New Russian Railway Corridor to Reduce Trans-Siberian Transit Time

A new railway corridor in the Russian Far East will provide a faster connection between the Trans-Siberian railway and the Pacific Ocean via a new port on the Sea of Japan,  according to Sputnik News.

The project, which has a completion date of 2025, is being managed by Khabarovsk-based transport logistics company Samarga-Holding and is expected to cost $6.5 billion .

Under the project, a logistical center will be built at a railway station in Khabarovsk and a new railway line will be laid from Khabarovsk to the neighboring Primorye Territory, according to the report.

“The project cuts the distance to the Trans-Siberian railway by 550 km and allows much faster transportation of cargo to the European part of Russia. This transport corridor will be able to serve most of the ports of the Russian Far East, as well as Japan, China and Korea,”  Alexander Vasilyev, director of Samarga-Holding told the website.

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WTO Calls Russian Import Duties Violations

In a ruling circulated last week, a WTO panel confirmed that Russian import duties on paper, refrigerators and palm oil violate WTO rules,  the European Commission reports in the official notice. The import duties exceed those Russia agreed to when it joined the WTO. The WTO‘s ruling, which vindicates claims by the European Union, is the first against Russia since the country joined the organization in 2012.

Despite being a WTO member since August 2012, Russia has not yet fulfilled some of its commitments made before its accession. This includes one of the WTO’s most fundamental rules, according to which its members must not apply customs duties in excess of the ‘bound rates’ they commit themselves to in their respective Schedules. Following the dispute settlement procedure activated by the EU in October 2014, the WTO panel fully agreed that Russia’s customs duties on paper, refrigerators and palm oil are inconsistent with its WTO commitments.

For certain paper products Russia applies duties of 15% or 10% instead of the 5% it agreed when it joined the WTO.  For other products, Russia essentially fixes a minimum amount of import duty that needs to be paid even if this is not justified by the agreed duty rate (reflected in Russia’s accession schedule) that is expressed in a percentage of the product value.  Indeed, they imply that import duties are levied in excess of WTO-bound levels whenever products are imported at a certain price. Those measures are severely hampering trade in important sectors.

In the recent past, the EU has initiated Dispute Settlement procedures on a number of other trade barriers imposed by Russia, such as recycling fees on cars, a ban on import of pigs and pork, and antidumping duties on light commercial vehicles. These other procedures are ongoing. Russia put such measures in place in late 2014 to retaliate against Western sanctions related to Moscow‘s role in the Ukraine conflict.

Russia has already brought some of the challenged measures into compliance in the course of the panel proceedings. The panel report can be appealed within 60 days. If no appeal is filed within that deadline the report will be adopted and Russia will be bound to comply with the recommendation to bring all the concerned measures into line with WTO rules.

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Customs Point Change at St. Petersburg Port Suspended

A customs change that would have forced shippers to divert cargo away from the port of St. Petersburg, Russia’s busiest container port, to nearby Bronka has been suspended after the arrest of a customs official, as reported in the  Journal of Commerce.

Bronka was on track to be the single host of the Federal Customs Service’s e-customs clearance in the Russian northwest, which would have added costly delays to customs processing at St. Petersburg, Russia’s busiest port, if documentation were missing or some other issue to arise. Terminal operators and shippers opposed the shift of the cargo clearance agency to Bronka.

The suspension means that Big Port St. Petersburg will remain the center of gravity in Russia’s container trade for several more years, although Bronka was developed to cope with capacity constraints and the challenges posed by ship upsizing at St. Petersburg.

The center did open as planned on August 1st, but a scandal involving the now former head of the FCS, Andrei Belyaninov, led to the suspension of operations at Bronka and the resumption of customs processing in St. Petersburg.

The suspension could make it harder for Bronka to put its new capacity to use and impact its future development, according to a spokesperson for Maxim Sokolov, Russia’s Minister of Transport.

The move  of the customs point to port of Bronka could lead toe costs and more paperwork, most retailers fear.

The situation is also complicated by the fact that the majority of the stevedores and partners are based in the Big St. Petersburg seaport, so the move to Bronka would also result in higher costs.Stevedores have argued that Bronka was too far from St. Petersburg to host such an important customs center and that staff at the port lacked the required experience to make the move a success.

The FCS has justified the move to Bronka by citing customs corruption at Big Port St. Petersburg and saying that the move would also help increase container traffic in Russia’s Baltic Basin ports because of its advanced infrastructure and ability to handle larger ships.

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Russian Trucking Companies & Shippers Face Challenges

Trucking firms in Russia are consolidating and expanding their services in order to survive the country’s stagnant economy and remain competitive with containerized rail transportation, according to the Journal of Commerce.

Consolidation is most directly impacting small- and medium-sized Russian trucking companies with fleets of up to 50 trucks that make up nearly 90 percent of Russia’s trucking capacity. Large trucking operations with 100 tractors or more make up 10 percent of the market.

As the deteriorating market hit shippers, they sought to cut costs wherever possible, putting strain on Russian truckers and transportation firms, according to an official spokesperson of Russia’s Minister of Transport Maxim Sokolov. In addition to smaller companies, consolidation is also disproportionately impacting niche carriers, the ministry said.

Several trucking companies that specialize in containerized cargo have had to declare bankruptcy since the beginning of the year.  The current financial uncertainty in Russia and poor business climate were the major reasons for their bankruptcy.

In addition to competing on costs, Russian trucking companies are now expanding their value-added services, introducing door-to-door delivery and allowing for deferred payments. Many carriers have also revised their pricing policies with the aim of making them more flexible.

In addition to economic challenges, Russia’s trucking companies must deal with a newly reinvigorated RZD, the state railway monopoly.  RZD has announced plans to cut the cost of shipping by rail to compete with trucking and also said that it would reduce transit times via investments in new infrastructure.

The railroad has begun to offer personal managers for its most important clients and even floated the idea of high-speed container trains. RZD is also preparing to introduce a new web tool that will allow the ordering of complex transport services via the internet.

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Second-largest Russian Terminal Prepares for Container Weighing

Global Ports Investments PLC, the leading operator of container terminals in the Russian market, has completed the preparation of information systems and processes of its terminals to comply with the Verified Gross Mass (VGM) requirement of the International Maritime Organization (IMO).

First Container Terminal, part of Global Ports Holding, is the first Russian container terminal to announce a plan to provide container weighing service to help shippers meet the new amendment to the IMO’s Safety of Life at Sea convention.

The IMO requirement that enhances container weight control will be effective as of July 1, 2016 pursuant to the amendments to the Safety of Life at Sea Convention (SOLAS) and is designed to ensure safety of vessels, as well as loading and unloading operations at ports.

FCT expects the weighing of the container to obtain the VGM will take between eight and 10 minutes. Requests for cargo verification should be submitted prior to the delivery of a container to the terminal.

The terminal plans to install a second  set if scales over the next few days to avoid any delays in verification. The VGM certificate will be issued immediately in an electronic form with electronic signature. The terminal will announce the cost of the service in early June.

The FCT terminal at Big Port of St. Petersburg joins a growing group of container terminals, ranging from those in the U.S. to Asia facilities, that will help shippers meet the global rule. The charges planned for the service range from nothing to more than $100 per container.

Global Ports’ terminals are located in the Baltic and Far East Basins, key regions for foreign trade cargo flows. Global Ports operates five container terminals in Russia (Petrolesport, First Container Terminal, Ust-Luga Container Terminal and Moby Dik in the Baltics, and Vostochnaya Stevedoring Company in the Russian Far East) and two container terminals in Finland (Multi-Link Terminals Helsinki and Multi-Link Terminals Kotka). Global Ports also owns inland container terminals Yanino Logistics Park and Logistika-Terminal, both located in the vicinity of St. Petersburg, and has a 50% stake in the major oil product terminal AS Vopak E.O.S. in Estonia.

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Russia Applies New Rule for Foreign Trucking Companies Effective September 1st

The Journal of Commerce reports that beginning September 1st Russia will apply new rule for foreign trucking companies that enter the country.

The new requirements will apply to international consignment notes, which are provided by foreign carriers to the government to confirm the history of a shipment such as the origin warehouse and its location and vehicle registration. The Russian Association of Carriers by Auto Transport, a public association representing domestic and foreign transport companies operating in Russia, opposes the change because it fears that it could increase costs. The association also said that the customs agency needs to better fight corruption within its ranks, which has been growing worse in recent years.

Under current Russian legislation a stamp on the consignment note by the customs officials of a foreign country is acceptable, but this will change, according to an official spokesperson of Maxim Sokolov, Russia’s Ministry of Transport.

The details of the change have not been announced officially, but sources close to the ministry said the stampings will now be done by Russian customs authorities.

Shippers and foreign transportation firms have already criticized the possible change , as it could cause the number of foreign trucking providers in Russia to decline.

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EU to Extend Sanctions against Russia

European Union nations are set to renew sanctions against Russia for six more months amid a stalemate in efforts to decisively end two years of fighting in eastern Ukraine between the army and Russian-backed rebels, six European officials said.

Trade and investment curbs to punish Russia for its takeover of Crimea and intervention in eastern Ukraine in 2014 are set to lapse on July 31 and require a unanimous 28-nation vote to be prolonged.

The move comes amid a deadlock over fulfilling the conditions of the Minsk agreement, including granting more autonomy to the breakaway regions. The four countries involved in the peace process—Russia, Ukraine, Germany and France—are discussing proposals to create demilitarized areas along the front lines and set up phone links between the two sides to prevent escalations, two people close to the talks said. With no end in sight, what many already call a frozen conflict is looking increasingly permanent.

The EU, together with the U.S., imposed restrictions on Russia’s access to international capital markets and energy technology that along with the oil-price collapse helped trigger the country’s longest recession in two decades. The measures, a response to the Kremlin’s annexation of Crimea from Ukraine and support for the insurgency, also provoked a Russian counter-ban on most European foodstuffs, causing billions of dollars of losses for exporters.

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Russia Applies Extra Charges on Foreign Motor Carriers

The cost of transshipping containers by truck in Russia using international motor carriers has doubled due to a decision of the government to apply  extra charges on foreign motor carriers, increasing costs for shippers, as the Journal of Commerce reports.

The charges for foreign motor carriers previously existed but will increase from 385 rubles to 850 rubles ($5.88 to $12.99) per day, and from 60,000 rubles to 120,000 rubles per year. They will apply to trucks with capacities ranging from 3.5 tonnes to 12 tonnes (3.8 tons to 13.2 tons). Motor carriers from the following countries are likely to be impacted by the new regulation: Austria, Belgium, Bulgaria, Hungary, Germany, Denmark, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Romania, Slovakia, Turkmenistan, Czech Republic, Switzerland and Sweden.

Russian Prime Minister Dmitry Medvedev has already signed the rule change into law. The proceeds from the rule, which was passed to help reverse the effects of the devaluation of the ruble, will go into Russia’s Road Fund, which provides funding for the majority of the country’s infrastructure projects.

The rule should increase the competitiveness of Russian motor carriers, according to the government, which has not ruled out the possibility that the implementation of this measure may result in price increases for some imported goods.

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Russia and China Agree to Build a Cross-Border Rail and Road Bridge

Russia and China have signed an agreement to build a raibridge over the Amur river to link the Russian border city of Blagoveshchensk with Heihe, China, paving the way for truck and containerized rail on the corridor, reports Interfax.

The construction of the $300 million bridge will take about three years, including projecting work. Shipments by road should begin in 2019 with the opening of the rail line following in 2020.

The project also involves building a container terminal in Blagoveshchensk and traffic on the new route at the initial stage is expected to reach 100,000 to 150,000 twenty-foot-equivalent units with the possibility of a significant increase during the next several years.

According to experts, the construction of the bridges will lead to a high growth of volume of cross-border trade. The combined rail and automobile bridge will be used primarily to move Russian soy, corn, oil and other commodities to China, according to the Ministry of Transport and Construction of the Priamurja region.

The project will be implemented by a Russian-Chinese joint venture known as Amur Heilongjiang, which has been building another bridge over the Amur river since 2013. That bridge will link the Russian town of Nizhneleninskoye with Tongjiang, China. Its container capacity will be comparable with that of the Blagoveshchensk-Heihe bridge.

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World’s Top Oil Producers Meet in Russia to Discuss Oil Output Freeze

Russia will host a meeting on March 20 between OPEC and non-members to renew talks on capping global crude output, Bloomberg reports.

On February 16th, the oil ministers of Saudi Arabia, Qatar, Venezuela, OPEC and Russian Energy Minister Alexander Novak met in Doha, Qatar, and discussed how to improve the situation with oil prices on the global market. The parties expressed readiness to maintain the average oil production level in 2016 at the level of January this year, if other oil-producing countries join this initiative.

On Tuesday, Russia’s Energy Minister Alexander Novak said that the decision to stabilize oil production was publicly supported by fifteen nations producing 73% of oil across the globe.

Iran and Iraq have welcomed steps to stabilize oil markets, but haven’t joined the deal.

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