The first train with Russian groceries for China may depart from central Russia as soon as May 31. However, the destination of the train is yet to be decided: it is either going to head for Shilong in Guangdong Province, where Russian exporters already have clients, or for the port of Dalian. Delivery to Dalian would be significantly cheaper, but rail transport has to compete hard against marine transport here.
Shilong vs Dalian: the government is discussing the route of the first train with Russian groceries for China
"Efforts to dispatch the pilot train to China are underway at the government level," Deputy Head of the Analytical Center Tatiana Radchenko told Kommerstant journalists, "and now the final destination in China is being decided upon." The options that have been considered since December 2016 include Suzhou, Dalian, Yingkou, Tianjin, Beijing, Guangzhou, Ningbo, Shenzhen and Qingdao. In February, Dalian was selected as the preferred destination point but then after additional negotiations with the exporters and Chinese logistics companies (such as Sinotrans), Shilong was added to the potential delivery destinations, she explained.
Unlike Dalian, Shilong is not a port. However, the local authorities are interested in developing their district and are willing to negotiate mutual concessions to facilitate cargo flows. A number of Russian companies have also backed Shilong as their preferred destination. "However, delivery to Shilong is for the moment $1,000 per FEU more expensive than delivery to Dalian," Ms. Radchenko noted," and currently all hopes regarding lower delivery costs hinge on Russian Railways maybe cutting their rates in the future." Dalian's appeal stems primarily from the fact that it is a port from which deliveries can be forwarded by sea to Southern China, but there is more competition there as cargo can be delivered there by sea, which is even less expensive, the expert pointed out.
"Essentially what we are seeing here is that both Russian and Chinese logistics companies are only willing to slash their rates if there is competition from alternative modes of transport," Ms. Radchenko says.
Source: The Kommersant