Russia’s RZD Logistics Eyes Increased Caspian & INSTC Shipments

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Cargo traffic along all three directions of the International North-South Transport Corridor (INSTC) through the Caspian Sea, Turkey, and Azerbaijan due to the closure of European borders due to Russian sanctions show excellent development prospects, according to Russia’s RZD Logistics.

RZD is the largest multimodal logistics operator in the CIS and Baltic countries, and was created in order to develop the logistics business segment of Russian Railways Holding, the company is among the leaders of Russian logistics market and offers its clients a wide range of services, including international container transit and supply chain management.

The company has stated in a press release that “The logistics capacity of air and road deliveries will gradually decrease, due to increases in the costs of spare parts, maintenance and difficulties in fleet renewal. Due to a reduction in supply and an increase in demand for air and road shipments, the price will grow, whilst, rail transport, which has a relatively young fleet of rolling stock with a high degree of production localization in Russia, is able to meet the increased demand.”

The company noted that given the above, the International North-South Transportation Corridor acquires special importance.

“Goods from Iran, India and the UAE can be transported along this corridor. They can be transported both through the Suez Canal, which significantly increases the time and cost of transportation, and by rail through Azerbaijan. The latter route is faster and more profitable.”

The company also noted that RZD Logistics has recently been actively engaged in the development of cargo transportation with Kazakhstan and the Eurasian Economic Union countries.

“In 2021, RZD established a branch in Nur-Sultan, and created a joint venture in Uzbekistan. We have already integrated into newly created logistics chains and are ready to offer customers a modern logistics service based on new routes, including through Azerbaijan. Due to the gradual expansion of fleet of our own self-contained refrigerated containers, we can offer our customers the transportation of goods requiring special temperature conditions. Cargo includes not only vegetables, fruits, and frozen products, but also pharmacological products: raw materials, individual components, and finished drugs.”

The pace of development of the INSTC and interaction with the countries of Central Asia and the Caucasus will depend on the level of development of intergovernmental agreements, but interest in the further development of cooperation is very high, according to RZD.

There are likely to be significant market expansion opportunities for regional players such as RZD and other Eurasian logistics businesses as European and some MNC operators have discontinued services to the Russia market, leaving large gaps to be filled in the markets.

RZD’s statements concur with our findings on the recent Asia Investment Research paper ‘Russia’s Pivot to Asia‘ which outlines how Russian businesses are reaching east – exactly as RZD have outlined.

Russian businesses wishing to obtain a copy of the ‘Russia’s Pivot to Asia’ report may email directly to russia@dezshira.com to request a complimentary copy.  

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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