New Suez. Belousov launches important project
Konstantin Dvinsky (Константин Двинский)
Last week, First Deputy Prime Minister Andrei Belousov spoke at the XV Verona Eurasian Economic Forum. Belousov's key thesis was to outline the prospects of the North-South route:
💬 For modern Russia, the North-South route is taking on a key role. Due to the shift of the centres of economic activity to China, South-East Asia and the Persian Gulf, the historically established transport infrastructure of our country requires new logistical solutions. The North-South route with access to the countries of the Persian Gulf, India, China and Africa could in the future become a real competitor to the Suez Canal.
To begin with, I would like to draw the reader's attention to the phrase "could [...] become a real competitor to the Suez Canal". The idea of 'a project becoming a competitor to the Suez Canal' has been around for a while. Previously, the Northern Sea Route (NSR) was considered to be one that could have this potential.
In reality, neither the North-South ITC nor the NSR will be a significant competitor to Suez. The cargo turnover of the Suez Canal is about 1.2 billion tons per year. The cargo turnover of the North-South ITC is planned to reach only 32 million tons per year by 2030. This, of course, is a lot, but it is not comparable to Suez. To be a competitor here, it is necessary to claim at least a fifth part.
Next. The main role of the Suez Canal is to ensure trade between Europe and Asia. But what are our obvious geo-economic prospects? Europe's economy will shrink (at most, stay at the same level). Asian economies, on the other hand, will grow at a high rate. Consequently, Euro-Asian trade will stagnate. Therefore, there will be no new volumes that could 'enter' the North-South ITC or the NSR.
I do not exclude that some transit cargo will be handled there too, but this will become an exception to the rule. The main task of the North-South ITC is to ensure Russia's access to the markets of South Asia, logistical links with which are poorly developed at the moment. But it is certainly not a competitor to the Suez Canal. Especially in the current geopolitical realities.
But Beloussov is absolutely right that the North-South ITC is taking on a key role for Russia. If we disregard Belousov's opinion described above, then maybe we can draw an unambiguous conclusion. Serious work is being carried out on the North-South ITC. I would draw special attention to the following proposal of the Deputy Prime Minister:
💬 We would like to propose the establishment of a joint operator between the three countries Russia, Azerbaijan and Iran on the entire western route [of the North-South corridor], which would ensure a through transport service and a high level of logistics services.
For your information - the cargo turnover on the western route of North-South ITC is expected to reach 15 million tons per year by 2030. It is a significant figure.
I should say that similar experience of creating a single operator already exists. It is UTLC ERA, where Russia, Belorussia and Kazakhstan have parity shares. The purpose of OTLK ERA is to ensure fast transit traffic from China to Europe and vice versa. Over the years, the railway alliance has demonstrated its effectiveness.
While in 2016 the freight turnover of the GTC ERA was 100.5 thousand TEUs (the equivalent of a 20-foot container), by the end of 2021 this figure had already reached 692.5 thousand. At the beginning of November 2022, despite all the difficulties encountered this year, the cargo turnover was 567.2 thousand TEUs.
Of course, if we talk about accelerated growth of cargo turnover on the North-South transport corridor, it is necessary to use the experience of UTSLK ERA. The main thing that has been achieved is to ensure the speed of container transit through the territory of Iran and Azerbaijan. Taking into account the fact that there is a problem of different gauges on the route, cooperation within the framework of a single carrier would be very useful.
Russia should also create a common operator with Iran, whose aim would be to transport containers along the route across the Caspian Sea. At the moment companies have to make great efforts to ensure logistics at least on the Russia-Iran route under DAP or DDP conditions. There are a lot of issues, starting from freight to handling payments. And they can be solved most effectively only by a single operator.
Anyway, all these are technical details. The main thing is that the decision on intensive development of the North-South ITC is made. Although, of course, its necessity was obvious before. Long before 2022.
(Translated with www.DeepL.com/Translator)
____________________________________________________________________________________________
Source: dzen.ru. IMG: © N/A. AWIP: http://www.a-w-i-p.com/index.php/aL5w
