**PACIFIC RIM COUNTRIES TRANSITCARGO ATTRACTION TO THE PRIMORSKY KRAI PORTS AND THE TRANS-SIBERIAN RAILROAD**               

 

POST OF ORIGIN:  VLADIVOSTOK

DATE OF REPORT:  991217     

 

AUTHOR:  IRINA KONSTANTINOVA     

 

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIALSERVICE 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.  THESO-CALLED "BLACK CORRIDOR" IS A TAX AND DUTY-FREE ROUTE INTO RUSSIANMARKETS VIA SPECIAL IMPORTERS IN MOSCOW.     ON NOVEMBER 24, 1999 AT THE PRIMORSKYFOREIGN INVESTMENT ADVISORY COUNCIL (FIAC) ALEXANDER LASHIN, DEPUTY CHAIRMAN OFTHE PRIMORSKY KRAI SHIPPING, SEA PORTS, COMMUNICATIONS AND TRANSPORTATIONCOMMITTEE AND SERGEY BANNIKOV, HEAD OF THE RFE CUSTOMS SHIPPING DEPARTMENTANSWERED QUESTIONS ON CURRENT SITUATION ON THE "BLACK CORRIDOR" ANDPACIFIC 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 DOESPACIFIC 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 BEENSUBJECT TO DELAYED REFORMS, STRIKES, GOVERNMENT AND CUSTOMS INCONSISTENCY, ANDRAIL TARIFF GROWTH.  

 

SOME INDIVIDUALS AND COMPANIES IN THE WESTERN RUSSIA GETPRIVILEGES FOR CUSTOMS TAX AND DECLARED VALUE OF GOODS.  LOCAL COMPANIES HAVE SET UPREPRESENTATION OFFICES IN MOSCOW AND ST. PETERSBURG TO SEEK THESE PRIVILEGES ASWELL.  

DUE TO TAX AND TARIFFS DISCRIMINATION BETWEEN THE WESTERNRUSSIA 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 THETRANS-SIBERIAN RAILROAD TRANSIT CARGO VOLUMES.  THE PAST NINE YEARS, THE TRANS-SIBERIAN RAILROAD VOLUMESDECLINED FROM 139,000 CONTAINERS/YEAR TO 20,000 CONTAINERS/YEAR.

 

3. QUESTION:  WHY DOES THECUSTOMS VALUE OF GOODS DIFFER IN VLADIVOSTOK AND MOSCOW?  (FOR EXAMPLE, CUSTOMS VALUE OF 1 TON OFMEAT IS $1.3 U.S. IN VLADIVOSTOK VS. TO $0.8 U.S. IN MOSCOW.)

 

RESPONSE:  THEFEDERAL GOVERNMENT ISSUES THE CUSTOMS VALUE FOR EACH PRODUCT.  THE CUSTOMS VALUE OF GOODS IS EQUAL INALL RUSSIAN FEDERATION CUSTOMS POSTS. THE PROBLEM IS THAT SOME INDIVIDUALS AND COMPANIES IN MOSCOW ENJOYSPECIAL CUSTOMS PRIVILEGES.  DUE TOTHE "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 CURRENTTARIFFS AND TIME OF SHIPPING VIA THE TRANS-SIBERIAN RAILROAD?  

 

RESPONSE: DURING THE LAST TWO YEARS RAILROAD AND SEA TRANSPORTATION TARIFFS WEREDECREASED BY 9% AND MADE EQUAL. LOCAL CUSTOMS DECREASED TIME FOR CARGO PROCESSING.  SINCE EARLY 1999, THE CUSTOMS PAYMENTSWERE EQUALIZED FOR ALL OF RUSSIA. TIME OF SHIPPMENT VIA THE TRANS-SIBERIAN RAILROAD FROM PORT VOSTOCHNY TOBREST (RUSSIAN WESTERN BORDER) SHRANK TO 9 DAYS (FROM 14-15 DAYS BEFORE).  AS A RESULT, THE URALS METALLURGICALPLANTS EXPORTS ARE SHIPPED VIA THE RFE PORTS RATHER THAN VIA THE BALTIC SEAPORTS. 

 

CONTAINER SERVICE VIA THE TRANS-SIBERIAN RAILROAD TO EUROPECAN SAVE AS MUCH AS 15-17 DAYS SHIPPING TIME COMPARED TO 30 DAYS SHIPPING TIMEVIA SUEZ CANAL.  IN 1998, THETRANSIT 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 CARGOFLOW BETWEEN RUSSIA AND CHINA? 

 

RESPONSE:  THETRANS-SIBERIAN RAILROAD PROVIDES SEVERAL ACCESSES TO THE SEA: VLADIVOSTOK,NAKHODKA, PORTS OF VOSTOCHY, POSYET, AND ZARUBINO.  THESE TRANSPORTATION HUBS PROVIDE ACCESS FROM PRIMORSKY KRAITO CHINA, THE U.S., JAPAN, SOUTH KOREA, AND ASIA PACIFIC COUNTRIES VIA BORDERCHECKPOINTS AND SEAPORTS.  

 

NORTHWEST CHINA HAS NO ACCESS TO THE SEA.  THE DISTANCE FROM THE U.S. WEST COASTTO HARBIN (CHINA) VIA PRIMORSKY KRAI PORTS IS 1,800 KM SHORTER THAN THEDISTANCE VIA PUSAN (SOUTH KOREA) AND OVER 2,500 KM SHORTER THAN VIA KOBE(JAPAN).  THE TRANSPORTATION SECTOROF THE AD HOC WORKING GROUP DEVELOPED THE PROJECT "EAST TO WESTCORRIDOR".  THE PROJECTENVISAGES THE CREATION OF A NEW TRADE LINK BETWEEN THE U.S. WEST COAST AND THENORTHERN 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 THEPRIMORSKY KRAI ADMINISTRATION GUARANTEE CARGO SECURITY?

 

RESPONSE: DURING RECENT YEARS, THEFT HAS INCREASED SUBSTANTIALLY AND HAS BEEN SORIFE THAT MANY SHIPPERS STOPPED USING RFE PORTS FOR THIS REASON ALONE.  PRIMORSKY KRAI ADMINISTRATION CAN NOTBE A CARGO SECURITY GUARANTEE. LOCAL SHIPPING COMPANIES COORDINATE CARGO SECURITY IN RFE PORTS, RAILWAYROAD, AND CUSTOMS.

 

KEY CONTACTS

 

PRIMORSKY KRAI ADMINISTRATION

SHIPPING, SEA PORTS, COMMUNICATIONS AND TRANSPORTATIONCOMMITTEE

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