PACIFIC RIM COUNTRIES TRANSIT CARGO ATTRACTION TO THE PRIMORSKY KRAI PORTS AND THE TRANS-SIBERIAN RAILROAD
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND THE U.S. DEPARTMENT OF STATE, 2000. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.
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SUMMARY
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1. THE SO-CALLED "BLACK CORRIDOR" IS A TAX AND DUTY-FREE ROUTE INTO RUSSIAN MARKETS VIA SPECIAL IMPORTERS IN MOSCOW. ON NOVEMBER 24, 1999 AT THE PRIMORSKY FOREIGN INVESTMENT ADVISORY COUNCIL (FIAC) ALEXANDER LASHIN, DEPUTY CHAIRMAN OF THE PRIMORSKY KRAI SHIPPING, SEA PORTS, COMMUNICATIONS AND TRANSPORTATION COMMITTEE AND SERGEY BANNIKOV, HEAD OF THE RFE CUSTOMS SHIPPING DEPARTMENT ANSWERED QUESTIONS ON CURRENT SITUATION ON THE "BLACK CORRIDOR" AND PACIFIC RIM CARGO TRANSIT VIA THE RFE PORTS AND THE TRANS-SIBERIAN RAILROAD.
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THE "BLACK CORRIDOR" PROBLEM
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2. QUESTION: HOW MUCH DOES PACIFIC RIM CARGO FOR THE RFE GO VIA MOSCOW AND ST.-PETERSBURG? WHY IS THE "BLACK CORRIDOR" PREFFERED?
RESPONSE: SINCE 1997, THE RFE PORTS AND THE TRANS-SIBERIAN RAILROAD HAVE BEEN SUBJECT TO DELAYED REFORMS, STRIKES, GOVERNMENT AND CUSTOMS INCONSISTENCY, AND RAIL TARIFF GROWTH.
SOME INDIVIDUALS AND COMPANIES IN THE WESTERN RUSSIA GET PRIVILEGES FOR CUSTOMS TAX AND DECLARED VALUE OF GOODS. LOCAL COMPANIES HAVE SET UP REPRESENTATION OFFICES IN MOSCOW AND ST. PETERSBURG TO SEEK THESE PRIVILEGES AS WELL.
DUE TO TAX AND TARIFFS DISCRIMINATION BETWEEN THE WESTERN RUSSIA AND THE RFE, OFFSHORE RE-EXPORT OF GOODS INCREASED. CARGO PROCESSING IN PUSAN (SOUTH KOREA) IS 30-40% CHEAPER THAN IN PRIMORSKY KRAI PORTS.
THIS RESULTED IN DECREASE OF RFE PORTS AND THE TRANS-SIBERIAN RAILROAD TRANSIT CARGO VOLUMES. THE PAST NINE YEARS, THE TRANS-SIBERIAN RAILROAD VOLUMES DECLINED FROM 139,000 CONTAINERS/YEAR TO 20,000 CONTAINERS/YEAR.
3. QUESTION: WHY DOES THE CUSTOMS VALUE OF GOODS DIFFER IN VLADIVOSTOK AND MOSCOW? (FOR EXAMPLE, CUSTOMS VALUE OF 1 TON OF MEAT IS $1.3 U.S. IN VLADIVOSTOK VS. TO $0.8 U.S. IN MOSCOW.)
RESPONSE: THE FEDERAL GOVERNMENT ISSUES THE CUSTOMS VALUE FOR EACH PRODUCT. THE CUSTOMS VALUE OF GOODS IS EQUAL IN ALL RUSSIAN FEDERATION CUSTOMS POSTS. THE PROBLEM IS THAT SOME INDIVIDUALS AND COMPANIES IN MOSCOW ENJOY SPECIAL CUSTOMS PRIVILEGES. DUE TO THE "BLACK CORRIDOR" PROBLEM, PACIFIC RIM AND LOCAL COMPANIES SUFFER, PRICES GO UP, THE LOCAL MARKET HAS FEWER PRODUCTS.
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SHIPMENT COSTS IN THE RFE
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4. QUESTION: WHAT ARE CURRENT TARIFFS AND TIME OF SHIPPING VIA THE TRANS-SIBERIAN RAILROAD?
RESPONSE: DURING THE LAST TWO YEARS RAILROAD AND SEA TRANSPORTATION TARIFFS WERE DECREASED BY 9% AND MADE EQUAL. LOCAL CUSTOMS DECREASED TIME FOR CARGO PROCESSING. SINCE EARLY 1999, THE CUSTOMS PAYMENTS WERE EQUALIZED FOR ALL OF RUSSIA. TIME OF SHIPPMENT VIA THE TRANS-SIBERIAN RAILROAD FROM PORT VOSTOCHNY TO BREST (RUSSIAN WESTERN BORDER) SHRANK TO 9 DAYS (FROM 14-15 DAYS BEFORE). AS A RESULT, THE URALS METALLURGICAL PLANTS EXPORTS ARE SHIPPED VIA THE RFE PORTS RATHER THAN VIA THE BALTIC SEA PORTS.
CONTAINER SERVICE VIA THE TRANS-SIBERIAN RAILROAD TO EUROPE CAN SAVE AS MUCH AS 15-17 DAYS SHIPPING TIME COMPARED TO 30 DAYS SHIPPING TIME VIA SUEZ CANAL. IN 1998, THE TRANSIT TRANS-SIBERIAN RAILROAD TARIFF WAS $1,460 FOR ONE 20-FEET CONTAINER; SEA TARIFF VIA SUEZ CANAL WAS $1,650 FOR ONE 20-FEET CONTAINER.
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EAST BY WEST CORRIDOR PROJECT
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5. QUESTION: WHAT IS CARGO FLOW BETWEEN RUSSIA AND CHINA?
RESPONSE: THE TRANS-SIBERIAN RAILROAD PROVIDES SEVERAL ACCESSES TO THE SEA: VLADIVOSTOK, NAKHODKA, PORTS OF VOSTOCHY, POSYET, AND ZARUBINO. THESE TRANSPORTATION HUBS PROVIDE ACCESS FROM PRIMORSKY KRAI TO CHINA, THE U.S., JAPAN, SOUTH KOREA, AND ASIA PACIFIC COUNTRIES VIA BORDER CHECKPOINTS AND SEAPORTS.
NORTHWEST CHINA HAS NO ACCESS TO THE SEA. THE DISTANCE FROM THE U.S. WEST COAST TO HARBIN (CHINA) VIA PRIMORSKY KRAI PORTS IS 1,800 KM SHORTER THAN THE DISTANCE VIA PUSAN (SOUTH KOREA) AND OVER 2,500 KM SHORTER THAN VIA KOBE (JAPAN). THE TRANSPORTATION SECTOR OF THE AD HOC WORKING GROUP DEVELOPED THE PROJECT "EAST TO WEST CORRIDOR". THE PROJECT ENVISAGES THE CREATION OF A NEW TRADE LINK BETWEEN THE U.S. WEST COAST AND THE NORTHERN CHINA PROVINCES VIA THE RFE PORTS. IN 1999, A PILOT SHIPMENT PASSED THIS ROUTE.
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CARGO SECURITY
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6. QUESTION: DOES THE PRIMORSKY KRAI ADMINISTRATION GUARANTEE CARGO SECURITY?
RESPONSE: DURING RECENT YEARS, THEFT HAS INCREASED SUBSTANTIALLY AND HAS BEEN SO RIFE THAT MANY SHIPPERS STOPPED USING RFE PORTS FOR THIS REASON ALONE. PRIMORSKY KRAI ADMINISTRATION CAN NOT BE A CARGO SECURITY GUARANTEE. LOCAL SHIPPING COMPANIES COORDINATE CARGO SECURITY IN RFE PORTS, RAILWAY ROAD, AND CUSTOMS.
KEY CONTACTS
PRIMORSKY KRAI ADMINISTRATION
SHIPPING, SEA PORTS, COMMUNICATIONS AND TRANSPORTATION COMMITTEE
22 SVETLANSKAYA STREET, VLADIVOSTOK, RUSSIA
TEL/FAX: (7 4232) 227 930
CONTACT: IVAN NADEIN, CHAIRMAN
ALEXANDER LASHIN, DEPUTY CHAIRMAN
CUSTOMS DEPARTMENT OF SUPERVISION OF SHIPPING
OPERATIONS
KRASNOGO ZNAMENI AVENUE, VLADIVOSTOK, RUSSIA
TEL: (7-4232) 422-110
CONTACT: SERGEY B. BANNIKOV, HEAD