17/01/2025
Russian Railways’ diminishing volumes have coincided with further efforts by the Chinese to develop alternative routings into Europe, but the smart money is on Central Asia becoming a destination in its own right.
Reports suggest that last year, Russia’s state-owned rail operator experienced a 25% downturn in import volumes from the Far East.
The blame has been levelled at substantial drop-offs in the availability of locomotives, which the country struggled to maintain, and crew, as western sanctions and demand for frontline reinforcements bit.
Meanwhile, Turkish investment officials have been cited in claims that China is looking to modernise Turkey’s rail network with a $60bn investment.
President of Turkey’s governmental promotion office Burak Daglioglu told the South China Morning Post this morning that these funds would be used to further electrify parts of the network, and build new domestic routes and a high-speed line.
All of which, senior fellow at the ISEAS-Yusof Ishak Institute in Singapore Jayant Menon said would service China’s desire to move greater volumes via rail into Europe.
Mr Menon said using a routing via Turkey would offer a faster connection than the present system, making use of Kazakhstan and the Caspian, which experienced a major boom in volumes following Russia’s invasion of Ukraine.
Elsewhere, state-owned Kazakh Railways (KTZ) experienced a 1,400% year-on-year surge in China-Europe container traffic for trans-Caspian routings last year.
Azerbaijan and Georgia also saw growth at the expense of Russia, but KTZ stands out as the biggest beneficiary, with 2024 railfreight volumes up 63% compared with 2023, which had experienced a similar rate of growth.
However, there are those that believe China’s investments in Central Asian rail infrastructure are less geared to serving Europe and more about making the region a destination in itself.
At last July’s TOC Europe event in Rotterdam, Vespucci Maritime’s Lars Jensen said “land will never be an alternative to sea, or even air, on the Asia-Europe trades”, describing the routing as a “niche”.
Determining whether this suggests Central Asia is becoming a destination in its own right is not so easy, but China’s recent focus on the region is indicative of its increasing value. Indeed, President Xi Jinping has visited Kazakhstan five times since assuming office in 2012, on a par with visits to France and the US in terms of frequency, one of those trips coming post-Covid and coinciding with going to Tajikistan.
This, Carnegie Russia Eurasia Center fellow Temur Umarov said signalled China’s focus in the coming year as part of a “tectonic shift” in regional geopolitics at the expense of Russia.
That shift is also evidenced in trade data provided by Mr Umarov, which noted that since the onset of Russia’s war on Ukraine, Chinese trade turnover into Central Asia had “surged” ahead of the traditional Russian dominance.
“Trade turnover between China and the five Central Asian nations surpassed $70bn in 2022 (compared with $42bn with Russia),” Mr Umarov said.
He added that as of last year, trade turnover between Central Asia and China “was more than double what it was with Russia”, having hit $90bn, with other players beginning to take notice of opportunities in a region previously considered a Russian domain.
Among those are Abu Dhabi Ports’ shipping arm, Noatum Maritime, which announced plans for expanded operations in the Caspian Sea on the back of a deal with Kazakhstan National Shipping Co, which will see NM collaborate on construction of two 500 teu box ships, specifically built for operations in the Caspian.
