Russian Railways (RZD) , together with the railways of Kazakhstan, Turkmenistan and Iran, has decided to grant reduced container-kilometer rates in 2023 for using the infrastructure of the eastern route of the North-South international transport corridor (INSTC) that links Russia with countries in the Caspian basin, the Persian Gulf and Central, South and Southeast Asia.
According to the Silk Road Briefing, special rates in the amount of US$0.15/TEU-km (gross container weight up to 24 tonnes), US$0.18/TEU-km (gross container weight over 24 tonnes) and US$0.24/TEU-km will be in effect on the railways of Kazakhstan, Turkmenistan and Iran, RZD said.
It was reported that RZD would introduce a 20% discount in 2023 for export-import container shipments through border crossings between Russia and Kazakhstan. The discount will be in effect for all of next year on the condition that the freight also proceeds across the Bolashak-Serhetyaka crossing between Kazakhstan and Turkmenistan.
The effect of this will be to give incentives to increase both Russian multilateral trade along these routes but also to enhance competitiveness against European supply chains, who will not be able to take advantage of the discounts. The Russian, Kazakh, Turkmen and Iranian discounts will apply to the following routes:
- The Middle Corridor route Russia-Kazakhstan-China
- The Eastern INSTC route Russia-Turkmenistan-Uzbekistan-Kyrgyzstan-China
- The South-Eastern INSTC route Russia-Iran-Middle East, East Africa, India and South Asia
The 2023 impact can be expected to act as a significant incentive for all Russian and other sovereign trade along these routes. China and Europe alone have sent 15,000 trains between each other this year, an increase of 11% over 2021, while Chinese shipments will now attract a 20% discount. Central Asian, Middle Eastern, Indian, South Asian and the other Caspian nations – Azerbaijan, Kazakhstan, Iran, Turkmenistan and Russia can also take advantage of these incentives. It is possible that the Caucasus nations – Armenia and Georgia, as well as Turkiye could additionally be included in this scheme.
Other beneficiaries are likely to be Armenia and Belarus – both are members of the Eurasian Economic Union.
Russian trade across the Central Asian, Middle Eastern, Indian and Chinese markets has significantly increased over 2022 and these additional plans will ensure this growth continues during 2023.
Author: Chris Devonshire-Ellis