door containerized rail transport continues to be more expensive than sea transport, with rail costing US$8,000 and sea costing US$3,000, rail is much more efficient in terms of time, taking 14 to 15 days versus 40 to 45 for sea transit, Mamin said.

Cargo volumes traveling between Russia and China have been growing rapidly and have amounted to 1.9 million tons in the first eight months of this year and have already surpassed total figures for 2015. According to the Russian Transport Ministry, cargo traffic between two neighbors has been substantially driven by Russian agricultural and processed food exports to China, as well as wood exports.

In total, some 75,200 containers were transported along the Europe-China-Europe route in January-August 2016, which is 2.4 times as many as over the same period of 2015.

By the end of this year Russia also plan to open a new cargo transit corridor to China through Mongolia. The new route will stretch between the Siberian city of Ulan-Ude, pass through the Mongolian capital city of Ulaanbaatar and head for Beijing, the sputniknews.com reports. The new route will cut the distance between western Russia and southern China by over 1,000 kilometers (600 miles).

The new agreement will allow Russian cargo carriers to reach Beijing and the port city Tianjin in contrast to the current practice of hauling cargo to the nearest border town.

According to preliminary estimates, the cargo flow will increase 17-20 percent due to the rearrangement of transport movement. Later, increases of 10 percent per year were possible, which is, in general, in tune with the average yearly Russian-Chinese foreign trade increase,” Alexei Dvoinykh, head of the Russian Transport Ministry’s Agency of Automobile Transport, told Russian newspaper Izvestia.