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Focus on the East: the Russian freight transportation market is changing direction

Delo Group and Strategy Partners, a leading Russian consulting company, have released a joint research report on the Russian freight transportation market.

Over the last 2 years, the structure of Russia's foreign trade has substantially changed and became more directed towards the eastern and southern directions. Russian exports to the EU decreased practically in all major commodity groups. The drop in imports from unfriendly countries, including the EU, was compensated by the growth of supplies from friendly and neutral countries. The share of imports from China has reached 53%.

The total volume of cargo transported in Russia in 2023 grew by 3.6% to 7.9 billion tons. The departure of major foreign players in 2022 and the growing demand for freight transportation both in domestic and foreign trade provide additional opportunities for Russian companies.

In 2023, 82.5% of cargo was transported within Russia by road transport - 4.5 units more than in the previous year. The key drivers of growth are changes in logistics chains, limited railway capacity, implementation of infrastructure projects and evolution of the e-commerce market. Rail transport was more often used for long-distance transportation: its share amounted to 15.7%, while only 1.8% of freight was shipped by sea.

In 2023, the container logistics market started recovering: the volume of sea container transshipment grew by 10.3% after a decline in 2022. Half of all containers were transshipped through the Far East basin, 26% through the Baltic basin and 21% through the Azov-Black Sea basin.

Developments in Russia's foreign trade have had a significant impact on the structure and direction of cargo flows. The primary pressure has been placed on the Far East, in particular the Eastern polygon, which lacks throughput capacity. It is being undergoing modernization and increasing its carrying capacity. However, Strategy Partners and Delo Group experts note that the importance of developing alternative transportation corridors is already underway. These routes also have bottlenecks and difficulties, but they hold a lot of promise.

According to the forecasts of Strategy Partners and Delo Group experts, Russia's container market will grow by 3.2% annually until 2035. The best dynamics will be shown by the export direction, which will be facilitated by an increase in the number of Russian marine lines, increased trade with countries of the global South, and further growth in containerization of cargo. Market development may be hindered by restrictions at the Eastern polygon and possible tightening of sanctions measures.

“Russia's total international trade turnover may approach USD 1 trillion by 2030, provided that the logistics infrastructure continues to developed. At the same time, the contribution of the countries of the Greater East will amount to 40-50%, and the potential volume of Russia's trade turnover with these countries, including China and India, will amount to USD 470-500 bln, which is 30-40% higher than in 2023. To maximize the potential of trade with the countries of the Greater East, it is necessary to find a comprehensive solution to infrastructure and economic problems. Solving the difficulties at the Eastern polygon and working out alternative routes is what all market participants are waiting for,” says Valeria Plotnikova, Managing Partner of Strategy Partners.

“Improving the efficiency of the country's transportation and logistics industry will largely depend on real systemic actions by all market players: logistics operators, exporters and importers, and the government. Given the changing logistics market and its fluctuations, such actions should include the development of logistics infrastructure for many years ahead, especially in the Far East and the south of Russia, the formation of international hubs, high-quality logistics and digital solutions to compete in global markets,” said Maxim Shishkov, Strategic Marketing Director of Delo Group. < Back to list