The Russian transportation line is blocked. Is the China Europe train still safe?
After Russia launched military operations in Ukraine, western countries led by the United States began to encircle Russia in various fields, and major container liner companies also began to suspend container liner services to Russia. At present, Mediterranean, Maersk, ocean Union, Yangming, Hyundai and other liner companies have successively issued notices to suspend liner services to Russia.
Introduction to Russia’s foreign shipping routes
Russia has a long coastline, and the ports that can be connected to container liners are mainly distributed in three regions, one is St. Petersburg in the Baltic Sea, the second is novorossisk in the Black Sea, and the third is Vladivostok and Dongfang port on the Pacific coast of the Far East, which are navigable to the world through the world shipping network of liner companies.
Since the Black Sea is located in the war zone, many merchant ships have been hit by missiles or sunk by mines, and Russian troops may enter the Odessa port of Ukraine at any time. Therefore, it is reasonable for the liner company to suspend the service of novorossisk in the Black Sea for the sake of safety. For example, COSCO Shipping Company of China announced that it would stop docking with Ukrainian ports for safety reasons, and took certain measures for the goods that had been shipped to Ukraine, so as to facilitate the cargo owners to properly handle and avoid losses.
Container liner shipping industry is a subsidiary industry of international trade, and international trade is dominated by Europe and the United States. Therefore, among the world’s top ten liner companies, except COSCO Shipping Company of China, all belong to the European and American system.
As the European and American sanctions against Russia are so outrageous that even cats are not spared, the customs in Hamburg, Germany and Rotterdam, the Netherlands refuse to transit goods to St. Petersburg, and it is no surprise that various liner companies cancel their attachment to Russia. Because the transit center is built for a long time, it cannot be changed in a short time.
Then, has Russia’s foreign cargo transportation been interrupted due to the sanctions of liner companies? Answer is No.
Generally speaking, Russia’s dependence on foreign trade is not very high, mainly exporting oil and gas, grain and timber to foreign countries, and importing some equipment and consumer goods. Among them, the exported oil and gas are transported by pipeline, and the exported grain is transported by bulk carrier. The suspension of liner companies mainly affects exported timber and imported consumer goods.
In addition, the road and railway transportation between Russia and its neighboring countries has not been affected. It should be pointed out that some large logistics companies in European and American countries have voluntarily stopped accepting the business of China Europe Express, but the China Europe express itself has not stopped operating. The railway from Europe to Russia via Poland and Belarus is still unblocked, but the possibility of interrupting this railway line in Europe cannot be ruled out.
The first leg of the voyage is the Asia Europe route from China’s coastal ports to European basic ports
The second leg of the voyage – the branch line from the European basic port to St. Petersburg, Russia
Although COSCO ships provide part of the transportation capacity on this route, the whole route is jointly operated by COSCO and other liner companies. Each shipping company sends ships to carry out transportation tasks in turn according to the established schedule. Therefore, if other shared shipping companies refuse to ship goods to Russia, COSCO will have no choice, and even endanger the cooperative relationship between COSCO and other shipping companies in the alliance.
According to the shipping schedule from COSCO to the basic ports in Europe, we can see from the ship name that there are EVA and France Dafei ships
COSCO can’t be expected to ship alone to carry out transportation tasks. In the case of the world shipping crisis, all shipping companies, including COSCO, have no idle capacity. The construction of container ships is based on years, and it is too late to build now. Even if COSCO sea pulls out ships to carry out the whole transportation task to St. Petersburg under all pressure, the sea freight will definitely be sky high and lose its economic significance.
However, this line is only nominally interrupted, in fact, it will not be completely interrupted. Since Estonia, Latvia and Lithuania in the Baltic Sea were former Soviet republics, they have close relations with Russia. These three countries have ports and feeder ships to connect with the basic ports in Europe, and some goods will be transported to Russia through the three Baltic countries. Some of this mode belongs to the gray space zone, which is somewhat similar to the goods entering the mainland through Hong Kong after the founding of the people’s Republic of China and before the reform and opening up. It can be predicted that some goods originally directly transported to St. Petersburg will be transferred to this kind of transportation.
People engaged in such transportation in the Baltic countries often wander on the edge of nominal laws, and sanctions will even increase their interests. I don’t think the anti Russian sentiment of the three countries can stand the test of money, and I don’t have much confidence in the integrity of the law enforcement personnel in the three countries. As long as it is not too excessive, this kind of transportation will not be stopped due to sanctions, so the route through the European basic port will not be completely interrupted.
The second line is the railway that China leaves the country through Manzhouli, Erenhot, Alataw pass and other ports, and may reach Moscow directly or through Mongolia and Kazakhstan. These railway lines are part of the extension line of the Eurasian Continental Bridge in Russia and the China Europe train. The whole journey takes about 15-40 days. Many railway stations in China, such as Shenzhen, Shenyang and Suzhou, can start transportation.
This line is the safest because it is all overland. As long as the governments of Kazakhstan and Mongolia are sane, nothing will go wrong. Even if the governments of these two countries have problems in their minds, Russia is believed to be able to cure them.
The third route is from the coastal ports of China to Vladivostok and Dongfang port on the Pacific coast of the Far East of Russia through the Strait of Kumar between Japan and South Korea, and then to Moscow through the Siberian Railway of Russia. This route is mainly operated by Russian Far East Ocean Shipping Co., Ltd.
It takes less than a week from China’s coastal ports to Vladivostok and Dongfang port, and about 20 days to Moscow. Judging from the current ship navigation trajectory, the operation has not stopped. In terms of routes, Russian ships may theoretically face the threat of the Japanese and Korean navies and the seventh fleet of the United States. However, as Russian bombers travel around Japan all year round, the author believes that there is little possibility of problems.
There is also air transportation between China and Russia, and road transportation at ports such as Heihe River and Suifenhe River on the Sino Russian border. The traffic volume and radiation range are not very large. Someone once considered the Arctic route through the Bering Strait. Because the voyage is too long, it needs to break the ice, and there is no supply capacity along the way. The author believes that it is not of practical significance at present.
China’s chemical products should seize this opportunity
Originally, factories all over the world could use containers to transport products to Russia through the liner company’s world shipping network. Now the liner company cancels its attachment to Russian ports, which means that the maritime traffic from all over the world to Russia has been interrupted. If the transportation from China to Russia is still smooth, European and American chemical brands that have not quit Russia may increase the orders of Chinese factories to make up for the lost supply of factories in other parts of the world.
Previously, the products manufactured by China may take the first route, from China to the European basic port by sea, and then to St. Petersburg by feeder ship. Now there is no need to turn from Europe to pretend to be European origin. It may become to take the second and third routes, which can be directly sent by railway or transported by sea to Vladivostok / Dongfang port, and then transferred by railway to Moscow.
Tens of thousands of containers and transport vehicles are waiting to be sent to Europe at the origin of the China Europe train
At the same time, China has the opportunity to become a transit station for products from all over the world to Russia. The sea transportation from all over the world to Russia is broken, while the sea transportation from all over the world to China is still smooth, so some foreign chemical brands that do not give up the Russian market may first transport their products to China, and then use the transportation channel from China to Russia to repack and transport them to Russia.
China has bonded warehouses in almost all coastal ports, and products transferred in bonded warehouses do not need to pay tariffs, which can save costs for these foreign products. However, as long as products enter China, China can earn income from various links such as warehousing, loading and unloading.
In terms of capital flows, China is also a suitable transit place. Russia is restricted in the international capital clearing system (Swift), but there is no restriction on the settlement between Russia and China, and there is no change in the settlement between China and other countries in the world. At the same time, the RMB exchange rate is basically stable, so China may also receive some financial settlement dividends and expand the scope of use of the RMB.
It should be pointed out that there are also many difficulties for China to expand its economic influence in Russia. For example, many Russian manufacturers favor European and American chemical products and are biased against Chinese products; Russia’s legal system and business environment are poor, and grey customs clearance and other problems need us to overcome. The state may have to play a more important role in protecting China’s economy.
In terms of engineering capacity, China’s chemical production capacity is basically no different from that of foreign chemical giants. Especially for bulk chemicals, due to the assistance of the Soviet Union and the subsequent purchase of process packages and design packages from abroad, independent design and construction can be basically achieved in combination with the digestion and absorption of the design unit for many years. Compared with foreign countries, fine chemicals are indistinguishable, because most of them are new products, and everyone has no experience. In fact, the process of fine chemicals is more important, which is why China has more advantages. For some chemical equipment, foreign countries have the first mover advantage, but there is no problem with reverse engineering based on domestic design ability. Even if you know the general idea, it is possible to copy it.
David Zhang, Sales Manager of Junyuan Petroleum Group, gave us an example to illustrate the production characteristics of China’s chemical industry. In fact, it is still a little universal. A chemical solvent production plant wants to produce a chemical, which has been available abroad. According to the foreign process, there is a step in the synthesis route that requires hydrogenation and reduction. This hydrogenation and reduction process uses a special reactor and reaction system. At this time, when the manufacturer wants to produce this kind of chemical products, it naturally wants to learn from this foreign process. Its core is the reactor design. Because the domestic engineering capacity is fairly good, after some twists and turns, they finally mastered the design method of this reactor, drew the design drawings of the reactor, and then the manufacturer did an experiment with air and water, It was found that the mixing effect could fully meet the requirements, so it was excitedly handed over to the equipment factory to make equipment. The equipment factory looked at the technical requirements and said that it could not do this because there was a gap between their surrounding chemical industries. The temperature and pressure of this hydrogenation process was very high, and a circulating pump and instrument in the process had to operate under extreme conditions. This technology could not be achieved in China at present, so this process had to be abandoned. Finally, we can only think of ways from the process, not hydrogenation, but other reduction methods. Because China’s chemical process ability is very strong and the experimenters work very hard, finally, after repeated experiments to explore the conditions, we decided to use iron powder for reduction, and finally completed the production of this product. Although it has some disadvantages compared with hydrogenation, with the help of cheap labor and low cost of other raw materials, this product still has strong competitiveness in the global market, and finally completely occupies the global chemical raw material market.
European and American sanctions have given Chinese chemicals and solvents the opportunity to enter the Russian market, which must be seized.