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"The bridge to Sakhalin alone will never pay off"

FEFU experts sum up the logistics agenda of the Eastern Economic Forum


Artem Lukin

Associate Professor, Department of International Relations, Eastern Institute - School of Regional and International Studies, FEFU, PhD in Political Science
Today, in the Far East, a number of projects are being implemented that affect the future of logistics in Northeast Asia. The shortest East-West routes pass through the Far East, and traffic on the Trans-Siberian Railway in comparison with possible alternatives reduces the transit time by one-third. Among the projects are the modernization of BAM and Transsib, international transport corridors in Primorsky Krai, the Northern Sea Route, cross-border crossings in the Amur Region and the Jewish Autonomous Region. The construction of a bridge to Sakhalin and a high-speed highway from Harbin to Vladivostok is being discussed.

The top-priority project requiring an early implementation is the completion of the construction of international automobile checkpoints (MAPP) Kraskino and Pogranichny on the border of Primorye and China, especially since this does not require so much money. The total amount for their completion is about 1,5 billion rubles, while the total cost of the international transport corridors Primorye-1 and Primorye-2 is estimated at 300 billion rubles.  

Without the normally functioning automobile checkpoints, it is difficult to talk about a breakthrough in the implementation of international transport corridor projects. In its current form, the border check points Kraskino and Borderline on the Russian side of the border do not cope with the growing traffic flows, especially with passenger ones. It is not uncommon for people to wait half a day to cross the border. This hinders the development of business cooperation of the Far East with China and other countries of the Asia-Pacific region, damaging the image of Russia.
Further, it is necessary to finish building a new Vladivostok-Nakhodka-Vostochny port, which should become a key link in the Primorie-1 ITC. Its construction has been going on for several years, but quite sluggish.
Talks about the participation of Chinese investors in the MTC Primorye-1 and -2 have been going for about two decades. In recent years, the discussion has been at a high level between Moscow and Beijing. However, despite the interest expressed by Chinese officials to the Far Eastern ITC, there are no concrete results in the form of any firm commitment from the Chinese to invest in the construction of transport infrastructure and guarantees of the required volume of cargo. This is already beginning to cause irritation of the Russian side, which was recently publicly announced by Deputy Prime Minister Yuri Trutnev.  

Judging by the leisurely Chinese, the transport corridors passing through Primorye are not yet among the top priorities receiving funding under the Belts and Paths program. The Chinese might have shown more willingness to take on the basic financial costs of building the ITC if the Russian side agreed to give China a leading role in the management of these projects. This means that the ITC will have Chinese managers, and the contractors will be Chinese companies. But are Russian federal and regional authorities ready to do this?
Given the colossal cost (roughly more than 500 billion rubles), a bridge or a tunnel to Sakhalin from the point of view of the flow of goods to and from the island will never pay off. There is no real need for it. The railway ferries Vanino-Kholmsk and the line shipping services from Vladivostok to Korsakov manage to handle the cargo traffic. For the development of passenger transportation between Sakhalin and the mainland, it is better to use air transport. In addition to construction costs, you should also take into account the constant costs of maintaining the bridge, or the tunnel in a working and safe condition. These annual costs will also be very big, given the extreme climatic conditions in the Tatar Strait.  

Theoretically, a bridge between the mainland and Sakhalin could be expedient in the long term if, in addition to it, the Sakhalin-Hokkaido bridge is built, which will ensure the switching of the freight traffic from the deep sea (routes of ocean super courts through the Suez and Panama Canal, and also bypassing Africa) to a new railway route Hokkaido - Sakhalin - Komsomolsk-on-Amur and further along the BAM to Moscow and Europe. However, the Japanese still do not even seriously consider the option of connecting Hokkaido and Sakhalin. They are quite satisfied with the current shipping line to the Vostochny port, from which cargo can be sent further west along the Trans-Siberian Railway.

The bridge to Sakhalin, of course, would be beautiful as a picture and symbolism, but from a practical point of view and in terms of real benefits, it is now much more important for people to build a bridge across the Lena near Yakutsk. Without this bridge, the capital of Yakutia and one of the largest cities in the Far East is in transport semi-isolation. The construction of the bridge will not only reliably connect the Yakutsk people with the "mainland", but will also create a transport and logistics center in the Yakutsk region and lay the foundation for the Irkutsk - Kolyma transport corridor. It is also important that the estimated cost of the bridge across the Lena (70-80 billion rubles) is much more acceptable than the construction budget for the transition to Sakhalin.

In terms of the railway and port infrastructure of the coastal ITCs, there have been significant improvements in the past few years. According to the most conservative estimates, the ports and the railway will be able to withstand a tenfold increase in freight traffic (we are talking specifically about the transit traffic flowing along the coastal ITC). This also applies to the container terminal in the port of Vostochny, and the port in the Trinity Bay (Zarubino), and Vladivostok. Note that these ports, as well as a number of cargo owners and operators, take full advantage of the geographical advantages of the coastal ITCs, and the volume of transit cargo through them doubles on average annually.

There are successes related to the reduction of administrative barriers. For transit shipments from China to third countries via the Primor'e-Primorye-1 and Primorye-2, now there is no need to make customs clearance at the border crossing when leaving China. It is enough to do this in the port.

However, it is necessary to clearly understand which commercial projects within the framework of international transport corridors we offer investors and structure these proposals accordingly, so that the investor understands what the project management scheme is and, most importantly, what is the payback mechanism. Investments in transport projects involve high costs and very long payback periods. Therefore, investors, especially foreign ones, will definitely take into account the long-term prospects of the economy of Russia and the Russian Far East, economic and political risks.  
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