STRENGTHENING TRANSPORT CONNECTIVITY BETWEEN THE REPUBLIC OF KOREA AND EUROPE THROUGH THE UNESCAP EURASIAN TRANSPORT CORRIDORS
STUDY REPORT 2019
The United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) serves as the United Nations regional hub, promoting cooperation among countries to achieve inclusive and sustainable development. The largest regional intergovernmental platform with 53 member States and 9 associate members, ESCAP has emerged as a strong regional think-tank offering countries sound analytical products that provide insight into the evolving economic, social and environmental dynamics of the region. The strategic focus of ESCAP is to deliver on the 2030 Agenda for Sustainable Development, which it does by reinforcing and deepening regional cooperation and integration to advance connectivity, financial cooperation and market integration. The research and analysis ESCAP conducts, coupled with its policy advisory services, capacity building and technical assistance to governments, aims to support countries’ sustainable and inclusive development ambitions.
The views expressed in this publication are those of the authors and do not necessarily reflect the views of the Secretariat of the United Nations The opinions, figures and estimates set forth in this publication are the responsibility of the authors and should not necessarily be considered as reflecting the views or carrying the endorsement of the United Nations.
The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.
Mention of firm names and commercial products does not imply the endorsement of the United Nations.
This publication is issued without formal editing. ACKNOWLEDGEMENT
The present publication was prepared by the Transport Connectivity and Logistics Section, Transport Division, ESCAP.
The study was developed under the project entitled “Strengthening transport connectivity between the Republic of Korea and Europe through the Eurasian Transport Corridors”, implemented by Transport Division, ESCAP, under generous financial assistance of Korea Maritime Institute.
The study was led by Mr. Edouard Chong, Economic Affairs Officer, Transport Division with core authors comprised (alphabetical order): Mr. Edouard Chong, Mr. René Meeuws and Mr. Vincent Vaudel. ESCAP Eurasian Transport Corridors maps were prepared by Dr. Varvara Krechetova. Ms. Azhar Jaimurzina Ducrest, Chief of Transport Connectivity and Logistics Section, provided peer views on this study report.
Grateful acknowledgement are extended to the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), Greater Tumen Initiative, Korea Maritime Institute and Research Institute of Highway China (RIOH), for co-organizing/ co-sponsoring the “Expert Group Meeting on Strengthening transport connec- tivity between the Republic of Korea and Europe through the Eurasian Transport Corridors,” held on 28 February 2019 at Beijing, China. Contents
Abbreviations 7 Background – extension of ESCAP Eurasian Transport Corridors to the 9 Korean Peninsula I. Connectivity along the Eurasian Northern Corridor 10 I.1 Main corridor connecting Republic of Korea to Europe 10 I.2 Railways along the Eurasian Northern Corridor 14 I.2.1 Infrastructure connectivity 14 I.2.2 Operational connectivity 21 I.3 Roads along the Eurasian Northern Corridor 27 I.3.1 nfrastructure connectivity 27 I.3.2 Operational connectivity 30 I.4 Dry ports and economic poles 48 I.4.1 Major dry ports and main economic poles along the corridors 49 I.5 Major seaports connecting to the corridors and alternative transport corridors 53 I.5.1 Infrastructure status of major seaports along the Eurasian Northern Corridor 53 I.5.2 Sea-land connectivity between the Republic of Korea and Europe 56 I.5.3 Sea-land multimodal connectivity 57 I.5.4 Artic sea route 61 I.6 Intermodal sea-land connectivity between Republic of Korea and 63 Southeast Asia I.6.1 Route description and major ports in Greater Mekong Subregion 64 I.6.2 Railway along the Eurasian Southern Corridor 74 I.6.3 Roads along the Eurasian Southern Corridor 75 II. Financing mechanisms for transport infrastructure development 78 II.1 Financing transport infrastructure 79 II.2 Infrastructure project bankability 81 II.3 Finance mechanisms in the ESCAP region 82 III. Operational solutions to enhance connectivity along the corridors 88 III.1 International conventions and agreements 88 III.1.1 Coverage by international conventions 88 III.1.2 Coverage of regional transport facilitation agreements 92 III.1.4 Bilateral and multilateral road transport agreements 95 III.1.5 Cooperation mechanisms between local governments in Northeast Asia 96 III.2 Development of institutional arrangements for the management of 97 the Eurasian Northern Corridor III.2.1 Current institutional arrangements for ESCAP Eurasian Transport 97 Corridor management III.2.2 Proposals for an institutional structure that governs and manages the 98 ESCAP Eurasian Transport Corridors IV. Notes on international trade and transport flows between the Korean Peninsula 110 and Europe; opportunities and challenges in selecting the best transport mode IV.1 Trade flows between China and the Korean Peninsula 111 IV.2 Trade flows between the Russian Federation and the Korean Peninsula 113 IV.3 Competitiveness of the ESCAP Eurasian Transport Corridors in 115 comparison to the Asia-Europe sea route Bibliography 121
List of Figures Figure 1 Eurasian Northern Corridor: schematic routes 10 Figure 2 ESCAP Eurasian Transport Corridors 11 Figure 3 Eurasian Northern Corridor routes 14 Figure 4 Khasan – Rajin railway connectivity 16 Figure 5 Land connections between Democratic People’s Republic of Korea 18 and Republic of Korea Figure 6 Roadmap for the re-establishment of Trans-Korean Railway connectivity 19 Figure 7 Railway infrastructure along the Eurasian Northern Corridor 21 Figure 8 Infrastructure progress along transport corridors in Mongolia 28 Figure 9 Road grades along the Eurasian Northern Corridor 29 Figure 10 Road permits for bilateral transport along the Eurasian Northern Corridor 34 Figure 11 Distribution of maximum gross weight of articulated vehicles by country 39 Figure 12 Diversity of emission standards along the Asian Highway Network 40 Figure 13 Location of the special economic zones in the Democratic People’s 50 Republic of Korea Figure 14 Aerial map of the logistics terminal in Zamin-Uud 52 Figure 15 Dry ports, terminals and seaports along the Eurasian Northern Corridor 52 Figure 16 Sea-land connectivity between the Republic of Korea and the Eurasian 56 Northern Corridor Figure 17 Example of transit and cross-border dwell time 58 Figure 18 Example of transit and cross-border dwell time 59 Figure 19 Documents used for border clearance 60 Figure 20 Example of transit and cross-border dwell time 61 Figure 21 Eurasia Initiative of the Republic of Korea 64 Figure 22 Sea-land connectivity between the Republic of Korea and the Eurasian 65 Southern Corridor Figure 23 Seaports in the Greater Mekong Subregion and Asian Highway Network 66 Figure 24 Viet Nam seaports system 67 Figure 25 Cargo volume via seaport system 68 Figure 26 Transport infrastructure network in Cambodia. 69 Figure 27 Shipping routes – ASEAN port network system 70 Figure 28 Ports along the Mekong River 71 Figure 29 Eurasian Southern Corridor routes 76 Figure 30 Required documents for border-crossing between Lao People’s 77 Democratic Republic and Thailand Figure 31 Infrastructure finance by agent 80 Figure 32 Sources of funds (capital) for infrastructure financing 80 Figure 33 Basic features of PPP models 81 Figure 34 AIIB project process steps 84 Figure 35 Trade trend between China and Republic of Korea 112 Figure 36 Trade trend between China and Democratic People’s Republic of Korea 112 Figure 37 International transport routes between Busan and Berlin 119 Figure 38 Distance, time and costs of six international transport routes between 120 Busan and Berlin
List of Tables Table 1 Overlapping initiatives for the main sections of the Eurasian Northern 12 Corridor Table 2 Comparison of railway systems by country 23 Table 3 Road transport agreements in Northeast Asia 34 Table 4 Route N1 limits on dimensions, weights and axle loads of freight road 37 vehicles in countries along the Asian Highway Network Table 5 Route N1 - Emission standards for countries on the Eurasian Northern 40
Corridor Table 6 Freight turnover of Eurasian Northern Corridor seaports 55 Table 7 Summary of country-specific and shared challenges and issues 72 regarding coastal shipping in Cambodia, Myanmar, Thailand and Viet Nam. Table 8 Standards on weights and dimensions for road freight vehicles – 78 Eurasian Southern Corridor Table 9 Membership in major MDBs of countries along the Eurasian Northern 84 Corridor Table 10 Basic financial indicators of MDBs operating in the ESCAP region 84 Table 11 Customs cooperation agreements in Northeast Asia 95 Table 12 Transport agreements in Northeast Asia 96 Table 13 Exports and imports of China with Democratic People’s Republic of Korea 111 and Republic of Korea (USD, million) Table 14 Transport modes used for trade between China and Democratic People’s 114 Republic of Korea and Republic of Korea, 2016 (per cent) Table 15 Dynamics of Russian foreign trade with the Republic of Korea, 2011-2016 115 Table 16 Asia – Europe sea routes 116 Table 17 Transport distance and travel time of selected block trains between 116 China and Europe Table 18 Time/cost comparison of sea and land alternatives in illustrative cases 117 Abbreviations
ADB - Asian Development Bank AH - Asian Highway Network AIIB - Asian Infrastructure Investment Bank APEC - Asia-Pacific Economic Cooperation BCP - Border-crossing post BRI - Belt and Road Initiative CAREC - Central Asia Regional Economic Cooperation CIM - Uniform Rules concerning the Contract of International Carriage of Goods by Rail CIS - Commonwealth of Independent States CMR - Contract for the International Carriage of Goods by Road COTIF - Convention concerning International Carriage by Rail CPMM - Corridor Performance Measurement and Monitoring CTO - Corridor Transport Observatory DPRK - Democratic People's Republic of Korea EAEU - Eurasian Economic Union EATL - Euro-Asian Transport Linkages EBRD - European Bank for Reconstruction and Development ECE - (United Nations) Economic Commission for Europe ECO - Economic Cooperation Organization EDB - Eurasian Development Bank EIRR - Economic Internal Rate of Return ENPV - Economic Net Present Value ESCAP - (United Nations) Economic and Social Commission for Asia and Pacific ETDB - ECO Trade and Development Bank EU - European Union EurAsEC - Eurasian Economic Community FAL - Facilitation of International Maritime Traffic GT - Greater Tumen Initiative IBRD - International Bank for Reconstruction and Development IDA - International Development Association IFC - International Finance Corporation IFI - International Financial Institution IMO - International Maritime Organization IRR - Internal Rate of Return IRU - International Road Union IsDB - Islamic Development Bank JICA - Japan International Cooperation Agency KOICA - Korea International Cooperation Agency MDBs - Multilateral Development Banks MIGA - International Multilateral Investment Guarantee Agency MoU - Memorandum of Understanding NDB - New Development Bank NEA - Northeast Asia NPV - Net Present Value OPEC - Organization of the Petroleum Exporting Countries OSJD - Organization for Cooperation between Railways OTIF - Intergovernmental Organization for International Carriage by Rail PPP - Public-Private Partnership ROK - Republic of Korea SCO - Shanghai Cooperation Organization SMGS - Agreement on International Goods Transport by Rail SMPS - Agreement on International Passenger Transport by Rail TAR - Trans-Asian Railway Network TIR - Transports International Routiers TPRI - Transport Planning and Research Institute, Ministry of Transport, China TRACECA - Transport Corridor Europe – Caucasus – Asia UNDP - United Nations Development Programme Background – extension of ESCAP Eurasian Transport Corridors to the Korean Peninsula 9
Background – extension of ESCAP Eurasian Transport Corridors to the Korean Peninsula
Overland connectivity between Asia and network through the Democratic People’s Republic Europe provides shorter distances than sea of Korea, allowing for seamless future overland freight and is at least twice as fast. Despite transport connectivity to mainland Asia and Europe. the time advantage, sea routes still dominate Such a connection through the ESCAP Eurasian Asia – Europe connectivity. Overland transport by Transport Corridors will enhance trade and economic rail and road along sections of the United Nations development, and benefit the local communities of Economic and Social Commission for Asia and the all countries along the corridors (i.e. the People’s Pacific (UN ESCAP) Eurasian Transport Corridors is Republic of China, Democratic People’s Republic of impeded by a substandard infrastructure network, Korea, Mongolia, Republic of Korea and the Russian and complex and non-harmonized border-crossing Federation). formalities and procedures. Technical standards for This paper builds upon the previous study both road and rail transport differ between countries, undertaken by ESCAP titled Comprehensive Planning and this reduces the efficiency and seamlessness of Eurasian Transport Corridors to Strengthen the of cross-border connectivity. Weak infrastructure, Intra- and Inter-Regional Transport Connectivity, inefficient legal frameworks and a lack of coordina- which aimed to extend the ESCAP Eurasian Transport tion in infrastructure development policy and corridor Corridors through the Korean Peninsula. This study management mechanisms between neighbouring evaluates infrastructure and operational statuses countries, limit the potential development of full- along the routes and provides information on the fledged, integrated multimodal transport and the financing mechanism for infrastructural development. operationalization of the ESCAP Eurasian Transport It also develops policy recommendations – with the Corridors. aim to strengthen sustainable transport, logistics The current lack of transport linkages on the connectivity and transport facilitation along the Korean Peninsula means the Republic of Korea is not corridors – and examines international trade and connected overland to the ESCAP Eurasian Transport transport flows between the Korean Peninsula and Corridors network. However, the evolving situation Europe, identifying opportunities and challenges for on the Peninsula may result in a connection to the different transport modes. 10 Connectivity along the Eurasian Northern Corridor
I. Connectivity along the Eurasian Northern Corridor
The United Nations Economic and Social (ii) Eurasian Central Corridor: routes linking the Commission for Asia and the Pacific (UN ESCAP) Russian Federation and the European Union (EU) with has identified three major transport corridors that China, the countries of Central Asia and the ports of can enhance overland connectivity between Asia the Arabian Sea; and and Europe: (iii) Eurasian Southern Corridor: routes that link (i) Eurasian Northern Corridor: routes that China and the countries of Southeast Asia with the connect the ports of Northeast Asia (Russian Far sea route to Europe. East and the east and northeast of the People’s This chapter will identify the relevant transport Republic of China) to Europe via Trans-Siberian Railway routes that connect the Republic of Korea to Europe. branches that run through the Russian Federation, and It will also assess the infrastructure quality of the routes running through Mongolia and the Republic of network and analyze the operationality of the corridors. Kazakhstan;
I.1 Main corridor connecting Republic of Korea to Europe
Figure 1 Eurasian Northern Corridor: schematic routes
Korean Peninsula Mongolia Europe Russian Federation China
Kazakhstan
Source: ESCAP Connectivity along the Eurasian Northern Corridor 11
Structure The geographical location of the Korean the competitiveness, economic productivity, growth Peninsula dictates that the most direct routes for and development of the region. overland linkages between and the Republic of Korea With the aim of improving the trans- and Europe, are provided by the Eurasian Northern port connectivity network and facilitating Corridor. trade and the exchange of goods, the sub- Northeast Asia is one of the world’s most region is steadily expanding its dynamic and influential economic hubs. Transport transport infrastructure. Operational land connections is the core constituent of its economic growth, and to Central and Western Asia, and to Central Europe the opportunities provided by the subregion’s ports, via China or the Russian Federation, will open new maritime connections, railways and roads are pivotal socio-economic and business horizons for the Korean to the economies of countries willing to leverage Peninsula and wider Northeast Asia. the potential of available infrastructure. A seamless There is still room for improvement, and the and efficient intra-subregional logistics network that filling of infrastructural and operational gaps is key to combines railways, roads, waterways, seaports and achieving seamless connectivity between the Korean inland intermodal facilities, is instrumental to ensuring Peninsula and Europe through Asia.
Figure 2 ESCAP Eurasian Transport Corridors
Source: ESCAP. 12 Connectivity along the Eurasian Northern Corridor
The Eurasian Northern Corridor provides the International Carriage by Rail (OTIF); the Organization backbone of transport connectivity between Asia for Cooperation between Railways (OSJD); the Central and Europe. It also hosts the most well established Asia Regional Economic Cooperation (CAREC); the and frequently used transport routes that link the Greater Tumen Initiative (GTI); and the Euro-Asian two continents. Transport Linkages (EATL) joint project of ESCAP Given the level of transport connectivity and and the United Nations Economic Commission for the economic importance of the corridor, many re- Europe (UNECE). gional and subregional initiatives have been created to The table below illustrates different regional enhance seamless connectivity between stakeholders. and subregional initiatives along the Eurasian Northern These include the Intergovernmental Organization for Corridor.
Table 1 Overlapping initiatives for the main sections of the Eurasian Northern Corridor
Source: ESCAP, 2017. Connectivity along the Eurasian Northern Corridor 13
Economic development along the Eurasian of manufacturing and transport. Such investment in Northern Corridor these special economic zones is aimed at turning The full potential of the Eurasian Northern them into major economic poles. In the Republic of Corridor – the different routes of which connect Korea, several free economic zones already exist in important economic seaports, industrial centres and Incheon, Busan, Gwangyang and Chongjiu, while the cities at strategic locations – is yet to be leveraged. special economic zones of the Democratic People’s As shown in figure 3 below, the routes of the Eurasian Republic of Korea are located in Rason, Sinuiju, Pyong- Northern Corridor mostly comprise both rail and road yang, Kaesong, Nampo, and Haeju. In China, these options, except for the road-only Barnaul – Hovd – economic zones can be found in the Tianjin bonded Urumqi section (N1D). They connect the north of zone and the Dalian bonded zone, while export-import Central Asia, Mongolia and Siberia to the Bohai Gulf processing zones are located in Urumqi, Shenyang, ports of Tianjin and Dalian in China (in the world top Dalian, Lianyungang, Xi’an and Huhhot. The “Vladivo- 15 by general cargo and container volumes), to the stok Free Port” area has been set up in the Russian Baltic port of St. Petersburg (in the world top 100) Federation and features several ports in Primorsky and the ports of Vladivostok, Nahodka and Vostochny territory at the east end of the Eurasian Northern in the far east of the Russian Federation.1 To leverage Corridor. Mongolia has also created the Altanbulag these linkages, countries along the route are actively Free Trade Zone and the Zamin-Uud free economic building an inland terminal network, which includes zone, while Kazakhstan has the “Khorgos – Eastern more extensive dry port facilities. Gateway” (a free economic zone between China and At country level, economic clusters are being Kazakhstan) and the special economic zone in Almaty. developed along the corridor through the creation of Stakeholder countries are also already working logistics facilities and centres of great importance, at national level to make the most of opportunities and by setting up special economic zones for major arising from the Eurasian Northern Corridor’s economic activities. development. Operationalizing these corridor routes Both governments and the private sector are will encourage development in areas that are investing in dry ports and logistics terminals and currently priorities for their respective governments. centres along the Eurasian Northern Corridor. Examples For example, the development of the far eastern of these investments can be found in Moscow, Novo- region in the Russian Federation already features as sibirsk, Nizhniy Novgorod, Yekaterinburg, Khabarovsk, a priority for the country, while the same is true for Ulan-Ude, Ussuriysk, Zabaykalsk, Irkutsk and Chita in the modernization and promotion of the old industrial the Russian Federation; Ulaanbaatar, Saynshand and bases in the northeast of China, the economic growth Zamin-Uud in Mongolia; Harbin, Erenhot, Suifenhe, and the development of human capital in the western Khorgos, Xi’an and Lanzhou in China; and Busan, Seoul, regions of China, the diversification of the economy Pyongyang, Sinuiju, Mango, Wonsan, Chongjin and in Mongolia, and the stronger logistics integration Rajin on the Korean Peninsula. of the Korean Peninsula with Eastern Asia, Central As for special economic zones, countries are Asia and Europe. establishing special regimes at strategic nodes to At regional level, the Belt and Road Initiative encourage the use of corridors’ existing transport (BRI) – also known as One Belt One Road (OBOR) – of facilities, and to attract new investment in the areas China is the largest project of its kind and is aimed
1 American Association of Port Authorities, “World Port Rankings”, 2014. 14 Connectivity along the Eurasian Northern Corridor
at developing economic poles along the Eurasian seeks to both establish and promote transport links Northern Corridor. The scope of the BRI covers the while ensuring the growth of economic cooperation entire Eurasian Northern Corridor, and the project and co-prosperity in the involved regions.
Figure 3 Eurasian Northern Corridor routes
Source: Compiled by Varvara Krechetova based on the ESCAP secretariat Trans-Asian Railway and Asian Highway database.
I.2 Railways along the Eurasian Northern Corridor
I.2.1 Infrastructure connectivity
Railway infrastructure along the sections of railway. Due to differences in electrification systems, the Eurasian Northern Corridor that run through at least three changes of locomotives are required China, the Russian Federation and the Republic of along the way. Korea, is in a better state the infrastructure of the The Trans-Siberian Railway is mainly used for sections in Mongolia and the Democratic People’s freight transport within the Russian Federation, Republic of Korea. and the railway itself hosts some 45 per cent of Routes N1 and N1B of the Eurasian Northern domestic railway freight traffic. Freight flows along Corridor are the main trunk of the Trans-Siberian Rail- the Trans-Siberian Railway are highly unbalanced: the way, a traditional and stable land connection between direction travelling west to east accounts for 95 per Asia and Europe. This route (Moscow – Nahodka) is cent of all freight traffic, while only 5 per cent of the made up of 9,288 km of double-tracked electrified freight moves from east to west.2 This makes the
2 Davydenko et al., “Potential for Eurasia Land Bridge Corridors & Logistics Developments along the Corridors”. Connectivity along the Eurasian Northern Corridor 15
railway’s operation rather expensive and challenges and locomotive changes.3 the economic and financial competitiveness of this The Mongolian railway section from Sukhbaatar corridor. The Trans-Siberian branch line to China to Zamin-Uud is operated by Ulaanbaatar Railway Joint (Karimskaya – Zabaykalsk, section of N1A) is currently Stock Company (UBTZ), established in 1949 by an being modernized. agreement between the Soviet Union and Mongolia. The Zabaykalsk (Russian Federation) – Manzhouli The parties own equal shares, a situation which has (China) section is made up of combined 1,435/1,520 complicated the decision-making process for the mm gauge tracks. The double-tracked Manzhouli – management of this section. Harbin section of the N1A on the Chinese side has The operational efficiency of the Tianjin – Ulaan- recently been electrified, with train speeds along the baatar railway is negatively affected by unreliable line increasing from 80 to 120 km/h. The Harbin – Mu- transport times that are caused by unpredictable danjiang section is non-electrified double track, but transloading times at Tianjin port. Cargo arriving in electrification works have started. The Mudanjiang – Tianjin that has Mongolia as its destination is often Suifenhe section is single-track non-electrified. Route subject to congestion at the port. N1A of the Eurasian Northern Corridor in the Russian The Chinese section of the N2 route is standard Federation at the Ussuriysk – Grodekovo section is gauge, while the Russian Federation and Kazakhstan single-track non-electrified, while the Grodekovo – use 1,520 mm broad gauge. Break of gauge on this Suifenhe (China) cross-border section is single-track route happens in Khorgos on the China – Kazakhstan with a combined 1,435/1,520 mm gauge. border. Rail traffic on the Russian Federation – Ka- The N1C railway route (928 km in length) that zakhstan part of the corridor benefits from unified connects the ports of Dalian and Yingkou to northeast technical standards and conditions, and from a China and later to the Trans-Siberian, is double-tracked common customs area. and electrified. The Khorgos – Yining section on the Chinese The N1 section running Ulan-Ude (Russian part of the corridor is single-track non-electrified, Federation) – Ulaanbaatar (Mongolia) – Tianjin Yining – Jinghe is single-track electrified and the (China) is often called either the Trans-Mongolian route from Jinghe to Lianyungang is double-tracked route or the Trans-Siberian branch to Mongolia. The electrified. The Kazakhstan section of route N2 is part from Ulan-Ude up to Zamin-Uud on the Mongolia/ mostly double-track electrified, while Kokshetau – China border, is 1,520 mm broad gauge, single-track Petropavlovsk and the newly built Zhetyken – Khorgos and non-electrified. The Chinese section to Tianjin is lines are single-track non-electrified. 1,435 mm standard gauge, the Erenhot – Jining part The railway network in Kazakhstan faces is single-track non-electrified and the Jining – Beijing some challenges. It is estimated that some 70 stretch is double-track electrified. On top of the delays per cent of railway tracks in Kazakhstan require usually taking place at border crossings (especially rehabilitation.4 Rolling stock is old and is causing at the Zamin-Uud – Erenhot crossing due to break shortages in container platforms, and the number of gauge), the route also has lengthy stops at Choir, of locomotives is decreasing.5 Similar problems have Saynshand and Ulaanbaatar for technical inspection been experienced by Mongolian railways and UBTZ.
3 Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-regional Transport Connectivity; Study Report 2017; ESCAP; p.11. 4 CARGO-REPORT.INFO, “Kazakhstan - important players shared the railway market” (Russian). 16 Connectivity along the Eurasian Northern Corridor
However, the situation in Kazakhstan is slowly On the N1H route, the Tumangan-Khasan border improving. crossing provides a railway connection between the While railways in the Russian Federation are not Korean Peninsula and the Russian Federation, and generally afflicted by a shortage of wagons, wagon it provides the peninsula with direct access to the management difficulties can cause local deficits at Trans-Siberian Railway network. There is an initiative certain times. The situation is gradually improving to rebuild the Khasan – Rajin railway line and to through the application of better practices in fleet simultaneously construct a cargo terminal at Rajin operations, and through an increase in the speed Port (see figure 4). The initiative also includes the of empty runs. For the Russian Federation and promotion of transit cargo traffic by rail from the Kazakhstan, the modernization of their wagon fleet north-eastern provinces of China through Rajin Port has been promoted by the entry into force of the on the Korean Peninsula, and onwards to the Russian new technical regulations of a Customs Union Federation. Part of the initiative is the reconstruction that prohibits the usage of obsolete wagons and of the Tumangan – Rajin section, with the laying of stimulates operators to replace them with newly dual-gauge tracks (both 1,520 mm and 1,435 mm) built vehicles. Russian Railways are now continuously facilitating Chinese cargo transport through Rajin Port renewing their locomotive fleet.6 to the Russian Federation. Routes N1G and N1H of the Eurasian North- ern Corridor connect to the Korean Peninsula. They incorporate three major land-land routes connecting Figure 4 Khasan – Rajin railway connectivity northeast China with the Korean Peninsula at Dandong, Jian and Yanji. The N1G route runs from Beijing and the Lia- oning Province of China to Dandong railway port on the Chinese side, and onwards to the Shinuiju railway port on the Democratic People’s Republic of Korea side. It then runs to Pyongyang and further to the cross-border port of Kaesong, and has the possibility of extension to Seoul and Pusan. The track between Shinuiju and Pyongyang is 225 km long, and Pyongyang to Kaesong is 177 km of standard gauge track. Most railway lines connecting the Korean Peninsula to China are single track. Many of the cross-border bridges between China and Democratic People’s Republic of Korea were built before the 1930s. Their surfaces are in a bad condition and they are too old to meet the demands of future trade flows. Source: Ministry of Transport of the Russian Federation.
5 29 Davydenko et al., “Potential for Eurasia Land Bridge Corridors & Logistics Developments along the Corridors,” p. 78 6 Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-regional Transport Connectivity; Study Report 2017; ESCAP; p.12. Connectivity along the Eurasian Northern Corridor 17
Characteristics of the railway systems on the Korean Peninsula The railway system in the Democratic People’s The Gyeongui Line and the Donghae North Republic of Korea accounts for 75 per cent of Line were restored and rehabilitated between 2000 passenger and 90 per cent of freight transport. It and 2004. Following an agreement on railway and uses standard gauge (1,435 mm) track and includes vehicle operations between the Democratic People’s 5,302 km of railway lines (Ministry of Unification, Republic of Korea and the Republic of Korea, both 2014), of which 98 per cent is single-track. Of these lines operated from 2007 to 2008, after which 5,302 km of railway, only an estimated 1,100 km operations again ceased. was built after 1960, meaning that the technology Although the railway systems in the Democrat- employed across most the system is outdated. The ic People’s Republic of Korea and the Republic of electrification rate is around 80 per cent, but the Korea have the same gauge, there are some technical electric traction system is the older 1,500-volt DC differences between the two systems: (direct current) model, as opposed to the newer • Different gradients and dimensions of 25 kV AC (alternating current) system. wagons and locomotives; In the past, four railway lines connected the • Differences in traction, designed maximum current territories of Democratic People’s Repub- speeds, coupling and brake standards; lic of Korea and Republic of Korea: the Gyeongui • Differences in signaling systems, power Line (Seoul, Republic of Korea – Sinuiji, Democratic supplies and track circuits; and People’s Republic of Korea), which opened in 1906; • Differences in the weights of tracks and the Gyeongwon Line (Seoul, Republic of Korea – the quality of sleepers.8 Wonsan, Democratic People’s Republic of Korea), which opened in 1914; the Mt. Kumgang/Geumgang- san Line (Seoul, Republic of Korea – Mt. Kumgang, Democratic People’s Republic of Korea), which opened in the 1920s; and the Donghae North/Bakbu Line (Samcheok, Republic of Korea – Anbyon, Democratic People’s Republic of Korea), which opened in the 1930s.7
7 Pang, “North Korea: transport and logistics Scenarios and South Korean Enterprises’ Location Decisions”. 8 You, Koo, and Kim, “A Technical review for Kyungeui Line Connection Korea Railroad Research Institute”. 18 Connectivity along the Eurasian Northern Corridor
Figure 5 Land connections between Democratic People’s Republic of Korea and Republic of Korea
Source: Kim et al, 2003.9
There is also the need to upgrade infrastructure have also been drawn up to re-establish an integrated along the N1G and N1H routes (notably in the Dem- railway network within the Korean Peninsula, as shown ocratic People’s Republic of Korea), which are part in figure 6 below. of the Trans Asian Railway (TAR) network. Roadmaps
9 Kim, Hong, and Nam, “Building Infrastructure for the Facilitation of Economic Cooperation in Northeast Asia in the 21st Century: Focusing on Land Transport Linkages between Korea and China”. Connectivity along the Eurasian Northern Corridor 19
Figure 6 Roadmap for the re-establishment of Trans-Korean Railway connectivity
The designations employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Source: Korea Railroad Research Institute.
Railway border-crossing points on the Route N1G Korean Peninsula In 2004, the Gyeongui route (Kaesong, Democratic People’s Republic of Korea and Republic Democratic People’s Republic of Korea – Seoul, of Korea Republic of Korea) was rebuilt. It is used for There used to be four railway border crossings bilateral passenger and freight transport. Data from between Democratic People’s Republic of Korea and the Ministry of Unification shows that between 2003 Republic of Korea: Gyeongui Railway, Gyeongwon and 2015, the majority of traffic used the Gyeongui Railway, Geumgangsan Railway and Donghae Railway. route, leading to the establishment of the Kaesong/ Gaesung Industrial Complex.10
10 Ministry of Unification, Republic of Korea, “Inter-Korean Traffic”. Accessed on 1 August 2019. Available at
Route N1H Korea). This port handles 70 per cent of trade between The N1H travels up the eastern seaboard China and the Democratic People’s Republic of Korea, from the border with the Republic of Korea south of with an installed capacity of 4,000,000 tons.13 Onjongri, to the border with the Russian Federation at In addition to Dandong/Sinuiju, there are two Tumangang (total distance within Democratic People’s alternative railway corridors between China and Republic of Korea: 800 km). Democratic People’s Republic of Korea, which are not In 2004, the Donghae route (Mt. Kumgang zone, located along the Eurasian Northern Corridor. Democratic People’s Republic of Korea – Ganseong, One of the BCPs is between Jian and Manpo. Republic of Korea) was rebuilt. It is used for bilateral Freight volumes are very low, while the installed passenger and freight transport. capacity allows for 300,000 tons. Border crossings on the western (Dorasan, Another railway border crossing between China for the Gyeongeui Line) and eastern (Jejin, for the and Democratic Republic of Korea is at Tumen/Namyang Donghae North Line) sides of the country are equipped in the upper north of Democratic People’s Republic of with railway transit facilities. Logistics centres also Korea. This border crossing has an installed capacity exist, including customs inspection and quarantine of 2,500,000 tons. facilities. The Dorasan border crossing also has a container yard.11 Russian Federation and Democratic People’s Republic of Korea14 China and Democratic People’s Republic of Korea12 Route N1H • Tumangan (Democratic People’s Republic of Route N1G Korea) – Khasan (Russian Federation) • Dandong (China) – Sinuiju (Democratic People’s The Tumangan – Khasan railway border crossing Republic of Korea) connects the Democratic People’s Republic of Korea This route hosts the most important border- with the Russian Federation. Khasan station connects crossing point (BCP) for the Democratic People’s to the Trans-Siberian Railway and is a cargo interstate Republic of Korea. Cross-border land ports are essential transfer station serviced by the Far Eastern Railway. entry points for northeast China, especially for trade It connects with Tumangan border station via a sin- with Democratic People’s Republic of Korea. There are gle-track, 54 km dual gauge (both 1,520 and 1,435 3 rail (and 10 road) cross-border points between China mm) line equipped with a two-way, semi-automatic and the Democratic People’s Republic of Korea. The blockage of passage in both directions for cargo capacity on the Chinese side is sufficient for handling and passenger trains that use autonomous traction. existing trade volumes between the two countries. The line was rehabilitated from 2008 to 2014, under The most important cross-border port is Dandong a joint venture between Russian Railways and the (China) – Sinuiju (Democratic People’s Republic of Democratic People’s Republic of Korea.
11 Na and Korea Railroad Institute, “Integrated Transport Infrastructure and Cross-Border Facilitation Study for the Trans-GTR Transport Corridors”. Individual Country Report: Republic of Korea. 12 There are no transport relations between the two countries. 13 Transport Planning and Research Institute (TPRI), year not known. In ESCAP study report on The establishment of the integrated logistics system in the region connecting to the Korean Peninsula (2017). 14 There are no road transport relations between the two countries.> Connectivity along the Eurasian Northern Corridor 21
The rehabilitation project also included the In short, there are no missing links on the railway development of container berth facilities in the port network of the Eurasian Northern Corridor. However, of Rajin. The port is ice-free all year, is strategically there is room for improvement in the infrastructure located and is of interest to China, the Republic of quality of the network, notably in the Democratic Korea and the Russian Federation for the transit of People’s Republic of Korea and Mongolia. cargo freight in the subregion.
Figure 7 Railway infrastructure along the Eurasian Northern Corridor
Source: Compiled by Varvara Krechetova based on ESCAP secretariat Trans-Asian Railway database and open data sources.
I.2.2 Operational connectivity
Even though there are no missing links along • Technical barriers the Eurasian Northern Corridor in terms of its infra- o Differences in fleets and train length structural network, operational challenges remain. o Gauges, railway electricity infrastructure, The following are examples of the main operational axle loads challenges that have an adverse impact on the seam- lessness of railway connectivity along the Eurasian • Speed of cargo trains
Northern Corridor:15 o Low freight train speed and lack of punc- tuality
15 Some of these challenges are also identified by OTIF (2016, ‘Study on Corridors’). 22 Connectivity along the Eurasian Northern Corridor
• Complexity of documentation requirements EU, 40-foot platforms are the most popular length as and transit time they can fit two 20-foot or one 40-foot container. This
o Risks (and possible costs) related to different length causes the occupancy of several loading blocks administrative rules and documentation at a time, increases the clearing time when leaving a requirements block section and prevents trains from crossing tracks
o Occasional difficulties have been reported and overtaking in some network regions. Container with customs clearance trains from China reach the Kazakh border with 54 conditional carriages (each 13.92 m (14 m) in length). • Tariffs A 54-carriage train would therefore be 756 m long,
o Risk of non-competitive tariffs, fluctuations and with the addition of a locomotive a total of 801 or sudden tariff adjustments m in length. For Kazakhstan this length is acceptable,
o Imbalance of rail cargo container flows, as Dostyk station’s rails allow trains of this length to which affects wagon availability operate. In the Russian Federation, the average train contains 71 conditional carriages (994 m), making • Impediments to efficient railway transport the full train 1,040 m long. The train length can be operations are described in more detail below. smaller (around 800 m) under certain circumstances.18 The length of such trains in Democratic People’s • Train length and fleet Republic of Korea and in the Republic of Korea is 400 A 2018 assessment of the technical limitations m, while it is 800 m for Mongolia. Given the demand of national railways pointed to train length as having for faster, more frequent deliveries of smaller batches a strong effect on freight economy.16 The length of of raw materials and goods, some argue that railroad trains is regulated by the national rail authority of each development is moving in the wrong direction. Long country, and also limited by other factors such as trains take longer to assemble and disassemble in length of station tracks, train weight, the possibility freight yards and can lead to delays on main lines.19 of traction, the profiles of routes and their technical Finally, there is also the risk of non-availability of capabilities (stations, crossing points, overpasses, road platform wagons for container transport. For example, crossing points, on-route posts, automatic blocking on the route between Europe and China, the availability and traffic lights).17 of platform wagons for container transport is often The loading of fitting platforms with containers low. This is due to differences in country wagon pool is also influenced by train length. For example, in ownership, and the private container train operator China, the Eurasian Economic Union (EAEU) and the market complicating interchanges at borders.
16 IIASA, 2018. Trans-Eurasian Land Transport Corridors: Assessment of prospects and barriers. 17 IIASA, 2018. Trans-Eurasian Land Transport Corridors: Assessment of prospects and barriers. 18 OTIF, 2016. “Study on Corridors”. 19 D. Machalaba, 2018. Available at
Table 2 Comparison of railway systems by country
Source: Korea Railroad Research Institute, 2017.
• Gauges, railway electricity infrastructure and Often considered a physical obstacle to the axle load smooth flow of traffic, differences in track gauges Technical differences can create bottlenecks at prevent the continuous movement of rolling stock border stations. Along the Eurasian Northern Corridor, across borders and are also a transport facilitation break of gauge occurs at the borders between China issue. Long delays in passenger and freight transport and Mongolia, the Russian Federation and Kazakhstan, have been observed at border crossings that have a and between Democratic People’s Republic of Korea break of gauge. While such delays are partly caused and the Russian Federation. by disorderly transshipment procedures, there are The wider gauge of 1,520 mm is used in Kazakh- a number of technical solutions for reducing the stan, Mongolia and the Russian Federation alongside impact on rail service efficiency. These include trans- compatible carriages, brakes, coupling devices and shipment, bogie changing, the use of wagons with other related equipment.20 The standard gauge of “variable-gauge” bogies, the provision of dual gauge 1,435 mm is used in the Democratic People’s Republic tracks and the conversion of different track gauges of Korea, China and the Republic of Korea, as well as into a single-gauge standard:21 in western Europe.
20 In western Europe, railways run on three different gauges. The most common is 1,435 mm; in Spain and Portugal the gauge is 1,668 mm; and in Ireland it is 1,600 mm. 21 Available at
(i) Transshipment is the transferal of freight or alternating current and, correspondingly, different by manual or mechanical means from wagons of one voltages in their electricity networks. gauge to wagons of another, directly or indirectly using Differences in axle load capabilities between platforms, yards, storage or warehouse facilities; or countries can also reduce the efficiency and effec- the transfer of passengers from one train to another; tiveness of international railway transport. Railways (ii) Bogie change happens when wagons are are designed with a maximum weight-per-axle that lifted on a set of jacks, and bogies of one gauge are if exceeded can cause damage to rail tracks. rolled out and bogies of the other gauge rolled in; The Russian Federation has significant experience (iii) The use of wagons with “variable-gauge” in operating 23.5-ton and 25-ton axle load carriages. bogies enable wagons to be pulled along a special Russian Railways are currently experimenting with transition track at a reduced speed. During the pro- 27-ton axle load carriages, as this type of loading cess, the distance between wheels is adjusted from minimizes costs per 1 ton of cargo. In the future, one track gauge to another; developments will enable axle loads to carry up to (iv) Two different track gauges are provided on 30 tons if railway infrastructure is modernized.23 a single-track foundation through the insertion of a Transport companies indicate that this type of carriage third rail (or sometimes a fourth rail to obtain the is preferable, as Russian Railways is looking for the so-called ‘composite gauge’); and fastest way of increasing cargo volume and speed. (v) Conversion of tracks of different gauges to In the subregion, maximum axle load currently varies a single gauge standard is to build or re-build tracks from one railway system to another – it is 22 tons with the same standard. in the Republic of Korea, 16.8 tons in Democratic The absence of double-tracks can lead to People’s Republic of Korea and 23 tons in China.24 congestion and bottlenecks at certain parts of the Eurasian Northern Corridor. The following sections • Speed of cargo trains along the corridors are single-track: Mudanjiang – Transport speed is often viewed as one of the Suifenhe; Ussuriysk – Grodekovo on the N1A route; most important features for cargo transport. the Grodekovo – Suifenhe (China) cross-border section; Container trains travel through the territory of Ulan-Ude up to Zamin-Uud on the Mongolian/China EAEU countries at an average speed of 45 km/h.25 border; Erenhot – Jining; Khorgos – Yining; Yining – Average speeds for countries in the subregion Jinghe; and the Zhetyken – Khorgos section.22 Almost are as follows: in the Russian Federation, there are the entire network in the Democratic People’s Republic different average speeds on different parts of routes, of Korea, and 40 per cent of the railway network in with the average section speed for cargo trains being the Republic of Korea is single track. 41.8 km/hour;26 in China, the average speed of freight Another factor that adversely affects seamless trains is 35.6 km/h, but when trains are approaching international railway connectivity is the difference in Alashankou, bordering Kazakhstan, the speed reduces electrification, because countries either use direct to 28-30 km/h because of single-track traffic (given
22 ESCAP, 2017. Comprehensive planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter- Regional Transport Connectivity. 23 IIASA, 2018. “Trans-Eurasian Land Transport Corridors: Assessment of prospects and barriers”. 24 Korea Railway Research Institute, 2017. Presentation on Connecting the Korean Peninsula to the Trans-Eurasian railway network. 25 IIASA, 2018. “Trans-Eurasian Land Transport Corridors: Assessment of prospects and barriers”. 26 Available at
that the second rail track has not yet been opened); control authorities – such as Customs, immigration and there is no information available about cargo train and quarantine – to process and clear documents speeds in the Democratic People’s Republic of Korea.27 and to inspect goods. A survey made by OSJD As for EU countries, rail freight trains indicated that international trains spend 34.5 per cent achieve an average speed of 18-30 km/h due to of their time involved in border-crossing formalities. administrative constraints, waiting times, lack of 30 According to the Coordinating Council of Trans- central management, etc.28 Siberian Transportation (CCTT), the main reasons for Traditional maritime routes take on average cargo delays or detentions at borders along Eurasian 4-6 weeks to transport goods between Asia and corridor routes are:31 Europe, travelling either all the way south or back • Incorrect execution of commercial/carriage north again along the coast of Africa or the Suez documents (56 per cent); Canal. In comparison it would take 12-15 days from • Untimely provision of cargo consignments East Asia to Europe using railway transport (block to empty rolling stock (12 per cent); trains) (see table 17). • Customs procedures (9 per cent); • Commercial failures (8 per cent); • Complexity of documentation requirements and • Technical flaws and malfunction of transit time29 infrastructure (7 per cent); and The consignment note is the most important • Entry into force of defective normative legal document for rail transport. All countries along the documents (1 per cent). Eurasian Northern Corridor are contracting parties to the Organization for Co-operation between Railways • Complexity of tariff systems (OSJD), meaning the Agreement on International Tariffs play an important role in terms of the Goods Transport by Rail (SMGS) consignment note attractiveness and competitiveness of routes. can be used. For onwards shipment to Europe, the A coordinated tariff policy attracts and enables Common CIM/SMGS consignment note, introduced in efficient rail transport across countries situated 2006, can be used. along corridors. If not coordinated, disrupted tariff In addition to the rail consignment note, there policies imply more instability and smaller incentives are many other documents that may be required, such for railway operators. as commercial invoices, packing lists, certificates of If a railway administration along the Eurasian origin, quarantine inspection certificates from relevant Northern Corridor has a segmented tariff policy, it may government agencies, exports/import permits, etc. create higher and therefore non-competitive prices. However, there is still a lack of harmonization for the Furthermore, tariff changes prevent long-term logistics documents that are required by different countries. service contracts when using the Trans-Siberian route, Train delays at border crossings are mostly for example.32 On Trans-Siberian routes, pricing is still caused by the significant amount of time required by inflexible and reacts slowly to market fluctuations.
27 IIASA, 2018. “Trans-Eurasian Land Transport Corridors: Assessment of prospects and barriers”. 28 Available at
The deregulation of tariffs along the Trans-Siberian notes at border stations between SMGS countries. route is required and supported by Russian Railways in their statements.33 • Imbalance in rail cargo container flows – availability Currently, the Russian railway administration of wagons Trans-Siberian Railway (TSR) has implemented a fixed The majority of rail cargo transported between tariff, and provides discounts so as to be competitive Asia and Europe travels from east to west. The higher in the logistics market. As for Chinese railways, “the amount of cargo volume travelling westbound rather strict oversight National Development and Reform than eastbound creates an imbalance in exchanges Commission (NDRC) and Ministry of Transport maintain between regions. It is forecasted that there will on China Railway Corporation’s operations also has be further cargo growth between Europe and Asia made an unfriendly market, regulating rail tariffs and in the future through EAEU countries, mainly due thereby prohibiting China Railway Corporation (CRC) from to increasing Europe – China trade. Over the past tailoring its customer offerings based on willingness four years, cargo flow from China to Europe by rail to pay”.34 Despite the above, the rail freight industry through the EAEU has doubled annually, reaching “has a positive outlook: conventional rail lines have some 97,000 containers in 2016, while in the opposite the potential to be freed up thanks to an expansion direction container freight flow was around 50,000 in passenger dedicated lines; the ongoing reform containers per year.38 This trade imbalance creates at CRC supported by NDRC is a big step toward great challenges in the management of containers enabling a competitive environment for rail; and and wagons, especially in terms of the availability the expansion of intermodal facilities in the country of the right type of wagons/containers in the right will facilitate inter-modal connectivity”.35 place at the right time. Out of nine agreements concluded within In the Russian Federation, there are generally the framework of the OSJD, the most relevant for very few wagon shortages. However, issues with freight transport and border crossing by railway wagon management can cause local deficits when is the SMGS. The agreement introduces a formal they occur. The situation is progressively getting contract for the carriage of goods and establishes better, with improved fleet operation management the obligation to set and publish transport tariffs.36-37 and faster empty runs.39 In the Russian Federation It provides a single contract for the carriage of goods and Kazakhstan, the modernization of the wagon fleet and a single consignment note for rail freight traffic has been improved by the entry into force of the among contracting parties at respective territories new technical regulations of a Customs Union, that where OSJD/SMGS rules apply. It is not a requirement prohibit the use of obsolete wagons and encourage to conclude a new contract or issue new consignment operators to replace them with recent vehicles. As
33 OTIF, 2016. Study on corridors. 34 World Bank, 2017. Case Study-China Rail. 35 Ibid. 36 SMGS Agreement Art.7-8 and 14 to 16. 37 Transport tariffs are regulated with OSJD Agreement on the International Railway Transit Tariff (MTT) and Agreement on the Uniform Transit Tariff (ETT). 38 IIASA, 2018. Trans-Eurasian Land Transport Corridors: Assessment of Prospects and Barriers. 39 Zibrova, “Wagon deficit does not threat railways” (Russian). Connectivity along the Eurasian Northern Corridor 27
for Democratic People’s Republic of Korea, Kazakhstan and Mongolia, wagon and locomotive fleet renewals are required, although the extent of the requirements differs for each country.40 The situation in the Republic of Korea and China is generally better.
I.3 Roads along the Eurasian Northern Corridor
I.3.1 Infrastructure connectivity
The overall state of road infrastructure along the standards41 Primary, Class I and II). In China the best Eurasian Northern Corridor is good in China, Republic road conditions occur along route N2 from Jiayuguan of Korea and the Russian Federation, but there are still to Lianyungang (Primary, Class I and II); route N1 from many challenges in the Democratic People’s Republic Erenhot to Tianjin (Primary, Class II); along route N1A of Korea and Mongolia. on the Manzhouli to Harbin (Class II) section and the The data provided by the corridor’s countries Harbin to Suifenhe section; and along route N1C from to the Asian Highway Network (AH) Database show Harbin to Dalian (Primary). the list of classes for the larger links of particular The Chita – Zabaykalsk section of Route N1A in highways between notable transport nodes. However, the Russian Federation features stretches of Class it is possible that quality varies from one section to III roads and those below Class III. From 2008 to another within those links. 2015, the eastern part of route N1B in the Russian The best road conditions along the Eurasian Federation (AH30) between Chita and Khabarovsk Northern Corridor can be found on the section of was upgraded, and currently meets the requirements route N1 in the Russian Federation, from Kras- of Class III and Class II roads. It is a two-lane road noyarsk to the borders with Finland and Belarus (AH paved with asphalt along its full length.
40 ESCAP, 2017. Comprehensive planning of Eurasian Transport Corridors to strengthen the intra- and inter- regional transport connectivity. 41 The Asian Highway Agreement (2004) sets the following road standards: “Primary” – access-controlled highways with asphalt or cement concrete pavement; “Class I” – four or more lane highway with asphalt or cement concrete pavement; “Class II” – two-lane road with asphalt or cement concrete pavement; “Class III” – two-lane road with double bituminous treatment. 28 Connectivity along the Eurasian Northern Corridor
Figure 8 Infrastructure progress along transport corridors in Mongolia
Source: Ministry of Road and Transport Development of Mongolia.
The worst conditions exist along the N1D route Recently, the construction of the Almaty – Khor- within Mongolia, where there are a mix of Class II and gos four-lane paved-concrete toll road was finalized below Class III roads. Close to the border with China with financing from the World Bank. (which is being upgraded to Class II), the Tsaganor to Hovd stretch contains sections of Class II within Characteristics of the road network on roads below Class III. The sections from Ulaanbaishint the Korean Peninsula to Tsaganor and from Hovd to Bulgan Sum are entirely Roads in Democratic People’s Republic of Korea below Class III. However, there are numerous on-going are classified into highways and Level I-IV roads. It and planned projects to upgrade the road network in is estimated that less than 10 per cent of the ordi- Mongolia. nary roads in Democratic People’s Republic of Korea Transit transport from the Russian Federation are paved.42 In 2014, Democratic People’s Republic to the border with China on the N1 route became of Korea had 26,164 km of roads and 729 km of possible with the completion of road construction highways. There are eight highways, five of which works along the road running from Choir to Zamin-Uud connect Pyongyang with Sunan (15 km), Wonsan (189 to the border with China, in 2015. The section from km), Nampo (46 km), Kaesong (170 km) and Huichon Choir to Zamin-Uud is now a two-lane asphalt-paved (120 km). The other two sections are Wonsan – Mt. road, and the last 3.3 km to the border with China is Kumgang (114 km) and Sariwon – Sinchon (30 km). a four-lane asphalt road. Connectivity along the Eurasian Northern Corridor 29
Along the N1G route in Democratic People’s dong (China); Namyang (Democratic People’s Republic Republic of Korea, there is a Class III road running of Korea) – Tumen (China); and Wonjong (Democratic from the border with Republic of Korea to Gaesung/ People’s Republic of Korea) – Quanhe (China). Kaesong, and onwards to Pyongyang there is a Class I The Republic of Korea has 105,673 km of road. From Pyongyang to Sinuiju the road is also Class roads and 4,139 km of highways. The road network I, but with some sections below Class III. Along the is almost fully paved (92.4 per cent).44 The Republic N1H route in the eastern coast of the Korean Penin- of Korea has been party to the Intergovernmental sula, from Ganseong to the Sonbong border with the Agreement on the Asian Highway Network since Russian Federation, the roads are a mix of Class II, 2004 and is traversed by two AH routes: AH1 (N1G) Class III and below Class III.43 (Ministry of Unification, and AH6 (N1H). The N1G route is a Primary road by Republic of Korea). AH classification, running from Busan to Seoul. The The Democratic People’s Republic of Korea is N1H route runs from Gyeongju to Ganseong and the connected with China by 11 bridges over the Yalu and border with Democratic People’s Republic of Korea, Tumen rivers. The main bilateral border crossings are and consists of Class I and Class II roads with a Sinuiju (Democratic People’s Republic of Korea) – Dan- section of Primary.
Figure 9 Road grades along the Eurasian Northern Corridor
Source: Varvara Krechetova. Note: Based on Asian Highway Database, ESCAP, ADB, Rosavtodor.
42 Tsuji, “The Transport Infrastructure of the DPRK”. 43 Asian Highway Database. Available at
I.3.2 Operational connectivity
The efficiency of road transport does not Other common issues include lack of capacity, depend solely on the quality of roads. It is also the lack of separate lines for trucks and buses, a affected by issues such as national and international lack of scanning equipment for cargoes or the lack transport licenses and transport permits; traffic of IT hardware and software, which can lead to the rights (bilateral or multilateral); designated trans- manual processing of documents.45 port routes; visa requirements for drivers and crew; On the Eurasian Northern Corridor, the capacities weights, dimensions and emissions standards for of road BCPs are still inadequate for current traffic. vehicles; insurance requirements; driver’s licenses; This is the case at the Kyahta (Russian Federation) documents required by transport authorities; documents – Altanbulag (Mongolia) crossing point; at Tashanta required for cargo; requirements to which transport (Russian Federation) – Ulaanbaishint (Mongolia); operators must adhere; and customs requirements Zabaykalsk (Russian Federation) – Manzhouli (China); for vehicles and freight. Pogranichny (Russian Federation) – Suifenhe (China); All these issues can be agreed upon between and Bugristoe (Russian Federation) – Kaerak (Kazakh- member States along the ESCAP Eurasian Transport stan). In addition to this, the working hours of some Corridors through bilateral and multilateral agreements. BCPs are not synchronized between countries, for There is a continuous, on-going process looking to example between Tashanta (Russian Federation) and harmonize standards related to vehicles, drivers Ulaanbaishint (Mongolia). and crew, and cargo, and to agree upon the mutual Below are details of the different BCPs along recognition of documents and inspections. the Eurasian Northern Corridor, and operational issues related to each of them: Border-crossing points As road traffic runs through the different Democratic People’s Republic of Korea and Republic countries of the Eurasian Northern Corridor, it has to of Korea negotiate numerous border-crossing points (BCPs). Route N1G – The border is currently closed. These BCPs – however well designed – present bot- Route N1H – The border is currently closed. tlenecks for international transport, and regulations are sometimes an issue. China and Democratic People’s Republic Overall, along the Eurasian Northern Corridor, of Korea46 the major challenges related to border-crossing are Route N1G non-harmonized transit trade procedures, a lack of • Dandong (China) – Sinuiju (Democratic People’s inter-agency cooperation, low adoption of advance Republic of Korea) risk-management technologies, delays due to queu- The most important cross-border port is located ing, lengthy inspections and the manual processing at Dandong (China) – Sinuiju (Democratic People’s of documents. Republic of Korea). The bulk of road-carried bilateral
45 Dr. V. Krechetova, 2017. Seminar on the Establishment of the Integrated Logistics System in the Region Connecting to the Korean Peninsula, Bangkok, 28 September 2017. 46 No transport relations exist between the two countries. Connectivity along the Eurasian Northern Corridor 31
trade between the Democratic People’s Republic transport operators.51 In China, the maximum weight of Korea and China is routed via the 80-year-old allowance for trucks is higher than in Kazakhstan. Friendship Bridge, which links Sinuiju (Democratic For that reason, Chinese trucks are only partial- People’s Republic of Korea) to Dandong (China) across ly loaded when entering the zone. The plan is to the Yalu river. It handles around 70 per cent of the increase weight limits both within the zone and in trade between the Democratic People’s Republic of its adjacent territory. Korea and China. The road transport throughput is 1,280,000 tons, transported by some 148,000 trucks.47 China and Mongolia52 Route N1 China and Kazakhstan48 • Zamin-Uud (Mongolia) – Erenhot (China) Route N2 This is the main BCP between China and • Altynkol/Khorgos (Kazakhstan) – Khorgos (China) Mongolia. With the adoption of information and On average, the time taken to cross the border communications technology (ICT) and the streamlining by road from China to Kazakhstan at the Khorgos of Customs procedures, border crossing times for border crossing point is 10.6 hours, and 5.8 hours in road freight vehicles reduced from an average of 12 the opposite direction. This wait is 4.5 and 3 times hours in 2014, to 4 hours in 2015. Cargo manifests shorter, respectively, than in 2010.49 are currently being exchanged electronically at the Even though Khorgos has one of the busiest border, and fewer paper documents are required from roads in terms of vehicle queues, overall the situation drivers when crossing the border. The logistics costs is improving at the border crossing. On the Kazakh- for road transporters crossing the border along the stan side, outgoing trucks complete the necessary Sukhbaatar – Ulaanbaatar – Erenhot corridor have procedures within 30 minutes, while trucks incoming reportedly dropped by 43 per cent (from USD 267 from China require around 1 or 2 hours.50 to USD 151).53 The “Khorgos – Eastern Gateway” free economic zone project is a framework that is helping the Route N1D development of facilities on the Kazakhstan side. • Takeshkan (China) – Yarantai (Mongolia) The zone envisages visa-free access for business Open all year round for international traffic and visitors from Kazakhstan, China and third countries, operates 9 hours per day. Passenger traffic at the along with single-window services for residents and port is around 10,000 people.54
47 Transport Planning and Research Institute (TPRI), year not known. In ESCAP study report, The Establishment of the Integrated Logistics System in the Region Connecting to the Korean Peninsula (2017). 48 Agreement between the Government of the People’s Republic of China and the Government of the Republic of Kazakhstan on Interna- tional Road Transport, 1992. 49 Asian Development Bank. “CAREC Corridor Performance Measurement & Monitoring Annual Report,” 2015. 50 ESCAP. “Report on Transport Facilitation Procedures and Documentation in Kazakhstan.” 51 JSC Khorgos International Centre of Boundary Cooperation. Available at
China and the Russian Federation55 it can be adapted by the laying of planks between Route N1A the tracks to allow for the carriage of motor vehicles • Zabaykalsk (Russian Federation) – Manzhouli (by special arrangement). (China) This border crossing is open 24 hours per day Russian Federation and Mongolia57 for both passengers and cargoes from the Russian Route N1 Federation, China and third countries. • Kyahta (Russian Federation) – Altanbulag (Mongolia) The Zabaykalsk border operates below capacity Kyahta BCP is open 24 hours a day for cars for trucks (156 of 625 possible per day) and buses and passengers, and 12 hours a day for trucks. The (35 of 210 possible per day), and over capacity for design capacity of the BCP is 1,500 passengers and cars (441 cars, when it was designed for 425 cars 500 vehicles per day, but in 2016 the BCP operated per day). For passengers, 3,185 pass per day, while above capacity. On peak days these numbers almost the crossing was designed for 3,000 per day. tripled. Kyahta has 5 transport lines and Altanbulag 11, Freight and container terminals exist on both making queuing a common occurrence. As a result, sides and are being continuously developed. Russian Customs has considered modernization as a way of expanding capacity. • Grodekovo rail/Pogranichny road (Russian Feder- From the Mongolian side, it takes around 2 hours ation) – Suifenhe (China) to cross to the Russian Federation side at Altanbulag. Open for the bilateral flow of freight, passengers It is estimated that this wait could rise to 4 hours and cargoes, and for passengers from third countries. in the coming next years.58 Khyahta is not equipped Road transport travels through Pogranichny with an X-ray system, but Altanbulag is. on the Russian Federation side. The road border crossing operates under-capacity for freight vehicles Route N1D (100 trucks per day instead of 130). However, it is • Tashanta (Russian Federation) – Ulaanbaishint operating over capacity for buses (60 buses per day (Mongolia) when designed for 44) and is thus over capacity for On the Russian Federation side, Tashanta is passengers (3,200 persons per day while its design open 9 hours per day all year round, with a capacity capacity is for 2,880). of 100 vehicles per day. It has inadequate equipment for coping with the current traffic level. Russian Federation and Democratic On the Ulaanbaishint side, the working schedule People’s Republic of Korea56 is not synchronized with that of the Russian Federation The crossing is primarily a railway-only bridge, side, with an overlap of 4 hours.59 used by freight and passenger trains. However,
55 Agreement between the Government of the People's Republic of China and the Government of the Russian Federation on International Road Transportation, 1992. 56 There are no road transport relations between two countries 57 Agreement between the Government of the Russian Federation and the Government of Mongolia on International Road Transport, 1996 58 Asian Development Bank, “CAREC Corridor Performance Measurement & Monitoring Annual Report”, 2015. 59 Ministry of Foreign Affairs, Mongolia. Available at
Russian Federation and Kazakhstan60 sources indicate that private cars can pass through Route N1: these posts while spending as little as 20 minutes • Zhana Zhol (Kazakhstan) – Petuhovo (Russian each side, unless the physical capacity of a post is Federation) insufficient to cope with actual traffic volumes It is open 24 hours per day for passengers and cargoes from Kazakhstan, the Russian Federation Traffic rights and transport permits and third countries. Special cargoes, food products, Traffic rights animals and quarantine products are not allowed to The Eurasian Northern Corridor is covered by pass through this border crossing on the Kazakh side. various bilateral and multilateral road transport agree- ments between countries along the corridor. China, • Karakuga (Kazakhstan) – Isilkul (Russian Federation) Kazakhstan, Mongolia and the Russian Federation Open 24 hours per day for passengers and share bilateral and multilateral traffic-rights exchange cargoes from Kazakhstan, the Russian Federation mechanisms. and third countries. Food products, animals and In December 2016, Mongolia, China and the quarantine products are not allowed to pass through Russian Federation signed the Intergovernmental the Kazakh side.61 Agreement on International Road Transport along the Asian Highway Network, which regulates international Route N2 road transport along the N1D (AH4) and the Ulan- • Troisk rail/Bugristoe road (Russian Federation) – Ude – Tianjin segment (AH3) of the N1 routes. The Kaerak (Kazakhstan) countries give each other traffic rights along these On the Russian Federation side, the road border segments by issuing carriers with permits from within crossing is located at Bugristoe. It is open for bilateral an agreed quota. The agreement has been ratified and third country cargo and passengers. by all concerned parties and has been in force since Kazakhstan is carrying out modernization works 2018. It is open to accession by an interested in Kaerak, with the addition of six lanes to the existing party subject to the agreement of the three existing five and the improvement of roads running up to the contacting parties. Russian Federation border. On the Korean Peninsula, the Democratic The current capacity is 1,500 vehicles per day, People’s Republic of Korea does not grant traffic with a peak-day vehicle flow of around 5,500. rights to foreign vehicles. There is therefore no Road border crossings between Kazakhstan international road transport on the Korean and the Russian Federation provide examples of Peninsula. good practice within the Customs Union. Various
60 Agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on International Road Transport, 2003. 61 Federal Agency for the Development of the State Border Facilities of the Russian Federation. Accessed on 24 November 2016, available at
Table 3 Road transport agreements in Northeast Asia
Source: Varvara Krechetova.
Transport permits Transport permits along the Eurasian Northern Corridor, when available, are usually granted on bilateral and multilateral bases. The permits are most often subject to annual agreed quotas and can be issued for single trips or multiple trips.
Figure 10 Road permits for bilateral transport along the Eurasian Northern Corridor
Source: Varvara Krechetova. Connectivity along the Eurasian Northern Corridor 35
There are no traffic exchanges between the transport (2011) covers the border-crossings of Democratic People’s Republic of Korea and the Takeshkan (China) – Yarantai (Mongolia) and Erenhot Republic of Korea, as the border is closed. (China) – Zamin-Uud (Mongolia) on the N1 route of Between China and the Democratic People’s the Eurasian Northern Corridor. Both countries use Republic of Korea, transloading is done at the border a permit system, but when China issues a single area, and Chinese trucks can enter up to 2 km into round-trip permit subject to an annual quota, Mongolia the Democratic People’s Republic of Korea. Generally, issues both single round-trip and multiple round-trip transport permits are issued for only a single trip permits. along a designated route by a specified vehicle.62 There is a permit system in place between Between China and Kazakhstan, a cross-border China and the Russian Federation, and both countries Type C transport permit – valid for one round trip issue single round-trip permits, subject to an annual (subject to an annually agreed quota) – is required quota. The China – Russian Federation agreement on both sides. Cabotage is not allowed and transit on international road transport (1992) covers the traffic is subject to separate permission, while Manzhouli (China) – Zabaykalsk (Russian Federation), cargo transport should be carried out under a national and Suifenhe (China) – Pogranichny (Russian Federation) consignment note in an internationally accepted BCPs. No cabotage is allowed, and cargo transport is format. 63 A permit system is in use and the two only carried out under national consignment notes. countries issue single round-trip permits from their Between the Russian Federation and Mongolia, annual quotas. Kazakhstan issues 50,000 permits a single round-trip cross-border permit is required, a year to its operators.64 Both countries assign subject to an annual quota. The Mongolia – Russian designated routes and require international road Federation agreement on international road transport operators to be registered with their relevant national (1996) covers the two border crossings Tashanta authorities. A third-party insurance policy from the (Russian Federation) – Ulaanbaishint (Mongolia) and operator’s own side is also requested. Kyahta (Russian Federation) – Altanbulag (Mongolia). The ESCAP survey on international road trans- They are located along the N1 route of the Eurasian port practices between the countries of the region Northern Corridor. Both countries issue single round- showed that China and Mongolia use a permit system, trip permits subject to quota (8,000 for the Russian whereby China issues a single round-trip permits. 65 Federation). The agreement also prohibits cabotage. subject to an annual quota, while Mongolia issues Finally, for the Russian Federation and Kazakhstan, both single round-trip and multiple round-trip permits. there is no permit system in use for most bilateral The China-Mongolia agreement on international road freight and passenger road transport.
62 ESCAP, 2017. The Establishment of the Integrated Logistics System in the Region Connecting to the Korean Peninsula, study report. 63 ESCAP, 2017. Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity. 64 ESCAP, 2017. Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity. 65 Ibid. 36 Connectivity along the Eurasian Northern Corridor
Transport routes China and Mongolia. Chinese drivers entering Mon- In general, countries along the Eurasian Northern golia require a visa, and a single-entry business visa Corridor have designated transport routes for foreign is usually issued. Mongolian drivers entering China road freight vehicles, except for traffic between the also require visas, with a single-entry C-category visa Russian Federation and Mongolia and between the usually being issued. Russian Federation and Kazakhstan. For China and the Russian Federation, Chinese In the case of Democratic People’s Republic drivers require a visa to enter the Russian Federation. of Korea, the border is currently closed with the A business “driver” category visa with six months Republic of Korea. The only border route in operation of multiple entries can be issued. For drivers from is between China and the Russian Federation up the Russian Federation entering China, a visa is also to a designated border post, where transloading is required. A six-month multiple entry C-category visa performed at designated areas along the borders. can be obtained. China and the Russian Federation Between China and Kazakhstan, the designated are in discussions to streamline and simplify visa transport routes are Khorgos – Yining-Urumqi, and application requirements for commercial drivers Khorgos – Almaty. between the two countries. Between China and Mongolia, the designated Between the Russian Federation and the routes for Mongolian trucks in China are Takeshkan – Democratic People’s Republic of Korea, transloading Qinghe, and Erenhot up to the BCP. Chinese trucks are takes place at the border areas. required to follow the designated routes in Mongolia Between Mongolia and the Russian Federation, from Yarantai along the AH4, and from Zamin-Uud a bilateral visa-free arrangement is in place for the along the AH3. commercial drivers of both countries. The Russian Federation and China have des- The Russian Federation and Kazakhstan are ignated routes within their own countries. In China members of the EAEU, which allows for a free travel the transport route is from Manjouli up to the border regime among its member States. area, and from Suifenhe to Harbin. In the Russian Federation the designated routes are Pogranichny Permissible weights and dimensions for vehicles, – Ussuriysk, Pogranichny – Kraskino, and Zabaykalsk and standards on emissions to the border area. Different standards on weights and dimensions There is currently no international road transport for road freight vehicles along a corridor can cause activity in the Republic of Korea. inefficiency along the logistics supply chain and increase cost. Vehicles carrying goods abroad will end Visa requirements for drivers and crew up with the overloading or under-loading of cargo while Visa requirements for countries along the transiting through countries with different standards. Eurasian Northern Corridor vary between countries. Taking the example of the Eurasian Northern Corridor, Between China and the Democratic People’s the maximum gross weight for a rigid vehicle in China Republic of Korea, Chinese drivers can enter Dem- is 31 tons, 25 tons in Mongolia and 35 tons in the ocratic People’s Republic of Korea without advance Russian Federation. This means that both Russian visa requirements, usually up to 2 km from the border Federation and Chinese trucks have to underload and following designated routes. while transiting through Mongolia, making more For transport between China and Kazakhstan, rounds of deliveries, which reduces the efficiency and visas are required for both parties. seamlessness of transport operations and has a Visas are required for drivers and crew between negative impact on the environment. Regarding the Connectivity along the Eurasian Northern Corridor 37
Democratic People’s Republic of Korea and the Republic People’s Republic of Korea. Challenges may occur if of Korea, there is no information available. an articulated vehicle is to be used: while China and The heaviest articulated vehicles are allowed the Russian Federation allow road trains of 20 m, in China (49 tons), meaning that Chinese freight Mongolia and the EU limit their length to 18.75 m. forwarders and shipping companies either under- Any vehicle going through Mongolia or entering the EU load trucks or keep smaller vehicles to send along would therefore be smaller than capable of operating this route. In comparison, the heaviest articulated in China or the Russian Federation. vehicles allowed in Republic of Korea are 40 tons. There It should be noted that group axle loads differ is no information available regarding the Democratic between China (24-ton limit per tridem axle) and the People’s Republic of Korea. Russian Federation (26 tons allowed). Along this N1 corridor, Mongolia, China and the In this regard, harmonizing standards on the Russian Federation have identical limits in terms of weights, dimensions and emissions of road vehicles vehicles’ widths, heights, the length of rigid trucks and would contribute to the development of seamless, loads per single axle (see table 4 below). The Republic efficient and effective cross-border and transit of Korea does not adhere to the same parameters, and operations among ESCAP member countries of the there is no information available for the Democratic Asian Highway Network.
Table 4 Route N1 limits on dimensions, weights and axle loads of freight road vehicles in countries along the Asian Highway Network
66 Reference Data to the Republic of Korea Motor Vehicle Management Act No.14546, Enforcement Date 18 July 2017. 67 “People’s Republic of China National Standard GB 1589-2016: Limits of Dimensions, Axle Load and Masses for Motor Vehicles, Trailers and Combinations Vehicles”, 2016. 68 Mongolian State Standard: General Requirement for Technical Condition of Road Vehicles MNS 4598:2011 (Code: 43.040.01). 38 Connectivity along the Eurasian Northern Corridor
Notes: i - for tridem axle; ii - 2,600 mm for truck with isothermal or refrigerator body; and iii - for powered axle. ..data are not available or are not reported separately Source: National standards as indicated in the footnotes.
Case study:
Eurasian Northern Corridor: Route N1 (AH3- AH6/AH8)
The route extends from the port of Tianjin have bilateral road transport agreements that allow in China to the borders of the Russian Federation for international transport under single round-trip with Belarus and Finland, passing through Mongolia permits. Agreements between China and the (figure 11). Countries along the route are actively Russian Federation (1992), and Mongolia and the cooperating to enhance connectivity. The route Russian Federation (1996), do not set special is covered by respective bilateral and multilateral requirements for the dimensions and weights of agreements, and the level of vehicle standards vehicles in international transport; vehicles should compatibility is fair. comply with the national standards of the country China, Mongolia and the Russian Federation in which they travel.
69 Order of the Minister of the Investments and Development of the Republic of Kazakhstan No.342 from 26 March 2015, “On Approval of the Permissible Parameters of the Road Vehicles to Be Used on the Roads of the Republic of Kazakhstan”. 70 Decree of the Government of the Russian Federation “On Approval of the Rules on Transport of Cargoes by Road Transport No.272 from 15 April 2011 as Amended 22 December 2016”. 71 “Council Directive 96/53/EC of 25 July 1996 Laying down for Certain Road Vehicles Circulating within the Community the Maximum Authorized Dimensions in National and International Traffic and the Maximum Authorized Weights in International Traffic”; “Directive (EU) 2015/719 of the European Parliament and of the Council of 29 April 2015 Amending Council Directive 96/53/EC Laying down for Certain Road Vehicles Circulating within the Community the Maximum Authorised Dimensions in National and International Traffic and the Maximum Authorised Weights in International Traffic”. 72 Annex 5 to the “Technical Regulations TP TC 018/2011 of the Customs Union ‘On Safety of the Wheeled Transport Vehicles’ Approved by the Decision of the Custom Union”. Connectivity along the Eurasian Northern Corridor 39
Figure 11 Distribution of maximum gross weight of articulated vehicles by country
Sweden Norway Finland Russian Federation Estonia Latvia Denmark Lithuania IrelandU.K. of Great Britain and Northern Ireland Belarus Poland BelgiumGermany Jersey Czech RepublicSlovakia Ukraine Austria Kazakhstan France HungaryMoldova, Republic of Switzerland Croatia Romania Mongolia MonacoItaly Serbia Bosnia and Herzegovina Bulgaria Georgia Albania Uzbekistan Kyrgyzstan Spain ArmeniaAzerbaijan Dem People's Rep of Korea Greece Turkey Turkmenistan Tajikistan Gibraltar Malta Aksai Chin China Republic of Korea Japan Cyprus AfghanistanJammu and Kashmir Iran (Islamic Republic of) Maximum Gross Weight(ton) Pakistan Nepal Arunachal Pradesh
Source: Provided by V. Krechetova. Attributes are edited and updated by S. H. Park. 2019.
In 2016, the three countries concluded the travel via Mongolia or enter the EU are therefore Intergovernmental Agreement on International Road smaller than those that can operate in China or Transport along the Asian Highway Network. The the Russian Federation. agreement sets up a multilateral permit system The four countries have different limits on to be used for cargo haulage on the indicated the gross weight for a rigid truck, and while the AH routes (a multilateral single round-trip road highest national permissible value is 35 tons transport permit with one-year validity) and refers (Russian Federation), hypothetical haulage from to respective national regulations for dimensions China to the EU along this route would be limited and weight standards. The agreement covers AH3 to 25 tons per truck, which is equivalent to the and AH4 but might be extended to cover more AH route’s lowest limit (Mongolia). routes if any party to the AH Agreement (2003) China allows for the heaviest articulated wishes to join. vehicles (49 tons) out of the four regulatory The three countries along the N1 route environments along the route, meaning that Chi- of the Eurasian Northern Corridor have identical nese freight forwarders and shipping companies limits on vehicle widths, heights, lengths of rigid either underload trucks or keep smaller vehicles. trucks and loads per single axle. The same limits Attention would also have to be paid to axle load, exist in the EU. Obstacles arise if an articulated as the 24-ton limit per tridem axle allowed in China vehicle is to be used: while China and the Russian is lower than the 26 tons allowed in the Russian Federation allow road trains of 20 m, Mongolia and Federation. the EU limit their length in 18.75 m. Vehicles that 40 Connectivity along the Eurasian Northern Corridor
Emission standards differ widely between the not available for the Democratic People’s Republic countries of the AH network, just as they do between of Korea and Mongolia, although it is believed that the countries along the Eurasian Northern Corridor. emission standards are lower. Republic of Korea has the most stringent emission The lack of harmonized emission standards requirements, which are compatible with EURO VI. China, impedes seamless international road transport, where Kazakhstan and the Russian Federation have adopted road freight vehicles with lower standards will not be their own national standards (or those of the EAEU), allowed into countries with more stringent requirements. which are compatible with EURO V. Official data are
Figure 12 Diversity of emission standards along the Asian Highway Network
AFAGIT Euro 5, 6 and Protocol 4 Euro V, VI National 4% 17% standards Euro 4 and Euro III/IV 14% EAEU technical United Euro 3 and regulations Nations Euro III 14% regulations Euro 1, 2 and No.24, Euro I, II No.49, No.83 17%
Source: V. Krechetova, based on open sources.
Table 5 Route N1 - Emission standards for countries on the Eurasian Northern Corridor
Equivalent to Country Emission standard EURO standards
Republic of Korea National and Euro VI EURO VI Democratic People’s Republic of Korea ..N/A China CHINA 5 EURO V Mongolia ..N/A Kazakhstan EAEU Technical Regulations ТР ТС 018/2011 EURO V
Russian Federation EAEU Technical Regulations ТР ТС 018/2011 EURO V
EU Euro 6 and Euro VI EURO VI Note: .. data are not available or are not reported separately. Source: Compiled by Dr. Shinhyoung Park based on national sources. Connectivity along the Eurasian Northern Corridor 41
Insurance requirements national languages. All countries along the Eurasian Northern Cor- It must be noted that the borders are currently ridor that are open to international road transport, closed between Democratic People’s Republic of require a minimum of third-party liability insurance for Korea and Republic of Korea; between China and Dem- foreign road freight vehicles entering their territories. ocratic People’s Republic of Korea; and between the In addition, the Russian Federation also accepts the Russian Federation and Democratic People’s Republic International Motor Insurance Certificate (Green Card). of Korea. There are no formal agreements regarding driver’s licenses. Driver’s licenses National or international driver’s licenses are Documents required by transport authorities some of the documents required from foreign road Below is the list of documents required from transporters by all countries along the Eurasian foreign road transporters by the transport authorities Northern Corridor. China and the Russian Federation of relevant countries. also require a certified translation into their own
73 There are no transport relations between the two countries. 74 Agreement between the Government of the People’s Republic of China and the Government of the Republic of Kazakhstan on Interna- tional Road Transport, 1992. 42 Connectivity along the Eurasian Northern Corridor
75 Agreement between the Government of the People’s Republic of China and the Government of Mongolia on International Road Transport, 2011. 76 Agreement between the Government of the People's Republic of China and the Government of the Russian Federation on International Road Transportation, 1992. 77 There are no road transport relations between the two countries. Connectivity along the Eurasian Northern Corridor 43
Required documents for cargo Cargo transportation can prove complicated if The list of documents required for cargo the processes and documents for border crossing transport through the countries of the Eurasian are not standardized. A lack of standardization in Northern Corridor has not been harmonized. Even at documentation requirements can lead to inefficiency the same BCP, the list of required documents can at border posts through lengthy processes, excessive often differ. The most commonly required documents bureaucracy or cargo delays at border stations. Delays include Customs declaration forms for importing in cargo shipment incur costs, and they often impact goods/CMR consignment notes, commercial invoices, the final price of transported products. Non-harmonized and authorization and entrustment agreements for requirements make the task of preparing adequate customs clearance (veterinary certificates may also documents more complex, and they can cause be required in some cases). confusion among transporters.
78 Agreement between the Government of the Russian Federation and the Government of Mongolia on International Road Transport, 1996. 79 Agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on International Road Transport, 2003. 44 Connectivity along the Eurasian Northern Corridor
It can be noted that between China and note in an internationally accepted format.81 The ease Kazakhstan, the Russian Federation and Kazakhstan with which cargo transport can take place between (Customs Union),80 and the Russian Federation and China and the Russian Federation depends on the BCP Mongolia, transport authorities have similar customs used. Fees, for example, can be charged for cargo requirements for cargoes. The agreement between transportation at the Poltavka two-way car checkpoint, China and Kazakhstan allows for separate procedures where crossing the Russian Federation – China border for passenger and cargo transport between the is subject to a payment of 3,000 rubles per truck.82 border regions of the two countries, and requires The documents required for border crossing the transport of goods using a national consignment are listed in the tables below:
80 ESCAP, 2017. Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity. 81 Agreement on Motor Transport between the Government of the People’s Republic of China and the Government of the Republic of Kazakhstan 82 ESCAP, 2017. The Establishment of the Integrated Logistics System in the Region Connecting to the Korean Peninsula. 83 There are no transport relations between the two countries. 84 Agreement between the Government of the People’s Republic of China and the Government of the Republic of Kazakhstan on Interna- tional Road Transport, 1992. Connectivity along the Eurasian Northern Corridor 45
85 Agreement between the Government of the People’s Republic of China and the Government of Mongolia on International Road Transport, 2011. 86 Agreement between the Government of the People's Republic of China and the Government of the Russian Federation on International Road Transportation, 1992. 87 Agreement between the Government of the Russian Federation and the Government of Mongolia on International Road Transport, 1996. 46 Connectivity along the Eurasian Northern Corridor
Requirements for transport operators declaration form for the temporary admission of a Transport operators must be registered with the vehicle; the filing form for international road transport competent national authority of the relevant country. vehicles; Customs vehicle inspection reports; four Customs requirements for vehicles colour photos of the vehicle; and guarantees for the The customs requirements for foreign road freight vehicles. In the case of the Russian Federation and vehicles are not harmonized among the countries of Kazakhstan, no documents are required as they are the Eurasian Northern Corridor. part of the EAEU. Among the most common requirements in The documents required for Customs are listed countries along the corridor are the Customs in the tables below:
88 Agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on International Road Transport, 2003. 89 There are no transport relations between the two countries. Connectivity along the Eurasian Northern Corridor 47
90 Agreement between the Government of the People’s Republic of China and the Government of the Republic of Kazakhstan on Interna- tional Road Transport, 1992. 91 Agreement between the Government of the People’s Republic of China and the Government of Mongolia on International Road Transport, 2011. 92 Agreement between the Government of the People's Republic of China and the Government of the Russian Federation on International Road Transportation, 1992. 48 Connectivity along the Eurasian Northern Corridor
I.4 Dry ports and economic poles
The Eurasian Northern Corridor has the ability Federation – in addition to the country-wide plans for to boost economic activity along the length of the development of terminals networks – there are its route from Asia to Europe. Furthermore, its multiple private sector initiatives of varying scope at potential can be maximized by connecting the almost every location along the corridor. The Chinese land network of the Korean Peninsula to China and Belt and Road Initiative (BRI, also known as One Belt the Russian Federation. Such seamless connectivity One Road or OBOR) is the largest of these different would catalyze the development of connected undertakings. This project aims to establish and seaports, in conjunction with the development of promote transport links to ensure economic growth, multimodal land transport links in the Eurasian domain. cooperation and co-prosperity in the involved regions. Countries along the corridor are already seeking to The scope of this initiative takes in the Eurasian make the most of opportunities arising from the Northern Corridor studied in this report. corridor’s growth. In China, Kazakhstan and the Russian
93 There are no road transport relations between the two countries. 94 Agreement between the Government of the Russian Federation and the Government of Mongolia on International Road Transport, 1996. 95 Agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on International Road Transport, 2003. Connectivity along the Eurasian Northern Corridor 49
I.4.1 Major dry ports and main economic poles along the corridors
The development of economic clusters is currently zone, and export-import processing zones in Urumqi, taking place all along the Eurasian Northern Corridor Shenyang, Dalian, Lianyungang, Xi’an and Huhhot in and can be observed in the form of the logistics fa- China; cilities and special economic zones, created by both • Special economic zones in Rason, Sinuiju, government and private sector initiatives. Pyongyang, Kaesong, Nampo and Haeju, in Democratic People’s Republic of Korea; and Development of logistics facilities • Free economic zones in Incheon, Busan, Both the private sector and governments are Gwangyang bay area, Yellow Sea, Gunsan, Yang Yang, investing in logistics terminals/centres and dry ports and Chongjiu in Republic of Korea. along the corridor. Such projects are taking place in Along the Eurasian Northern Corridor, a network of Moscow, Novosibirsk, Nizhniy Novgorod, Yekaterinburg, dry ports and economic poles is being formed through Khabarovsk, Ulan-Ude, Ussuriysk, Zabaykalsk, Irkutsk, both private sector initiatives and state planning. The and Chita in the Russian Federation. In Mongolia, they United Nations Economic and Social Commission for can be found in Ulaanbaatar, Saynshand and Zamin-Uud, Asia and the Pacific provided the impetus for the while in China they are under way in Harbin, Erenhot, standardization of the process, by advocating the Suifenhe, Khorgos, Xi’an and Lanzhou. On the Korean Intergovernmental Agreement on Dry Ports, setting Peninsula, these projects are taking place in Busan, standards for the design, layout, capacity, facilities Seoul, Pyongyang, Sinuiju, Mango, Wonsan, Chongjin, and functions of dry ports. and Rajin. On the Korean Peninsula, one of the major po- tential dry ports under the agreement will be in the Creation of special economic zones Incheon-Seoul region. The Republic of Korea is still In order to promote the usage of existing trans- developing free economic zones near to their main port facilities along the corridor, involved countries maritime ports due to the fact that the land corridors are creating special regimes at important nodes to cannot yet be exploited. Other important seaports on also attract new investments in both transport and the peninsula are Rajin, Sonbong, Chongjin, Wonsan manufacturing. These special economic zones include: and Nampo in the Democratic People’s Republic of • “Vladivostok Free Port” area, which features Korea, and Donghae, Pohang, Ulsan and Busan in several ports in Primorsky territory of the Russian Republic of Korea. Federation, at the east end of the Eurasian Northern The Democratic People’s Republic of Korea is Corridor; developing Special Economic Zones, most of which are • Altanbulag Free Trade Zone, and Zamin-Uud located along the border with China and near the AH1 free economic zone in Mongolia; and AH6 routes. There are major clusters at Sinuiju and • “Khorgos – Eastern Gateway” free economic Nampo ports, and at Pyongyang. Such clusters also zone between China and Kazakhstan, and the special exist at the Rajin and Sonbong port areas near to the economic zone in Almaty, Kazakhstan; border with the Russian Federation, and in Kaesong/ • Tianjin bonded zone and Dalian bonded Gaesung near to the border with Republic of Korea. 50 Connectivity along the Eurasian Northern Corridor
Figure 13 Location of the special economic zones in the Democratic People’s Republic of Korea
The designations employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Source: The Korea Economic Development Association (Democratic People’s Republic of Korea) and Choson Sinbo.96
In China, the Government is highly interested large cities. Under the Intergovernmental Agreement and involved in the development of inland logistics on Dry Ports, the main dry ports on the Chinese facilities. The goal is to build a country-wide network sections of the Eurasian Northern Corridor include, following the Country Plan for Development of Logistic for N1A, N1C: Manzhouli New International Freight Parks (2013-2020). Around 99 such parks are set Yard (15 sq. km – processes containers, timber and to be created in every provincial capital and most wood, coal, cars, mineral ores, dangerous chemicals);
96 From Mitsuhiro Mimura, “The Newly Created Economic Development Zones in the Democratic People’s Republic of Korea: in relation to the new economic policy under the Kim Jong Un Government”; in The Northeast Asian Economic Review, Vol. 3, No. 1, June 2015. Connectivity along the Eurasian Northern Corridor 51
Changchun Xinglong Bonded International Logistics Irkutsk; Chita; Omsk; Chelyabinsk; Ryazan; and in the Port (first of three development stages complete, St. Petersburg region. Among these centres, “Klesh- 4.89 sq. km – includes a tax-bonded processing chiha” in Novosibirsk, “Baltiysky” in the St. Petersburg zone, tax-bonded logistics zone, border examination region, “Doskino” in Nizhniy Novgorod, “Beliy Rast” in zone, comprehensive service zone); Harbin Longyun Moscow, and “Primorsky” in Ussuriysk – along with Logistics Park (first stage of construction completed, a terminal in Yekaterinburg (Reshety station) – are 515,000 sq. m – includes an unloading and loading included in the list of potential or existing dry ports area, warehouses, logistics transaction area and of international importance within annex 1 of the container area); Suifenhe Cargo Centre; Erenhot South Intergovernmental Agreement on Dry Ports. Other International Logistics for the N1; Khorgos International terminals included in the agreement are Janino (St. Logistics Park for the N2 (2011 plan envisaged 40 Petersburg region), Dmitrovsky (Moscow region) and ha of warehouses, transport and loading facilities); “Southern Primorsky Terminal”. and Xinjiang Railway International Logistics Park in Through the construction of a terminals network Urumqi (work started in 2014, 153 ha). in the country, the strategic objective for Russian In addition to this, another dry port is based Railways, TransContainer companies and their partners at Xi’an (44.6 sq. km, includes tax-bonded area, is to build a backbone structure for container trains. railway container centre, highway port; focuses on Terminals along the Trans-Siberian railroad route are multimodal transportation) and another one is planned therefore priorities for development or reconstruction. for Lanzhou (planned area 200 ha, 10 feeder routes; It is difficult to assess progress on the different planned cargoes are containers, cars, electronics, planned terminals; a number of cities advertise the machinery and steel). While the progress made on existence of some terminal facilities but their con- the Suifenhe Cargo Centre is unclear, Suifenhe is nection to the official plans is not always clear.97 A also planning a logistics park of 35,000 sq. m with Russian Railways official has announced that facilities over 5,000 sq. m of customs storage, around 12,000 have been completed at Beliy Rast (Moscow), Doski- sq. m of warehouses, and over 9,000 sq. m of cold no (Nizhniy Novgorod) and Kleshchiha (Novosibirsk). storage. Jining Modern Logistics Park is 90 sq. km Meanwhile, investors have entered negotiations over and includes a tax-bonded area, a comprehensive Primorsky and Yekaterinburg, while JSC TransContainer logistics complex with a mineral-processing facility, operates a container terminal in Zabaykalsk. warehousing, unloading and loading areas, and storage In Kazakhstan, the main terminals along for construction materials. the N2 Eurasian Northern Corridor are Astana (24 In the Russian Federation, the terminal network ha, 15 feeder tracks, 722 sq. m of sheltered ware- is being created to support the operation of container houses, and open storage – processes cables, tubes, trains between Asia and Europe. Russian Railways are chemicals, road vehicles, construction materials and planning to build 20 terminal logistics centres along containers) and Petropavlovsk. In addition to this, the the Eurasian Northern Corridor (N1, N1A, N1B and dry port agreement also mentioned Damu-Almaty N1E) in the following places: Moscow; Novosibirsk; Industrial and Logistics Centre (110,000 sq. m, Class Nizhniy Novgorod; Samara; Yekaterinburg; Khabarovsk; A, sheltered warehouses, open storage – processes Ufa; Ulan-Ude; Krasnoyarsk; Ussuriysk; Zabaykalsk; containers, road vehicles and break-bulk) as being an
97 ESCAP, 2017. Comprehensive planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity. 52 Connectivity along the Eurasian Northern Corridor
international dry port, along with three more that are size containers, overweight cargoes and road vehicles, listed as potential centres, including the High Tech etc.), Kokshetau (24 ha, 4 feeder tracks – processes Logistics, Tau Terminal (39,400 sq. m, Class A) and coal, overweight cargoes, containers and break-bulk) Khorgos International Border Cooperation Centre and Kostanai (3.5 ha, 3 feeder tracks, open storage, (Khorgos Eastern Gateway, 579 ha, container yard, sheltered warehousing – processes timber, cars, warehouses and rail tracks for both gauges (1,435 chemicals, ceramics and stones, machinery, paper mm and 1,520 mm)). and containers).98 The other transport and logistics centres along In Mongolia, there are four logistics terminals, all the N2 route are Karaganda (8.06 ha, 11 feeder tracks, located along the N1 corridor. These are Zamin-Uud, sheltered warehouse, open storage – processes mid- Altanbulag, Ulaanbaatar and Saynshand.
Figure 14 Aerial map of the logistics terminal in Zamin-Uud
Source: Ministry of Road and Transport Development of Mongolia.
Figure 15 Dry ports, terminals and seaports along the Eurasian Northern Corridor
Source: Compiled by Varvara Krechetova based on the ESCAP secretariat Trans-Asian Railway and Asian Highway database.
98 KazLogistics. Available at
I.5 Major seaports connecting to the corridors and alternative transport corridors
I.5.1 Infrastructure status of major seaports along the Eurasian Northern Corridor
Seaports are the main entry/exit points for In China, seaport capacities are generally well cargo being transported by land routes, and as such developed. The Chinese seaports of Dalian, Yingkou are of strategic importance for the economies of and Tianjin of Lianyungang province at the east of the countries. The throughput and the cargo structure of Eurasian Northern Corridor, are large and important a seaport can have a significant impact on transport points of exit and entry for the corridor. Dalian and along a corridor. Yingkou are located at the south-east end of the N1 On the Korean Peninsula, the most important route and are strategically well positioned to transport seaports are Busan and Gwangyang in Republic of cargo from/to northeast China, the Russian Federation Korea, and Nampo and Chongjin in Democratic People’s and the Democratic People’s Republic of Korea. The Republic of Korea.99 ports have adequate road and rail connections through Of the main seaports in Democratic Peo- the inland transport network, and they accommodate ple’s Republic of Korea, Nampo, Songrim and Haeju trade flows with Europe, Southeast Asia, Japan, are located on the west coast and Chongjin, Rajin, and Hong Kong, China. The ports process dry and Sonbong, Hungnam and Wonsan are on the east coast. break-bulk cargoes, including coal and minerals, oil and The ports are smaller than the major ports of Republic containers. Yingkou port has signed an agreement with of Korea. Estimates for the turnover of the port of Russian Railways on the purchase of 49 per cent of Nampo (the port with the largest turnover) are 13.5 the “Beliy Rast” dry port on the N1 route.100 million tons in 2016. The next largest turnover was The port of Tianjin is also located at the south- 8 million tons for the port of Chongjin (see table 6). east end of the N1 route and is the third most There are around 30 trade seaports in Republic important seaport in China (after Shanghai and the of Korea. The largest ports are located in the south Ningbo- Zhoushan port area). The port’s lines travel of the country and on the west coast. In 2016, the to its neighbors in Republic of Korea, the Russian three leading ports – Busan (292 million-ton turnover), Federation and Japan, and also spread globally to Gwangyang (210.5 million-ton turnover) and Incheon destinations in Africa, Southeast Asia, the Middle (96.8 million-ton turnover) – together accounted for East, the west coast of North America and to the more than 60 per cent of total turnover volume. Other east of South America. important ports are Pyeongtaek-Dangjin, Pohang and The port of Lianyungang, on the N2 route, is the Ulsan (see table 6). 12th largest seaport in China, handling containers,
99 Seaports in Republic of Korea do not operate on international land transport corridors. 100 ESCAP, 2017. Comprehensive Planning of Eurasian Transport Corridors to strengthen the Intra- and Inter-Regional Transport Connec- tivity, Study Report, p. 23. 54 Connectivity along the Eurasian Northern Corridor
machinery, dry bulk and break-bulk (grain, non-ferrous port’s turnover was 65.2 million tons in 2015, some metals, raw steel materials, fertilizers and coal). It 35 per cent of which was coal (22.8 million tons).102 provides services to shipping lines connecting to These three ports of Vladivostok, Nahodka Republic of Korea and the rest of Northeast Asia, and Vostochny serve trade flows to China (Shanghai, Southeast Asia, Europe, North America and the Ningbo, Tianjin, Qingdao and Chiwan); Hong Kong, China; Middle East. Republic of Korea (Busan, and Donghae); Socialist The capacities of Russian Federation ports are Republic of Viet Nam (Ho Chi Minh City); Malaysia; much smaller, and there is potential for increases in Japan (Tokomai, Yokogama, Nagoya, Kobe, Toyama, and capacity through investment. Although smaller in size Niigata); the United States of America (west coast); than the Chinese ports, the Primorsky seaports (Na- and the Russian Federation regions of Kamchatka, hodka, Vladivostok and Vostochny) in the far east are Sakhalin, Magadan, and Chukotka. important entry and exit points. These ports connect Finally, the port of St. Petersburg on the western to ESCAP Eurasian Transport Corridors routes N1A end of the N1E route towards Europe, operates year- and N1B. The port of Vladivostok operates year- round. It is an ice-free port processing containers, round, handling oil products, metals, machinery and cars and machinery, metal and tubes, oversized and equipment, coal, metal scrap, wood and grain, as well overweight cargoes, timber, coal and grain. The port’s as containers. In 2015, the port’s turnover dropped turnover dropped by 16 per cent down to 51.1 million 16 per cent to 12.9 million tons.101 One operational tons in 2015. It serves trade flows with Europe, with hinderance to the expansion of Vladivostok port is over 70 per cent of its cargoes processed for this that it is located in an urban area, complicating road purpose (mostly to Belgium, the Netherlands, Turkey and railway access. and Spain), and also with North America (14 per cent) There is also the port of Nahodka, which is and South America (8 per cent). ice-free all year round, and handles oil products, Overall, regarding the status of seaports along metals, machinery and equipment, coal, metal scrap, the corridors connecting to Europe, seaport capacity wood and containers. The port’s turnover was 21.3 is well developed at the Chinese end of the N2 route million tons in 2015. Both Vladivostok and Nahodka and in the Republic of Korea. However, the capac- ports have been part of the “Vladivostok Free Port” ities of Russian Federation ports and the ports of special port zone since 2016, with residents of the the Democratic People’s Republic of Korea are still zone benefitting from tax and social security fee much smaller, and there is potential for increases in privileges and other business support measures. This capacity through investment. zone also has a special status as a special customs zone, and customs and other inspections are carried out through “single window” operations. In addition to this, the port of Vostochny is one of the most important in the far east of the Russian Federation, handling coal, fertilizers, metal scrap, wood, oil, oil products and large-tonnage containers. The
101 Information & Analytical Agency Port News, “In 2015, turnover of the Russian seaports grew 5.7% up to 676.7 million tons”, (Russian). 102 Seaport Vostochny. Available at
Table 6 Freight turnover of Eurasian Northern Corridor seaports
Source: Association of seaports in the Russian Federation; National Bureau of Statistics, China; Ministry of Unification and Korea Statistical Office of Republic of Korea. 56 Connectivity along the Eurasian Northern Corridor
I.5.2 Sea-land connectivity between the Republic of Korea and Europe
Given the current impediments to overland connectivity within the Korean Peninsula, the Republic of Korea relies on maritime transport to connect to the Eurasian Northern Corridor.
Figure 16 Sea-land connectivity between the Republic of Korea and the Eurasian Northern Corridor
The designations employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Source: Korea Railroad Research Institute, 2017. Connectivity along the Eurasian Northern Corridor 57
I.5.3 Sea-land multimodal connectivity
These possible linkages would make use of an cutting travel time by more than half). The possibility intermodal transport system that operates through of transiting goods from Northeast Asia to Europe both ports and railways, connecting the Republic of through the TSR can therefore not be ignored.105 Up Korea through various routes. until 2006, the TSR was transporting a sizeable volume Some of these links are made through short of transit containers between Europe and Asia, with sea shipping (SSS) operations from the Republic of 80 per cent of that traffic made up of containers Korea (ports of Incheon, Busan and Sokcho) to the from Republic of Korea. According to a Greater Tumen ports located in the eastern part of the Eurasian Initiative (GTI) study, “things started to deteriorate Northern Corridor, and onwards by railway to Europe in 2006 when tariffs imposed by railway operator or Central Asia through the N1, (Trans-Mongolian JSC RZD became no more competitive with shipping Railway (TMR)); N1B (Trans-Siberian Railway (TSR)) rates which were declining. Customs complications, and N2 (Trans-Chinese Railway (TCR)). infrastructure bottlenecks along the lines and policies to discourage such traffic added to the problems. • Republic of Korea to Europe via N1B Asian container transit traffic almost disappeared One alternative route for enabling the Republic from 2006 to 2010. There are signs that it could start of Korea to connect to Europe would be to con- again. The TSR is 10,000 km double track electrified nect the port of Busan to Vladivostok through SSS rail line between Moscow and Vladivostok. It has the operations. Cargo would then be transported on rail capacity to carry 130 million tons including 600,000 from Vladivostok to Europe through the TSR network containers for export/import and 300,000 for transit. running along Eurasian Northern Corridor N1B in the If TSR is capable of offering attractive tariffs, then Russian Federation.104 From corridor N1B, the route it becomes again a valuable alternative”. 106 The TSR also connects to corridor N1. Details of TSR infra- remains one of the most important corridors, evidenced structure are featured in a previous section of this by Samsung Electronics signing an MoU with Russian paper (‘Rail infrastructure’). Railways in 2016 to collaborate on the TSR project The second route would be to connect the in Moscow.107 Both parties agreed on switching from port of Sokcho to the port of Zarubino in the Russian maritime transportation to the TSR when delivering Federation, and then to use the TSR network to Europe. materials from the Republic of Korea or China to The Republic of Korea is already sending Europe. Using the TSR will allow Samsung to utilize the containers to and receiving containers from Europe routes that lead to production and sales sites in the using the TSR land bridge. This land bridge has often Russian Federation and Europe, enabling a reduction been promoted by international organizations as in lead time and logistical costs. Routes included an interesting alternative to shipping, as it saves a in the MoU are “routes to European countries and significant amount of time (ideally the route would Russian Federation. Once the container ships arrive take only 15 days from Vladivostok to Moscow, in Vladivostok from Korea and China, the containers
104 More information available at
will be transferred via TSR to Slovakia, Hungary, and 2016, Samsung has been using the TSR to deliver Poland. This will drastically reduce the lead time from components and materials from China to a factory 35 days to 18 days”. 108 Furthermore, since January in Kaluga in the Russian Federation.109
Figure 17 Example of transit and cross-border dwell time
Source: Adapted from Presentation by SJ Logistics, Seoul, 14 April 2016.
• Republic of Korea to Europe/Central Asia via N2 then connect with the N1 route at Yekaterinburg, Another alternative route is to connect the ports pass onto the TSR and travel all the way to Europe. of Incheon, Busan, Gwangyang and Pyeongtaek to the Using this N2 route from Lianyungang enables port of Lianyungang in China, which provides a link to Republic of Korea to connect to Europe, Central-Asia the N2 (TCR) route of the Eurasian Northern Corridor. and West-Asia, and allows for the development of From there, cargo would be able to pass onto the economic growth through its connections. railways from Lianyungang train station, which connects Recently, a new railway service was launched to the TCR network and CIS countries. Cargo could between Asia and Europe by linking the eastern
10 Ibid. 109 Ibid. Connectivity along the Eurasian Northern Corridor 59
Chinese port of Lianyungang with Turkey. It provides service provided by Kerry Logistics is said to run with an alternative to the northern routes, which lead a transit time of 18 to 20 days through Kazakhstan cargo through the Russian Federation, Kazakhstan and to cross the Caspian Sea, from where it will hit the Belarus to enter Europe at the border with Poland. This Baku – Tbilisi – Kars railway, using block train and middle corridor runs from China through Kazakhstan, single wagon services. Azerbaijan and Georgia to Turkey,110 providing another Another distributor company called “G&D Europe” gateway to Europe via the Black Sea. Furthermore, (based in the Netherlands) also used the N2 route the Baku – Tbilisi – Kars railway opened in Octo- from Lianyungang to Rotterdam through Kazakhstan ber 2017, filling in the route’s missing link.111 This for their goods transportation business.112
Figure 18 Example of transit and cross-border dwell time
Source: Adapted from a presentation by SJ Logistics, Seoul, 14 April 2016.
110 Available at
Figure 19 Documents used for border clearance
Source: Information obtained from participating countries during ESCAP missions.
• Republic of Korea to Mongolia/Europe via N1 of northern China, and headed to the China-Belarus The Republic of Korea can also connect to Industrial Park in Minsk. The return trip carried goods Europe via Mongolia through the N1 (TMR) route of to China, including wood products from Belarus and the Eurasian Northern Corridor. surrounding countries.113 Maritime vessels connect the ports of Incheon In addition to this, on January 2018, the Cosco and Pyeongtaek to Tianjin, from which rail connectivity Shipping company launched the first China – Russian along the N1 Corridor will provide a route through Federation international train from the port of Tianjin China, Mongolia and the Russian Federation to Europe. heading toward Moscow. Carrying forty-six 40-foot In November 2016, a freight train departed containers solicited by Cosco Shipping Lines, the train from the Tianjin Pilot Free Trade Zone (FTZ), to arrive left China via Erenhot and was reloaded in Zamin-Uud 13 days later in Minsk, capital of Belarus. The train (Mongolia) and Naushki (Russian Federation) before left China via Erlianhaote Customs in Inner Mongolia reaching its destination. The 7,600 km journey took 14 days to complete.114
113 Available at
Figure 20 Example of transit and cross-border dwell time
Source: Adapted from a presentation by SJ Logistics, Seoul, 14 April 2016.
Likewise, the ports of Incheon and Pyeongtaek is currently served by maritime transport. On average, can connect to the port of Dalian, which then con- one to one-and-a-half months is required to transport nects through sections N1G and N1C to the N1A goods between Asia and Europe.115 Even though it is a Corridor, connecting to the TMR network in Harbin slow method, maritime transport has the advantages and further reaching the N1 Corridor through the of low costs and minimal border crossing, as cargoes TSR in Karimskaya. only undergo export/import related formalities in the All these routes offer the advantage of using countries of origin and destination. The low costs are existing infrastructure (and in certain cases shorter partly due to economies of scale: a study carried out routes in terms of distance), and they enable the by the Eurasian Development Bank calculated that a creation of intermodal logistics centres that connect new Maersk Triple E Class container ship carries an ports and railways. Most trade between Asia and Europe equivalent of 170 container trains.116
115 ESCAP, 2017. Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connec- tivity. 116 Vinokurov. “Transport Corridors of the Silk Road Economic Belt Across the Eurasian Economic Union: Preliminary Estimates for Trans- portation Capacity and Investment Needs”. 62 Connectivity along the Eurasian Northern Corridor
The biggest advantage railways have in com- Transport infrastructure still needs to be improved parison to maritime transport is speed: block trains in different parts of the railway network (on the N1 take half a month (two to three times quicker than by Mongolian section on the TMR network, for example), sea) to travel from one side of Eurasia to the other. and ports should increase their capacity to welcome Inland transport – notably railways – allows cargoes to increasing trade. Seaport capacity is well developed at be delivered to the same destinations while reducing the Chinese end of the N2 route and in the Republic logistics distances and thereby offering great potential of Korea (with the existence of important ports such for economic growth. At the same time, they create as Busan and Gwangyang), while the capacity of common ground and cooperation between countries ports in Democratic People’s Republic of Korea and along the Eurasian Northern Corridor while also creating the Russian Federation is much smaller and there is value chains and production networks. room for investment and development. In any case, In recent years, railway transport has become there is still a low level of awareness among shippers an increasingly attractive option for transcontinental of these routes and operations. shipments. This change has come about due to the If these routes are used to their full potential, growth of the railway network in Asia; advances in the cargo imbalance dynamic between Asia and Europe railway technologies have allowed for greater speeds will become even more clear. There is a need to create and loads, and reductions in times for the coupling/ new demand through infrastructure investment and decoupling of wagons. With its extensive railway incentives for shippers, while logistical barriers such network connecting China, Mongolia, Kazakhstan and as Customs clearance and bureaucratic delays must the Russian Federation, the Eurasian Northern Corridor be overcome to vitalize multi-lateral cooperation. offers a high level of performance and acts as the most seamless transcontinental route. For example, in the case of shipping 40-foot I.5.4 Artic sea route containers from Tianjin to Antwerp, the time taken by railway along Eurasian Northern Corridor routes (for the In the past, expensive ice-class vessels with most part, along the N1C – N1A – N1 routes) was 2.5 high transit fees – coupled with unpredictable timing times shorter than the time taken by sea, while the and expensive fees for Russian Federation icebreaker cost of moving the containers by sea was 2.15 times escorts – have deterred most international shipping less.117 With time often being an important factor for firms from using the Artic sea route from Asia/east goods of higher value or for goods that have specific of the Russian Federation to Europe. natures, manufacturing needs or consumer preferences, But there is now the prospect of navigating such savings in time outweigh the increase in costs, these routes year-round in the 2020s. Officials from making overland transport more attractive. However, the Russian Federation and the Republic of Korea sea shipping is more suitable for liquid bulk or large are reportedly in discussions on how to create an bulk with lower cargo value, while pipelines are still Arctic container shipping line that would stretch from best for oil and liquified gas. Petropavlovsk-Kamchatsky to Murmansk along the Operational challenges remain for the facilita- Northern Sea Route. Both parties met in 2017 to tion of railway transport between Asia and Europe. discuss the investments needed and the projected
117 Transport Planning and Research Institute (TPRI) and cases gathered via literature review. Connectivity along the Eurasian Northern Corridor 63
income from the joint project.118 Finally, in January 2018, China also expressed The Republic of Korea is increasingly interested its ambitions to create a “Polar Silk Road”, developing in using the artic sea route due to the dramatic shipping lanes through this route and building reduction in Artic sea ice, and because it is much infrastructure in the Artic. shorter than the current shipping route that runs Even though transshipments between Europe from Asia to Europe through the Suez Canal. and Asia remain limited, the Northern Sea Route However, profitability is an issue on this project still saw a major hike in 2016. A total of 7.265 as it is subject to the seasons and flows of sea ice. billion tons of goods were shipped to and from ports Suggestions have been made to operate this route along the route, an increase of 35 per cent from in summer when the ice is at its lowest, and to use 2015.123 the Suez route during winter. The idea of using an Below is an illustration of the Eurasia Initiative icebreaker to support shipping operations is also developed by the Republic of Korea, which involves being discussed.119 For now, the passage is only the reinforcement of economic ties with other states feasible for around three months a year, which may in the region under a new paradigm for international change with time.120 economic cooperation. This initiative includes It was also recently reported that in 2017 an developing the North Pole Sea Route to connect the icebreaker from the Republic of Korea completed Republic of Korea to Europe. a 70-day mission in the Artic for the Korea Polar Research Institute, with the purpose of analyzing global warming and the Artic ecosystem. In addition to this, the private company Hyundai Merchant Marine from the Republic of Korea has already expressed its plans to test run a few container ships (2,500-3,500 TEU) along the Northern Sea Route, beginning in 2020.121 In August 2018, Maersk company, the world’s biggest container shipping group, sent a vessel loaded with Russian Federation fish and electronics from the Republic of Korea to navigate the Artic sea route from Murmansk near the border of the Russian Federation with Norway, to the Bering Strait near Alaska. Ships sailing this route require a permit from Russian authorities.122
118 Available at
Figure 21 Eurasia Initiative of the Republic of Korea
The designations employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Source: Korea Railway Association.
I.6 Intermodal sea-land con- nectivity between Republic of Korea and Southeast Asia
Enhancing connectivity between the Republic of for the development of Association of Southeast Korea and Southeast Asia through the “New Southern Asian Nations (ASEAN)–Republic of Korea relations Policy”, is the current priority of the Government of the within this policy, especially regarding the commem- Republic of Korea. The New Southern Policy aims to oration of the 30th anniversary of the establishment further strengthen inter-regional connectivity between of dialogue between Republic of Korea and ASEAN, the Republic of Korea and the countries of South the organization behind related events such as the and Southeast Asia, and to diversify the country’s ASEAN–Republic of Korea Special Summit, as well as international diplomatic and economic partnerships.124 a summit between Seoul and the countries of the The year 2019 represents an important milestone Mekong region.125 Recent efforts in this regard have
124 Korea Institute for International Economic Policy, 2018. “Korea’s New Southern Policy: Vision and Challenges”. KIEP Opinions, 12 No- vember 2018. 125 The Diplomat, 20 March 2019. “Advancing ASEAN-South Korea Relations in Moon’s New Southern Policy”. Available at
resulted in bilateral trade volume with ASEAN rising I.6.1 Route description and major ports 6 per cent to USD 120 billion (SGD 166 billion) in in Greater Mekong Subregion the first nine months of the year, compared with the Sea-land intermodal transport is the main mode same period in 2017.126 Republic of Korea is currently of connectivity between the Republic of Korea and the region’s fifth largest trading partner, and both Southeast Asia, including the Greater Mekong Subregion Republic of Korea and ASEAN are aiming to reach a (GMS) countries. Cargoes arrive at major seaports in trade volume of USD 200 billion by 2020.127 the subregion before moving on through the hinter- lands of mainland Southeast Asia via road transport, and to a much lesser extent on inland waterways and the rail network. The GMS is also connected to South Asia through the Eurasian Southern Corridor of the Asian Highway (AH) Network.
Figure 22 Sea-land connectivity between the Republic of Korea and the Eurasian Southern Corridor
Source: UNESCAP.
126 The Straits Times. “33rd Asean Summit-Seoul's New Southern Policy marks intent to prosper with Asean: Moon”, 15 November 2018. 127 Ibid. 66 Connectivity along the Eurasian Northern Corridor
Figure 23 Seaports in the Greater Mekong Subregion and Asian Highway Network
Source: UNESCAP.
Port facilities in the Greater Mekong Subregion of Viet Nam to corridor S1, connecting all the way to In the Socialist Republic of Viet Nam, major ports India. In the northern region of Viet Nam, Hai Phong include Hai Phong, Danang, Qui Nhon, and Ho Chi Minh and Vung Ang are the biggest ports for international City. Other ports are also being developed, such as container traffic. However, it is worth noting that most My Thuy International Seaport, Lien Chieu Seaport, containers arriving in Hai Phong or Vung Ang require and Lach Huyen International Gateway Port. The port transshipment that usually takes place in Singapore of Ho Chi Minh City is the 26th biggest container port or Hong Kong, China, where containers are loaded in the world and the 5th biggest in ASEAN.128 All the onto smaller vessels that the northern ports of Viet ports in Viet Nam connect to corridor S1A and north Nam can accommodate.129
128 Dezan Shiran & Associates, 2018. 129 Ibid. Connectivity along the Eurasian Northern Corridor 67
Figure 24 Viet Nam seaports system
Source: VINAMARINE, 2018.
In the central part of Viet Nam, the major ports Major ports in Viet Nam are linked to interna- are Qui Nhon and Da Nang, the latter being a deep-wa- tional routes including those of ASEAN countries, and ter port which handles the majority of the traffic. In some cargoes are transported to ports in Europe, the south, the ports in Ho Chi Minh account for 67 North America, and other trading countries through per cent of the total national throughput.130 Inland transshipment ports such as Singapore, Busan and waterways based on the Mekong Delta River Ports Hong Kong. also play an important role in cargo transportation The rapidly increasing trade volume is driving with the Kingdom of Cambodia. If the coastal ship- the recent rise in the opening of new routes, and ping agreement currently being discussed between there is also increasing demand for connections Cambodia, the Kingdom of Thailand and Viet Nam with major trading markets through the deployment is concluded, logistics services through maritime of larger vessels. transport will become more active.
130 Vietnam Briefing. Available at
Figure 25 Cargo volume via seaport system
TOTAL GOODS
CONTAINER GOODS
Source: VINAMARINE, 2018.
As shown in figure 25 above, the traffic volumes port is the country's traditional river port, and it is seen by Vietnamese ports have grown by more than accessible to vessels from the South China Sea 10 per cent per annum, on the basis of the strong via the Mekong River through the delta area of Viet economic growth of Viet Nam. Container traffic, in Nam. Phnom Penh port is located in the city, on the particular, has grown by more than 16 per cent. These Sap river some 3-4 km from its junction with the cargoes were handled in ports scattered all over Viet Mekong.131 The port of Koh Kong is located near the Nam, with activity concentrated in regional hub ports Thai border and is used by smaller boats below 500 such as Hon Gai, Hai Phong, Nghi Son, Da Nang, Quy tons deadweight (dwt). Koh Kong is a small provincial Nhon, Sai Gon-Vung Tau, Cai Mep-Thi Vai and Hau river. capital and does not have a major road that makes In Cambodia, the main international ports are it accessible to the rest of Cambodia (currently only Sihanoukville and Phnom Penh. Both provide access Road 43 can be used, and with some difficulty for to corridor S1A and also connect to corridor S1B in motorcycles). Following clearance, most boats proceed Thailand. Sihanoukville is the main deep-sea port of to another provincial port called al Sre Ambel, which the country, and its capacity is being upgraded to lies in an inlet of Kompong Som Bay near Road 4, accommodate increasing traffic. The Phnom Penh some 170 km from Phnom Penh.132
131 Website of the Government of Cambodia. Available at
Figure 26 Transport infrastructure network in Cambodia.
Source: “The Study on Logistics System Improvement Masterplan in the Kingdom of Cambodia 2018-2025.”
With some 3219 km of coastline and over 4,000 tracks that will link the port directly to the northeast km of waterways, ports are critical to transportation of the country.134 Laem Chabang Port is on the Gulf in Thailand. The country’s major ports are located in of Thailand, and is the country's main deep sea port. Bangkok, Laem Chabang, Map Ta Phut, Rayong, Phuket, It can handle about 6.9 million containers per year,135 Songkhla, Sattahip, and Si Racha. The port of Bangkok and is also undergoing expansion to raise the port’s (or Klong Toey Port) is capable of handling 1.5 million capacity to a maximum of 18 million containers.136 All containers per year,133 and 54 per cent of the total these ports in Thailand connect efficiently to corridors exports and imports of Thailand pass through the S1A or S1B, allowing for transportation along these port. An expansion project is currently underway, Southern Eurasian Corridor routes either south to which includes the construction of new docks to Singapore (S1A) or north across Thailand through accommodate larger vessels and plans to build twin rail S1B before further linking to S1 or S1C.
133 Siam Shipping. Available at
Figure 27 Shipping routes – ASEAN port network system
Source: Dr. Rosli Azad Khan, MDS Transportation Consultants.
The long coastlines of the Republic of the Union transport master plans across the region as a means of Myanmar, Viet Nam and Thailand and the inland of developing national coastline routes and inland waterways network of major rivers – most notably waterways that improve logistics performance. Infra- the Mekong and Irrawaddy rivers – mean that inland structure in countries such as Thailand or Viet Nam waterway and coastal shipping could potentially play are of a relatively high standard, and the port sector a much more important role in this subregion for both is forecasted to grow in the near future through national and short-distance transport. This would help the development of trade. In this scenario, the hub to alleviate congestion on the road network, mitigate and spoke operations of Short Sea Shipping could adverse environmental impacts, as well leverage and unleash the potential of coastal shipping between unlock new economic opportunities, especially along Viet Nam, Cambodia and Thailand. Some challenges waterways in hinterland areas. however still hinder coastal shipping development in Governments increasingly acknowledge the the region. These include limited areas for coastal importance of coastal and inland waterway shipping, port construction and a lack of hinterlands, along and for that reason integrate them into national with insufficient supported industries and a lack of Connectivity along the Eurasian Northern Corridor 71
efficient inland transport linkages, skilled workers, and laws and regulations that govern maritime activities.137
Figure 28 Ports along the Mekong River
Source: Mekong Institute.
The level of sophistication in coastal shipping intergovernmental initiatives to facilitate the smooth and logistics transportation varies greatly across the flow of goods within countries and across borders ESCAP region. Although most Asian countries have into others, significant barriers still remain for land- always relied on maritime transport because industrial locked countries and in political fragmentation and development tended to occur along coastal regions, difficult-to-reconcile regulatory and transport-system there is little physical or organizational infrastructure differences. Geographical barriers – such as inland wa- for moving goods from ports into the hinterlands. terways that are too shallow or narrow, or landmasses Several factors combine to make it very difficult for that impede efficient transport connections – are Asia to achieve integrated intermodal operations. expensive to correct, and it is hard for governments For example, although there have been a number of with scarce capital resources to do so.
137 ESCAP workshop on strengthening transport connectivity among Cambodia, Lao People's Democratic Republic, Myanmar, Viet Nam and Thailand (CLMV-T), October 2018. 72 Connectivity along the Eurasian Northern Corridor
Table 7 Summary of country-specific and shared challenges and issues regarding coastal shipping in Cambodia, Myanmar, Thailand and Viet Nam. Connectivity along the Eurasian Northern Corridor 73 74 Connectivity along the Eurasian Northern Corridor
Source: ESCAP, Study on Strengthening Capacity to Plan and Develop Efficient Coastal Shipping in Southeast Asia.
I.6.2 Railway along the Eurasian Southern is mainly used in Southeast Asian countries; 1,435 Corridor mm is used in China; and 1,676 mm in India. Given the fragmented nature of the railway network in Southeast Infrastructure connectivity Asia, the issue of break-of-gauge is insignificant for The rail sector in Southeast Asia is severely now.138 The exception to this is northern Viet Nam, underdeveloped. The overall rail network was developed where dual 1,000 mm/1,435 mm gauge tracks are in based on the requirements of national connectivity, but place from the border with China to Hanoi, meaning no on the subregional level the network is fragmented and bogie change is required. Bangladesh has two gauge often not interconnected with neighboring countries. sizes within their national network: eastwards of Within Southeast Asia, Cambodia, Thailand, Ma- Dhaka is mainly 1,000 mm gauge, while to the west laysia and Singapore are connected by a metre-gauge of Dhaka the network is integrated into the standard rail network. Thailand and Lao People's Democratic Indian railway gauge. Republic are technically connected, although with Transnational connectivity is minimal, highly less than 5 km of rail track connecting Nongkhai, affected by the different gauges used throughout the Thailand across the Thai-Lao Friendship Bridge over region. Only two routes on corridor S1A (Bangladesh the Mekong River to Thanaleng Station in Lao People's – India, and China – Viet Nam) are connected. In the Democratic Republic. China – Viet Nam case, dual 1,000 mm/1,435 mm No railway connection exists between Lao Peo- gauge tracks are in place. The China – Myanmar, and ple's Democratic Republic and Viet Nam, or between Myanmar – India connections are only in the planning Viet Nam and Cambodia. As for Myanmar, its railway stage, and there is a window of opportunity for the network is not connected to any neighboring countries. optimal solution to the break-of-gauge situation to This also means that there is no rail connectivity be found. Lao People's Democratic Republic opted between Southeast Asia and South Asia, given that for its main railway line to use the technologies and Myanmar borders with South Asian countries such as gauges employed by China, thus pushing the issue the People’s Republic of Bangladesh and India. Within to its border with Thailand. Both Thailand and Myan- South Asia, Bangladesh and India are connected by rail. mar use 1,000 mm gauge. Meanwhile, the railway Along the Eurasian Southern Corridor, the railway that will connect Cambodia and Viet Nam is in the network consists of three gauge sizes: 1,000 mm track planning phase, while the connection between India
138 ESCAP, 2017. Comprehensive planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter- Regional Transport Connectivity. Connectivity along the Eurasian Northern Corridor 75
and Bangladesh has been operational for many years. railway would run 391 km from Lao Cai Province in the Along the S1 route, there is a disconnect in far north to Yen Bai, Phu Tho, Vinh Phuc, Hanoi, Hung the corridor at the China – Myanmar border (also a Yen, Hai Duong, and Hai Phong before ending at Lach missing link in the Trans-Asian Railway (TAR) network). Huyen Port in Hai Phong City.143 Overall, modernization work is required for railway The railway network between Cambodia and tracks, stations, signaling systems and rolling stock Thailand was reconnected in 2019 with a 1.3 km in Myanmar. Some 47 per cent of the locomotives cross-border rail link between Arayaprathet in Thailand are 30 years old. One third of passenger coaches (32 and Poipet in Cambodia. It will be operational as soon per cent) and more than half of the freight wagons as a bilateral border agreement for train transportation are 40 years old. Furthermore, railways in Myanmar is completed. 144 are not electrified and 88 per cent of lines are still There have been continuous rail freight services single-track.139 The country’s handling facilities are between Malaysia and Thailand since a bilateral rail old and limited in terms of capacity.140 traffic agreement was signed in 1954, enabling railway connectivity between the two countries. Currently, Operational connectivity one short-distance freight train and two or three Compared to other regions, trans-national rail- long-distance freight trains run between the two way transportation plays a minor role in the Greater countries each day.145 Mekong Subregion. Given the lack of an integrated The Lao People's Democratic Republic and railway infrastructure network among the countries Thailand are also in discussions to establish a di- of the subregion, there are minimal international rect rail freight service connecting landlocked Lao rail freight operations. Nevertheless, countries are People's Democratic Republic to Laem Chabang Port, undertaking an increasing number of initiatives to the major maritime port of Thailand. It is estimated enhance international railway transport. One such that the transport of goods by railway could reduce example was the launch of the first container train transport costs by between 30 per cent and 50 between Hanoi in Viet Nam, and Nanning, China in per cent compared to the current charges for road November 2017.141 A year later, a freight train service transportation.146 from Zhengzhou (a transport hub in central China) to Hanoi was launched, carrying machinery and e-products I.6.3 Roads along the Eurasian Southern from China to Viet Nam, while fruit, rice, dried fruit and Corridor aquatic products were transported from Viet Nam to China.142 In addition, Viet Nam is working on a plan to Infrastructural connectivity build a railway line that will run through eight northern The road sector is the backbone of inter- cities and provinces and up into China, to boost trade subregional transport connectivity among the and economic development in the region. The planned countries of the Eurasian Southern Corridor. The
139 UMI Asia (Thailand) Ltd. “Myanmar’s Railway Industry – Overview and Opportunities for Foreign Businesses.” 140 Ksoll and Quarmby. “Private S 141 Available at
quality of the Eurasian Southern Corridor’s roads in highways. Roads of Class III or below can be found in China, Malaysia, Thailand and Viet Nam is good, their Bangladesh, Cambodia, India, Lao People's Democratic classifications being either Primary, Class I or Class II Republic and in Myanmar.
Figure 29 Eurasian Southern Corridor routes
Source: UNESCAP.
Most of the road sections of Class III and below Republic are insufficient), which leads to safety issues. are dispersed along corridor route S1, on the stretch Infrastructure that is of low quality and inadequate from Bangladesh to the Indian border at Benapol/ for the amount of traffic that uses it, is detrimental Bongaon, and then through northeast India up to the to the efficiency and effectiveness of international China – Myanmar border at Ruili/Muse. The longest road transport, creating bottlenecks and adversely section below Class III is in Myanmar on the S1C impacting the seamlessness of national and inter- route, between Meiktila and Kyaing Tong. national logistics networks. In Cambodia, India, Lao People's Democratic Republic and Myanmar, road sections are mostly Operational connectivity classified as Class III and much of the road network lacks safety structures. Furthermore, the traffic Most countries along the Eurasian Southern Cor- capacities of the roads or bridges along the entire ridor, notably the Greater Mekong Subregion countries, Eurasian Southern Corridor are not adequate for exchange road transport traffic rights with each other traffic requirements (e.g. for bridges, the capacities through bilateral and multilateral agreements under of those in Myanmar or Lao People's Democratic the auspices of the ASEAN and GMS initiatives.147 Connectivity along the Eurasian Northern Corridor 77
All GMS countries (i.e. Cambodia, Lao People’s through the Malay peninsula. Democratic Republic, Thailand and Viet Nam) grant In addition, there are many other operational traffic rights to foreign road freight vehicles, usually challenges, or mismatches occurring at borders, which with a fixed number of permits under quotas arranged affect the seamlessness of international road freight by bilateral or sub-regional agreement. In 2019, connectivity within the subregion. Myanmar completed a bilateral arrangement with One of these mismatches relates to third-party Thailand on the granting of traffic rights, though it liability, when one country does not recognize insurance is still in the implementation phase. issued in another country and vehicles have to buy It must be noted that Lao People's Democratic insurance at the border. An example of this is China Republic does not allow transit traffic. For example, requiring vehicles from Viet Nam to buy insurance at freight originating in Viet Nam with a final destination the border, while Viet Nam accepts Chinese insurance. of Thailand has to be transloaded in Lao People's Also, Thailand requires Cambodian and Laotian vehicles Democratic Republic, meaning Vietnamese trucks and to purchase insurance at the border, while Cambodia Thai trucks both meet at the border with Lao People's and Lao People’s Democratic Republic accept the Democratic Republic for transloading because they are validity of Thai insurance.148 not allowed to cross the border to deliver their cargo. There are differences between countries’ Similarly, no traffic rights are shared between Customs and transport authority border-crossing Myanmar, Bangladesh and India, and transloading is procedures, the documentation required for cargoes, done at the borders of each country. and rules on the temporary importation of vehicles Even though Thailand and Malaysia do not grant at BCPs. These differences have the potential to add transport permits to each other, there are special an additional layer of complexity and administrative bilateral arrangements allowing Thai trucks transporting burden, which could impact seamless international perishable goods designated for Singapore to transit road transport connectivity.
Figure 30 Required documents for border-crossing between Lao People’s Democratic Republic and Thailand
ThailandThailand LaoLao PDRPDR
Source: ESCAP Handbook on Cross-border Transport along the Asian Highway Network.
147 ESCAP, 2017. Comprehensive planning of Eurasian Transport Corridors to strengthen the intra- and inter- regional transport connectivity. 148 ESCAP, 2017. Handbook on Cross-Border Transport along the Asian Highway Network. 78 Connectivity along the Eurasian Northern Corridor
Overall, despite some progress and the efforts at some BCPs, where manual processing is still the made at the BCPs along the corridor, advancements norm. In addition, the ICT systems on both sides of remain limited and there is room for improvement in the border are very often not integrated and there most of the corridor’s countries. Cambodia and Myan- is no exchange of information. mar have a low level of computerization, mixed traffic Differences in standards for the weights and at some road BCPs (no separate lanes for trucks or dimensions of road freight vehicles also create addi- buses) and extensive documentation requirements. tional operational challenges. Vehicles carrying goods Also, in Bangladesh, the manual processing of paper abroad may end up overloading or underloading cargo documents causes extra-long delays. Some BCPs con- while transiting through countries with different stan- tinue to lack up-to-date modern inspection equipment. dards. The lack of harmonized standards also affects The use of information and communication road freight vehicles as they move along corridors, technology (ICT, e.g. single-window and other elec- causing inefficiency in the logistics supply chain and tronic declaration systems) may not be available increasing cost. (see table 8).
Table 8 Standards on weights and dimensions for road freight vehicles – Eurasian Southern Corridor
Source: UNESCAP.
Road safety also poses an operational concern road curvature dictates frequent brake usage, and thus along some sections of the Eurasian Southern Corridor. a rise in the risk of brake malfunction.149 The study For example, a study from the GMS Freight Transport also pointed out that the capacity of bridges in Lao Association (FRETA) on sections of routes S1, S1B People's Democratic Republic (20-30 tons) does not and S1C revealed that in the Lao People's Democratic match with the corridor’s real traffic average (49.5 Republic there was a lack of emergency-braking paths tons), and therefore poses a safety risk. for trucks, even when the terrain’s steep slopes and
149 Ksoll and Quarmby. “Private Sector Views on Road Transport along the North South Economic Corridor.” Financing mechanisms for transport infrastructure development 79
II. Financing mechanisms for transport infrastructure development
This chapter deals with infrastructure financ- II.1 Financing transport in- ing, bankability and the respective mechanisms frastructure within the ESCAP region that finance transport infrastructure.150 The study report Comprehensive Investment is needed to develop new transport Planning of Eurasian Transport Corridors to Strengthen infrastructure and to rehabilitate what is already in the Intra-and Inter-Regional Transport Connectivity place along the ESCAP Eurasian Transport Corridors, (UNESCAP, 2017) estimates the priority invest- to meet transport and trade requirements between ments needed for upgrading the railway routes of Asia and Europe. These investments will have to come the ESCAP Eurasian Transport Corridors to be USD from either public or private sources (see figure 31): 21.470 billion.151 The same report stated USD 22.153 billion152 was needed to upgrade road corridor routes, given the costs for connecting roads and railways to the Korean Peninsula and the related costs for upgrading rail and road infrastructure.
150 This chapter is largely based on Chapter II.3 of the Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity, Study Report (2017), with some minor changes and additions. 151 Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity, Study Report (2017); p. 87. 152 Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional Transport Connectivity, Study Report (2017); p. 90. 80 Financing mechanisms for transport infrastructure development
Figure 31 Infrastructure finance by agent
Source: Adapted from G. Inderst, 2016.153
Most of this finance comes from the public from entities such as commercial banks and non-bank sector. For example, according to the Asian Devel- financial institutions. Project finance may also come opment Bank’s (ADB) observations on its 25 devel- in the form of public-private partnerships (PPPs) that oping member counties (96 per cent of Asia’s total have both public and private equity. Borrowing from population), 92 per cent of infrastructure in Asia is the private sector is justified by the future user financed by the public sector.154 Public sector providers fees that a project may be entitled to gather, such of finance are central and local governments, other as track access charges, road tolls, landing fees at governmental agencies, national and multilateral de- airports, dockage and port dues, and mooring fees. velopment banks and other development institutions. The figure below illustrates the various sources Private sector infrastructure financing can come of funding.
Figure 32 Sources of funds (capital) for infrastructure financing
Source: Adapted from Asian Development Bank, “Meeting Asia’s Infrastructure Needs”, 2017.
153 Inderst. “Infrastructure Investment, Private Finance, and Institutional Investors: Asia from a Global Perspective.” 154 Asian Development Bank, 2017. “Meeting Asia’s Infrastructure Needs.” Financing mechanisms for transport infrastructure development 81
Transport infrastructure investments are that might include the development of the infrastruc- distinctive in that they require a high level of sector ture needed for the delivery of this service.155 This expertise. Many different parameters have to be type of contract defines the allocation of resources, taken in account – such as transport demand analysis risks, responsibilities and rewards between both and forecasting – and it is necessary to deal with the government and the private business entity. It long periods of infrastructure construction and cost presents advantages such as risk mitigation and recovery. Because the cost of transport infrastruc- increased efficiency, but also bears disadvantages ture is significant, the main challenge is to estimate such as possible additional costs compared to public a realistic and unbiased estimate of infrastructure procurement in the form of higher borrowing and cost. Experience has shown that cost overruns and transaction costs. actual end-product usage below projections are not The United Nations Economic and Social Com- uncommon for large projects. mission for Asia and the Pacific identified the main types of PPP models in its Guidebook on Public-Private Public Private Partnerships Partnership in Infrastructure.156 Each of the five iden- Public-private partnerships are contractual tified categories have many variants (and in recent arrangements between governments and private times many PPP projects have been combinations business entities for the provision of a public service of types) depending on the features of the contract (see figure 33).
Figure 33 Basic features of PPP models
Source: ESCAP, Guidebook on Public-Private Partnership in Infrastructure.
155 Van den Broek, “Transport Corridors in the Greater Tumen Region: Financing Infrastructure Development”. 156 Available at
II.2 Infrastructure project bank- ability
Due to the large sums involved, it is complicated standards of services, along with defined penalties for investors to decide on whether to invest in an for failure to deliver. infrastructure project. The required level of technical expertise, long implementation periods and associated c) Existence of legal and economic recourse/ risks are just some of the difficulties that can put protection off investors. These legal recourses include procedures regarding It is therefore important that a project prepa- conflict escalation (with terms of settlements and ration agency address the risks involved in a project litigation), and there must be economic protection in the most transparent and detailed way possible. that provides insurance or direct guarantees against Bankable projects should comply with the following political or economic risks. requirements:157 Project cycle in Multilateral Development a) Proper documentation and due diligence Banks158 It is essential to define a project’s timeline and Project components and their bankability can to set clear milestones. It is as important as estab- be illustrated well through the project cycles used lishing a project’s governance structure and ensuring by Multilateral Development Banks (MDBs). the provision of all permits (land, construction, etc.) from the necessary authorities. Financial feasibility 1) Identification studies and risk analysis assessments are also re- Countries turn to a multilateral development quirements for further safe investment. bank (MDB) for the financing of projects usually in- cluded in their national development strategies and b) Appropriate covenants – clauses in the lending plans. Projects are identified based on countries’ agreements between the Special Purpose Vehicle development strategies, and the bank then selects and the bank and deal structure projects that fit the bank’s mission and priorities. To ensure project bankability, it is necessary to clarify the financial obligations of a Special Purpose 2) Preparation Vehicle (SPV) and to safeguard stakeholders' interests. In the second stage, project documentation is Appropriate covenants include defining concession prepared. The borrower country and the bank jointly rights with explained cost-recovery mechanisms for clarify the project’s objectives, risks, alternative the concessionaire (which is the SPV) and a schedule development scenarios, the tentative schedule for of payments for the concession. It is also necessary the project’s approval stages, key issues related to to implement a transparent payment mechanism the bank’s safeguards, etc. with incentives for providers to meet the required
159 Asian Development Bank. “Meeting Asia’s Infrastructure Needs.” 158 These steps are prepared on the basis of World Bank Group project cycles (available at
3) Due diligence 6) Evaluation The project documentation is thoroughly After project completion, an assessment is analyzed for conformity with the bank’s operation- undertaken by a separate evaluation body of the bank al requirements and the project’s readiness for (sometimes this evaluation is done jointly with the implementation. Institutional arrangements are borrower government). This analysis aims to evaluate reviewed, and the project timetable agreed between a project’s finances, its developmental effectiveness, the bank and the requesting government. outcomes and results against objectives, and the Several sets of documentation and assess- problems met and lessons learned. The evaluation ments are developed during this phase. These include usually takes the form of a separate report, and the feasibility studies (with technical and engineering information is used for the assessment of similar designs); economic assessments using cost-benefit future projects. analysis (calculations of Economic Internal Rate of Return (EIRR) and Economic Net Present Value (ENPV) etc.); financial assessments including the Financial Internal Rate of Return (FIRR) and the Financial Net II.3 Finance mechanisms in Present Value (FNPV); environmental and social the ESCAP region impacts (accounting for greenhouse gas emissions, impact on indigenous peoples, resettlement needs); Substantial financial resources are required procurement plans; and risk and legal assessments. to improve road and railway links along the Eurasian Northern Corridor. Preliminary estimates state the 4) Negotiation and approval need for some USD 44 billion to enhance transport This phase covers negotiation between parties infrastructure along the corridor, aside from any extra on loan conditions, on what part of the project’s investment required for road and railway infrastructure costs the bank may cover, and on related issues. The on the Korean Peninsula. finalization of legal and financial documents takes There are many options available for infrastruc- place and they are submitted to the bank’s board of ture finance, and they vary according to the ways in directors for approval. Documents can include project which capital is provided and the financial vehicles agreements and loan agreements. If approved, the and instruments used. project moves to the implementation stage. a) Multilateral Development Banks 5) Implementation In 2015, MDBs financed 2.5 per cent of During the implementation stage, the borrower infrastructure investment in Asia, and as much as government carries out the project while the bank 10 per cent when India and China are excluded.159 assists the implementing agency with the develop- Transport infrastructure projects are very costly ment of detailed designs, bidding documents, and the to implement, and these projects often require a procurement of goods, services and works. Project consortium of MDBs to finance a single project. A implementation is monitored by the bank and the consortium can also be formed by banks and financial borrower government, and the bank use data from institutions under regional cooperation programmes. the monitoring to measure the project’s efficacy.
159 Asian Development Bank. “Meeting Asia’s Infrastructure Needs.” 84 Financing mechanisms for transport infrastructure development
Multilateral Development Banks finance costs it has already paid; (iii) stay at the bank, which infrastructure through credits, loans and grants. These then directly pays for the eligible works, services and funds can either (i) be transferred to the borrower goods; or (iv) be paid by the bank to third parties for government to pay for project-related expenses, for the eligible expenditures under special commitments. which supporting documents should be provided after Along the Eurasian Northern Corridor, transport the expenses have occurred; (ii) be transferred to the infrastructure projects fall under the operational scopes borrower government as reimbursement for the eligible of several MDBs (see tables 9 and 10):
Table 9 Membership in major MDBs of countries along the Eurasian Northern Corridor
Source: Websites of respective MDBs.
Among the major MDBs in the region, the Asian of funding and are in line with the bank’s policies. In Infrastructure Investment Bank (AIIB) provides financing the case of projects proposed for co-financing, the to the public and private sectors in member countries, bank may accept assessments carried out by third through equity financing, loans to its members or loans parties. As of October 2017, six of the 21 AIIB- guaranteed by its members. Grants from the Project approved projects were in the transport sector.160 Preparation Special Fund are available to member The project process of the AIIB is guided by its countries that are also recipients of International “strategic goals and thematic priorities: sustainable Development Association (IDA) funding, including IDA infrastructure, cross-border connectivity and private Blend Countries. The bank selects projects that have capital mobilization”.161 Figure 34 below illustrates the clearly defined development objectives, action plans different steps of project procedure within the AIIB to achieve these objectives, no alternative sources (the steps are usually similar in other MDBs).
160 Asian Infrastructure Investment Bank (available at
Figure 34 AIIB project process steps
Source: AIIB website.162
Other MDBs include the World Bank Group (which Bank for Reconstruction and Development (EBRD); includes the International Bank for Reconstruction and the Islamic Development Bank (IsDB); the New Development (IBRD), the IDA, the International Finance Development Bank (NDB); the Eurasian Development Corporation (IFC) and the Multilateral Investment Bank (EDB); and the ECO Trade and Development Guarantee Agency (MIGA)); the ADB; the European Bank (ETDB).
Table 10 Basic financial indicators of MDBs operating in the ESCAP region
Note: * Ordinary capital resources of ADB, reported as of 1 January 2017. ** Data on IBRD and IDA, reported as of 30 June 2017. Source: Financial statements of respective MDBs.
162 Available at
b) Other sources of finance for transport Official development assistance agencies projects Official development assistance is financial Investment development funds support provided to developing countries by the When a country wants to act as a donor, an central/local governments of donor countries and investment development fund is established as a by multilateral agencies. This support may include corporate business entity, and unlike MDBs, the funds grants, loans, disaster relief and technical assistance. normally use equity financing as their main funding Agencies specializing in international development and tool. Examples relevant to the Eurasian Northern official development assistance (and which operate Corridor are: in countries along the Eurasian Northern Corridor) are: • The Silk Road Fund (established in 2014, • Organization of the Petroleum Exporting USD 40 billion). This is a mid/long-term investment and Countries (OPEC) Fund for International Development development fund used for supporting infrastructure (established in 1976, USD 7.9 billion). This fund and industrial cooperation under the Belt and Road provides loans for development projects, technical Initiative (BRI). Projects in countries participating in assistance grants, balance of payment support and the BRI are eligible for financing. The fund focuses on trade financing to developing countries (except for projects that would strengthen cooperation between OPEC members). The fund works with both the public China and countries where the projects are located; and private sectors. Transport commitments make up the projects are subject to assessments similar in 21 per cent of the fund’s total commitments;165 and structure and steps to those conducted by MDBs. • Japan International Cooperation Agency (JICA, Equity is the main tool of investment;163 other tools established in 2003, 8.55 billion Japanese yen). This include debt investments (bonds, loans), mezzanine agency provides loans, grant aid, technical assistance investments and mutual investment funds, while and emergency disaster relief to developing countries management of entrusted assets is also available;164 in a wide range of areas, including transport.166 and • The Japan Infrastructure Initiative (estab- The Republic of Korea channels its official develop- lished in 2017, 20 billion Japanese yen). This is an ment assistance through two agencies: investment fund that financially supports projects • The Korea International Cooperation Agency outside of Japan with the involvement of Japanese (KOICA, established in 1991, 647.6 billion Korean manufacturers or engineering companies. won) – provides grants and technical assistance; and • The Economic Development Cooperation Fund (established in 1987, total commitments USD 11.76 billion). This fund provides development loans, equity investments and guarantees, and is administered by Korea Eximbank. The transport sector is one of its investment priorities.
163 Mezzanine financing is a blended form of debt and equity. It is usually used to fill up a portion of needed investment, after the main part has been secured by a loan. In the case of borrower default, the mezzanine investor will be paid off after the main lender – usually a bank – is paid off. The mezzanine investor therefore takes on a higher risk (risk of not getting the investments back in the case of default) and funds provided via this form of financing are more expensive (have a high interest rate). 164 Silk Road Fund, Co., Ltd. Available at
Between 2006 and 2015, transport commit- Governments, PPPs and the private sector may ments made up 15-44 per cent/year of the total also turn to domestic institutions while seeking funding development assistance portfolio disseminated via for transport infrastructure projects. These include, these two channels.167 amongst others, national development banks and export-import banks (such as the Development Bank Direct partnership of interested countries of Mongolia, China Development Bank, Export-Import In some cases, countries that jointly develop Bank of Korea, etc.), and national financing institutions international transport corridors may directly assist and funds (such as the Far East Development Fund in each other in raising necessary funds. the Russian Federation, and the India Infrastructure The Greater Tumen Initiative Northeast Asia Finance Company). EXIM Banks Association is one of the approaches available for coordinating governmental resources from partner countries for regional transport development. The Greater Tumen Initiative (GTI) is a cooperation platform in Northeast Asia that has China, Mongolia, Republic of Korea and the Russian Federation as members. The development of transport infrastructure is one of the organization’s main priorities, and the initiative has defined several investment priorities in the sector as part of its multilateral transport strategy. To secure funds for the implementation of identified projects, the association – made up of the Export-Import Bank of China, the Development Bank of Mongolia, the Export-Import Bank of Korea, and the State Corporation “Bank for Development and Foreign Economic Affairs” of the Russian Federation – was established in 2014. This approach allows the countries to coordinate financing for projects of a cross-border nature in a mix of donor and developing countries. Projects are identified by the association in cooperation with the member governments of the GTI framework.
167 Korea International Cooperation Agency. Available at
III. Operational solutions to enhance connectivity along the corridors
The operational gaps that exist along the the prevention of marine and atmospheric pollution Eurasian Northern Corridor can be overcome through by ships. The work of the IMO supports the United better coordination and cooperation, and the Nations Sustainable Development Goals (SDGs). As better integration of the information systems of the a specialized agency of the United Nations, IMO is corridor’s countries. It is also important that countries the global standard-setting authority for the safety, adhere to international conventions and regional and security and environmental performance of interna- bilateral agreements on issues such as transport tional shipping. Its main role is to create a regulatory infrastructure, transport operations, trade facilitation framework for the shipping industry that is fair and and customs procedures. effective, universally adopted and universally imple- mented. Bureaucratic delays and “red tape” pose a bur- den for traders moving goods across borders. Trade III.1 International conventions facilitation – the simplification, modernization and and agreements harmonization of export and import processes – has therefore emerged as an important issue for the world III.1.1 Coverage by international conven- trading system. World Trade Organization members tions concluded negotiations at the 2013 Bali Ministerial Conference and agreed upon a Trade Facilitation There are various international conventions Agreement (TFA), which entered into force on 22 that aim to facilitate international transport and to February 2017 following its ratification by two-thirds make it safer, more secure and more environmentally of the WTO membership. The TFA contains provisions friendly. International organisations such as the for expediting the movement, release and clearance United Nations Economic Commission for Europe of goods, including goods in transit. It also sets out (UNECE), the International Maritime Organization measures for effective cooperation between Customs (IMO), the World Trade Organization (WTO) and the and other appropriate authorities on trade facilitation World Customs Organization (WCO) are promoting and Customs compliance issues. It further contains many of these international conventions for ratifi- provisions for technical assistance and capacity cation and implementation by their member States. building in this area. As such this agreement is very The IMO is the United Nations specialized agency relevant for the operation of the ESCAP Eurasian responsible for the safety and security of shipping and Transport Corridors. Operational solutions to enhance connectivity along the corridors 89
The WCO, established in 1952 as the Cus- This includes coherent international infrastructure toms Co-operation Council (CCC), is an independent networks, uniform and simplified border-crossing intergovernmental body whose mission is to enhance procedures, and uniform rules and regulations aimed the effectiveness and efficiency of Customs adminis- at ensuring a high level of efficiency, safety and envi- trations. It represents 183 Customs administrations, ronmental protection in transport. These agreements and presents a forum for dialogue and exchange of and conventions, a large number of which are kept experiences between national customs delegates. It constantly updated, are legally binding for the states also offers its members a range of conventions and who become Contracting Parties to them. other international instruments, as well as technical While these legal instruments are important assistance and training services provided either directly to all European countries, both western and eastern, by the Secretariat, or with its participation. Besides they appear to be today of utmost importance for the vital role played by the WCO in stimulating the governments of newly independent states who need growth of legitimate international trade, its efforts to build their transport regulations in line with those to combat fraudulent activities are also recognized existing in the other European countries. Additionally, internationally. In an international environment they are applied by a large number of countries characterized by instability and the ever-present threat worldwide. of terrorist activity, the WCO mission to enhance The list of the 57 United Nations Agree- the protection of society and national territory, and ments and Conventions in the field of transport, to secure and facilitate international trade, takes on is reproduced below, providing information on the its full meaning. status of these international legal instruments Since its creation in 1947, the UNECE Inland with regard to signatures, ratifications, accessions Transport Committee has been a framework for inter- and acceptances by Democratic People’s Republic governmental cooperation and concerted action toward of Korea, Republic of Korea, China, Mongolia and facilitating international transport while improving Kazakhstan. its safety and environmental performance. The main Among the extensive family of international results of the quiet, unspectacular but persevering conventions aimed at transport facilitation, ESCAP and useful work of the UNECE member governments, concentrates on promoting those conventions, which acting together for almost five decades now within it considers to be most relevant to its mandate. This the framework of the committee, are reflected in list is set by ESCAP Resolution 48/11, and includes: 57 international agreements and conventions which • Convention on Facilitation of International provide the international legal and technical frame- Maritime Traffic (FAL 1965), 1998 edition; work for the development of international road, rail, • Convention on Road Traffic (Vienna, 8 inland waterway and combined transport in the UNECE November 1968); region.169 • Convention on Road Signs and Signals These international legal instruments, some (Vienna, 8 November 1968); of which are applied also by countries outside the • Customs Convention on the International UNECE region, address a wide array of transport issues Transport of Goods under Cover of TIR Carnets (TIR which fall under the responsibility of governments Convention, Geneva, 14 November 1975); and which have an impact on international transport.
169 Available at
• Customs Convention on the Temporary as strict Customs controls and secure sealing at the Importation of Commercial Road Vehicles (Geneva, Customs office of departure.170 18 May 1956); The benefits of the TIR system mean that more • Customs Convention on Containers (Geneva, countries are still joining the TIR Convention. Pakistan 2 December 1972); became a member in 2016 (signed in 2015), while • International Convention on the Harmonization China signed the Convention in 2016 and will become of Frontier Controls of Goods (Geneva, 21 October a member in 2017. 1982); and Countries may often hesitate to join a partic- • Convention on the Contract for the Inter- ular convention because of reasons such as a lack national Carriage of Goods by Road (CMR) (Geneva, of national capacity for the convention’s implemen- 19 May 1956). tation, or the cost of adjustments needed to meet None of the conventions have been joined its requirements.171 by all the countries that feature along the Eurasian International railway transport is regulated by Northern Corridor that links Asia to Europe, and also two major international agreements: not all countries with sea access are members of the • Convention Concerning International Carriage FAL. by Rail (COTIF), promoted by the Intergovernmental In 2018, the TIR Convention – the one with the Organisation for International Carriage by Rail (OTIF); most members amongst the considered countries – and had been joined by all countries along the Eurasian • Agreements on International Goods northern and central corridors, except Democratic and Passenger Transport by Rail (SMGS and SMPS People’s Republic of Korea. The TIR Convention Agreement), promoted by the Organization for facilitates the international carriage of goods from Cooperation of Railways (OSJD). one or more Customs offices of departure to one or The geographical scope of these agreements more Customs offices of destination (up to a total of is different due to their development history, and four Customs offices of departure and destination) therefore the transport of goods and passengers and through as many countries as necessary. As between Asia and Europe by railway in some cases a rule, the vehicle remains sealed throughout TIR has to comply with both agreements. transport, and goods are therefore generally not Both legal regimes for international railway inspected at border crossings. However, Customs transport are relevant for the Eurasian Northern authorities remain entitled to perform random inspec- Corridor. tions or to conduct them whenever they suspect irregularities. The Convention applies to transport OTIF – COTIF with road vehicles and combinations of vehicles as The OTIF is an intergovernmental organization well as containers, and allows for the use of the TIR dedicated to international rail transport. It has been Carnet for all modes of transport, provided that some active since 1893 and is the oldest international portion of the journey is made by road. This, of course, organization in the sector. It now has 50 member requires a number of precautionary measures, such States, including one Associate Member. The
170 Available at
organization has its headquarters in Berne, Switzerland liability of carriers and passengers, and senders/recip- and has legal personality under international law and ients of baggage, and sets up a claims procedure;173 in the national laws of its member States.172 Its basic legal instrument is the COTIF 1999 and its seven Agreement on International Goods Transport by Rail (SMGS) Appendices. The main issues addressed by OTIF/COTIF The agreement, its annexes and instruction are railway contract law, technical interoperability manual identify goods allowed and not allowed for and the transport and handling of dangerous goods. carriage by rail, and special conditions, if needed, for In 2011, the EU acceded to COTIF 1999. From the dangerous and perishable goods. It also sets rules Eurasian Northern Corridor, only the Russian Federation for contracts, consignment notes (including the CIM/ is member State. SMGS consignment note), usage of wagons, applica- tion of tariffs and calculations of charges/fines and OSJD – SMGS/SMPS payment, release of goods to consignees, claims, International railway transport via the Korean and identifies the liabilities of railways;174 Peninsula and onwards to Europe via the Trans- Siberian Railway or by Chinese railways will require Agreement on the International Passenger Tariff (MPT) a legal framework for international haulage. China, This agreement sets up procedures related to Democratic People’s Republic of Korea and the Russian developing tariffs for the carrying of passengers, Federation have such a framework of agreements and establishes the rights and obligations of the for their railways through their membership of the contracting railways but does not restrict their OSJD. relations with other railways that are not parties to the agreement. It does not restrict the conclusion The OSJD legal framework for rules on international of separate bilateral or multilateral agreements on railway transport includes nine agreements: passenger tariffs if they do not affect the interests of the other parties;175 Agreement on International Passenger Transport by Rail (SMPS) Agreement on the Uniform Transit Tariff (ETT) The agreement, its annexes and instruction The agreement sets up procedures for developing manual set the rules for the international carriage tariffs related to carrying cargo in wagons, containers, of passengers, baggage, pets, children, transport in wagons that are not the property of the railway, and documents (tickets), categories of seats and the tariffs for additional services. Parities to the ETT can changing of seat categories, and the application of use other tariffs between themselves if they do not tariffs (without setting the tariffs). It also defines affect the interests of the other parties;176
172 Available at
Agreement on the International Railway Transit Tariff (MTT) Agreement on the Accounting Rules in International The agreement lays out rules for the development Transport of Passengers and Goods by Rail of tariffs used for the carriage of cargo in wagons, The agreement lays out accounting procedures containers, wagons that are not the property of the for the transport of goods, passengers, baggage and railway, and tariffs for additional services. Parities to for related services between contracting parties;180 the MTT can use other tariffs between each other and if they do not contradict the MTT Agreement. The MTT can also be applied in countries where the ETT Agreement on Organizational and Operational Aspects of is used;177 Combined Transportation between Europe and Asia The agreement contains recommendations for Agreement on Rules for the Use of Coaches in Interna- an international plan that governs the development tional Traffic (PPW) and functioning of the most important intermodal While setting the rules for the usage of pas- transport lines and their facilities, and provisions on senger coaches in international railway transport, how measures should be included into the national the agreement does not affect the responsibilities plans of parties. The annexes list the routes, facilities of parties bound to similar agreements. Parties also and the technical requirements for the lines and maintain their rights to conclude bilateral or multilat- facilities.181 eral agreements on the use of coaches, as long as The importance of joining the OSJD has been they do not affect the interests of other parties. The recognized by Republic of Korea. However, its earlier detailed rules are featured in its annexes;178 attempts to join the organization in 2003 and 2015 were fruitless as Democratic People’s Republic of Agreement on Rules for the Use of Wagons in International Korea was not yet ready to support the membership Traffic (PGW) of Republic of Korea.182 As a workaround measure, The agreement and its annexes contain rules Korail became an affiliated member in March 2014, and for the usage of wagons in the railway transport of OSJD continued to cooperate with the Government of cargo, and supersede the provisions of annex 4 to the Republic of Korea. In 2018 the Republic of Korea the SMGS. The parties to the PGW have the right finally joined OSJD. The Republic of Korea is now a to apply other bilateral or multilateral agreements to full member of OSJD and party to its agreements, the use of wagons as long as they do not affect the and a legal framework can be drawn up that allows interests of other parties;179 for the passage of international railway transport
177 OSJD, “Agreement on the International Railway Transit Tariff (MTT) as amended and expended as of 1 January 2017 (in force since 1 January 1997)” (Warsaw, 2017). Available at
through the Korean Peninsula towards destinations Both Democratic People’s Republic of Korea and in Europe and Asia. Republic of Korea are parties to the AH Agreement, Coordination between both legal regimes is as well as China and the Russian Federation. increasing. In 2006 a common CIM/SMGS consignment As mentioned above, China, Mongolia and the note was launched, which allows for the avoidance Russian Federation signed a separate international of “reconsignment” when goods leave the zone road transport agreement (the Intergovernmental of authority of the SMGS and enter the railway Agreement on International Road Transport along network covered by the COTIF. The note has both the Asian Highway Network) in 2016. Under this SMGS and COTIF contracts attached, does not agreement, each country gives the carriers of the require transcription, and also serves as both the other two countries traffic rights for international Customs transit document and the bank document.183 road transport operations on the parts of the Asian Highway routes AH3 (Novosibirsk – Barnaul – Hovd – III.1.2 Coverage of regional transport Urumqi – Honqiraf) and AH4 (Ulan Ude – Ulaanbaatar facilitation agreements – Beijing – Tianjin) that connect their territories. The agreement touches upon rules for vehicles’ Intergovernmental Agreement on the Asian Highway dimensions, dangerous goods, taxation, third-party Network liability insurance, drivers’ licenses, and has a Joint The Intergovernmental Agreement on the Asian Committee to supervise implementation. International Highway (AH) Network was adopted by ESCAP in 2003 road transportation along these routes is carried and entered into force in 2005. It had 30 parties out under permits issued for the carriers within an as of August 2017.184 The Asian Highway Network was agreed quota.185 formulated by ESCAP in cooperation with the countries Democratic People’s Republic of Korea of Asia and Europe to reinforce the development and Republic of Korea may follow this example to of road infrastructure in such a way that it would operationalize the AH1 and AH6 routes running support intra-regional connectivity, connectivity through the Korean Peninsula and onwards to Europe, with land-linked countries, and the region’s links with by concluding an additional Intergovernmental Agree- Europe. ment on International Road Transport along the Asian The States parties acknowledge that by joining Highway Network, with other countries in the region. the AH Network Agreement, it is the coordinated This would significantly facilitate road transport. plan for the development of regional roads. They This agreement is open to accession by any State also declare their intention to include AH routes in parties to the AH Agreement, and both Democratic their national development plans and to make them People’s Republic of Korea and Republic of Korea can adhere to unified design standards while harmonizing join. In doing so, they would facilitate connections and signage along highways.
183 Elena Ilie, “CIM/SMGS Consignment Note Simplifies Cross-Border Procedures”. Available at
operations along the AH1 and AH6 sections, which importance as the basis for coordinated development. would be beneficial for all of Northeast Asia. The dry ports are to be included in national plans that will bring them into conformity with agreed principles Intergovernmental Agreement on the Trans-Asian on their design, layout, capacity, facilities, regulatory Railway Network framework and functions.189 The agreement was adopted by ESCAP in 2006 China, Republic of Korea and the Russian and entered into force in 2009. As of August 2017, the Federation are parties and signatories to the Agree- agreement had been signed by 22 countries and had ment. The Democratic People’s Republic of Korea, 19 parties.186 The Trans-Asian Railway (TAR) Network however, has not yet signed. The Democratic People’s includes lines that are of recognized international Republic of Korea may benefit from membership to importance for both the region and the connection the agreement as it would facilitate the attraction of between Asia and Europe. new investment for the development of trans-Korean The parties consider the TAR to be a coordinated infrastructure. plan for the development of railways in the region, and intend to include the lines in their own national plans Other regional cooperation agreements amongst countries and to bring them in line with the agreed technical The countries along the Eurasian Northern Cor- principles.187 China, Democratic People’s Republic of ridor may also belong to other regional cooperation Korea, Republic of Korea, and the Russian Federation blocks, which may affect international transport and are parties to the TAR Agreement, and as such may trade operations. The harmonization of the contents use its provisions for the development of railway of all these international conventions and regional connections. cooperation agreements is still an enormous challenge, seeing as most countries also have bilateral agree- Intergovernmental Agreement on Dry Ports ments on matters such as international transport, Intermodal facilities are crucial and integral transit, standards for the weights and dimensions to international transport corridor networks. Their of vehicles, cargoes, professional drivers, customs importance has long been recognized, and some and trade regulations. requirements for container terminals were included in the TAR Agreement of 2006. The wider Intergovernmental Agreement on Dry Ports was concluded in 2013 and entered into force in 2016. As of August 2017, it had 17 signatories and 13 parties.188 The parties agreed upon the criteria for a dry port and a list of dry ports of international
186 United Nations Treaty Collection. Available at
III.1.4 Bilateral and multilateral road trans- port agreements
Various bilateral Customs cooperation agreements exist between China, Democratic People’s Republic of Korea, Republic of Korea and the Russian Federation (see table 11 below).
Table 11 Customs cooperation agreements in Northeast Asia
Source: Varvara Krechetova.
Railway cooperation is covered by an agreement As for road transport agreements (see table between the railway ministries of China and Demo- 12 below), Republic of Korea understandably is not cratic People’s Republic of Korea on border railways party to any such agreements as the present status (1973), and an agreement between Russian Railways of its land connections makes it a virtual “island”, in JSC and China Railways (2016). terms of international transport. Republic of Korea, therefore, concluded with China in 2010 an agreement Bilateral road transport agreements are important, on the sea-land intermodal transport of goods by road i) to allow access to foreign vehicles, drivers and cargo vehicles. This agreement regulates the movements in a certain country and also to allow the vehicles, of goods in trailers,190 for which part of the trip is drivers and cargo of the said country access to made by ship, and its journey is divided in segments other countries, often under certain conditions; and where the unit can be moved as a truck or pulled ii) to harmonize national standards related to road as a trailer. The re-establishment of road transport transport with other countries.
190 “Agreement on the Sea-Land Intermodal Transport of Goods by Road Vehicles between People’s Republic of China and the Republic of Korea (Chinese)” (Weihai, 7 September 2010). Available at
along trans-Korean corridors will most likely require region. The China – Russian Federation agreement new bilateral agreements regulating standards for of 1992, and the Democratic People’s Republic of vehicles, drivers and cargo. Korea – Russian Federation agreement of 2015, for To realize these agreements, the templates of instance, allow for bilateral road transport and road respective ESCAP models could be used. The choice transport from/to the territory of the third transit of template made by the contracting parties may well country under a single permit, via the border crossings be influenced by agreements already in force in the opened for international traffic.
Table 12 Transport agreements in Northeast Asia
Source: Varvara Krechetova.
III.1.5 Cooperation mechanisms between local governments in Northeast Asia
Where international cooperation mechanisms tourism, trade and logistics. There are various well- between the states in Northeast Asia are lacking functioning mechanisms used by the local governments due to numerous sensitivities at political, historical, of Northeast Asia, such as the Northeast Asia Local cultural and security level, local governments some- Government Summit191 (since 1994), the Association times take initiatives for international cooperation in of North East Asia Regional Governments192 (since border areas for the development of manufacturing, 1996), and the Greater Tumen Initiative (GTI)193 NEA
191 Governors of Gangwon Province (Republic of Korea), Jilin Province (China), Primorsky Territory (Russian Federation), Tottori Prefecture (Japan), and Central/Tuv Aimag (Mongolia) meet annually to discuss the issues of regional cooperation. 192 The Association of North East Asia Regional Governments includes 77 members from six Northeast Asia countries, including two from Democratic People’s Republic of Korea and 16 from Republic of Korea. There are 14 subcommittees on various areas of regional interest, from economy and cross-border cooperation to fishery and sports. 193 The Greater Tumen Initiative is the intergovernmental cooperation mechanism that has China, Mongolia, Republic of Korea and the Russian Federation as its members. It is focused on transport, trade facilitation, investment, tourism, energy, and environmental and agricultural cooperation. Known as the Tumen River Area Development Programme from 1995 to 2005, the mechanism included Democratic People’s Republic of Korea until the country’s withdrawal in 2009. Operational solutions to enhance connectivity along the corridors 97
Cooperation Committee194 (since 2011). Issues subregional transport facilitation instruments. It com- related to transport and logistics development fall bines a central government cooperation institution within the scope of all these mechanisms. with a network of local governments. Its Transport Local governments from the northeast of Board operates at the central government level China and from the provinces of Republic of Korea and is composed the LCC Logistics Subcommittee and the Far Eastern regions of the Russian Federa- and representatives of the GTI member countries’ tion, are organizing annual expos and trade fairs that ministries in charge of transport.195 The subcommittee bring together relevant players from the subregional brings together local governments – which enjoy government and business sectors. direct access to the central governments involved – The GTI (and its Local Cooperation Committee determined to develop intermodal sea-land routes (LCC)) is one of the platforms capable of developing in the subregion.
III.2 Development of institu- tional arrangements for the management of the Eurasian Northern Corridor
III.2.1 Current institutional arrangements for ESCAP Eurasian Transport Corridor management
The ESCAP project Comprehensive Planning of corridors, which requires optimal coordination and Eurasian Transport Corridors to Strengthen the Intra- cooperation amongst the involved countries, and the and Interregional Transport Connectivity, intended to integration of their planning and information systems contribute to the successful development of the related to the development of the corridors. This level ESCAP Eurasian Transport Corridors as defined by of integration is fully in line with the vision of ESCAP, the ESCAP Asian Highway Network, the Trans-Asian which is the most comprehensive multilateral platform Railway network and the network of dry ports. for promoting cooperation among its member States One of the main challenges is achieving the to achieve inclusive and sustainable economic and good governance and management of these transport social development in Asia and the Pacific.
194 The GTI Northeast Asia Local Cooperation Committee is a non-binding partnership network that has no legal identity and has no international agreements. Any NEA local governments, regardless of their central government’s membership of the GTI, can voluntarily join it. The committee has 11 members and three observers from GTI member countries and Japan (Tottori prefecture and Niigata prefecture as observers), and its members maintain relations with the directly governed city of Rason in Democratic People’s Republic of Korea. 195 The GTI LCC Logistics Subcommittee gathers the members of the LCC who focus on the development of sea-land intermodal international routes. It aims to achieve policy coordination with central governments to address cross-border bottlenecks, and promotes cooperation with the private sector and the exchange of information on international logistics services providers. Established in 2016, it has eight members from China, Japan, Mongolia, and Republic of Korea. 98 Operational solutions to enhance connectivity along the corridors
At its 73rd session in May 2017, ESCAP • Transport connectivity for least developed adopted Resolution 73/4 on the Implementation of countries, landlocked developing countries and small the Ministerial Declaration on Sustainable Transport island developing States; Connectivity in Asia and the Pacific, which was issued • Sustainable urban transport; at its 3rd session on 5-9 December 2016 in Moscow. • Rural transport connectivity to wider This Ministerial Declaration on Sustainable Transport networks; and Connectivity in Asia and the Pacific adopted the • Improving road safety. following programmes, agreements and models to The Ministerial Declaration also agreed to enhance sustainable transport connectivity in the work towards the establishment of an interregional ESCAP region: coordination committee on transport between Asia (a) The Regional Action Programme for Sustain- and Europe, to further promote intra-regional and in- able Transport Connectivity in Asia and the Pacific,196 ter-regional transport connectivity along the transport phase I (2017-2021); contained in annex I to the corridors between Asia and Europe. Declaration; The priority given to regional cooperation aimed (b) The Model Subregional Agreement on at enhancing regional transport connectivity was re- Transport Facilitation; contained in annex II to the confirmed in the Regional Roadmap for Implementing Declaration; the 2030 Agenda for Sustainable Development in (c) The Model Bilateral Agreement on Interna- Asia and Africa issued on 26 July 2017. tional Road Transport; contained in annex III to the Declaration; (d) The Model Multilateral Permit for Interna- III.2.2 Proposals for an institutional tional Road Transport; contained in annex IV to the structure that governs and manages the Declaration; ESCAP Eurasian Transport Corridors (e) The Standard Model of Logistics Information Systems; contained in annex V to the Declaration; and To achieve and maintain efficient transport (f) The updated Regional Road Safety Goals and border-crossing infrastructure along the ESCAP and Targets for Asia and the Pacific 2016-2020. Eurasian Transport Corridors and to optimize opera- contained in annex VI to the Declaration. tions and services, there must be coordination and cooperation between the involved countries, and The Regional Action Programme for Sustainable their operational and information systems must be Transport Connectivity in Asia and the Pacific includes integrated. It is therefore important to develop a seven thematic areas and formulates immediate governance and management model for the corri- objectives, outputs and indicators of achievement dors which will function as a platform and will guide in each area. The thematic areas are: coordination, cooperation and integration. • Regional transport infrastructure connectivity; There are various types of models for corridor • Regional transport operational connectivity; management or governance.197 One model could be • Euro-Asian transport connectivity; the establishment of a Transport Corridor Authority
196 Available at
that is given a clear mandate by its member states and multilateral agreements on border crossings, concerning the development of the transport corridor trade regulations and transit regulations; and the related transport network. Another option • Develop or promote financially sustainable could be a Transport Corridor Coordination Committee, schemes for transport and border-crossing infra- with less far-reaching powers and authority, which structure development and maintenance; develop, aims to provide information and coordinate initiatives implement and monitor infrastructure development related to the development of the transport corridor. projects; and A third type of model could be a Corridor Transport • Develop and regularly exercise corridor per- Observatory, which would normally have as its main formance measuring and monitoring, and disseminate activity the collection, processing and dissemina- information. tion of relevant information on infrastructure and operations along the corridor, while also monitoring The following topics are essential parts of any the corridor’s performance. Often the private sector, governance and management model for transport NGOs and knowledge institutions play important roles corridors: in such corridor transport observatories. All three corridor management or governance models – the Planning and financing of transport infrastruc- authority, committee or observatory – should involve ture investments. For the international transport the following stakeholders: governmental officials of corridor to become efficient, safe, secure and reliable, the countries situated along a corridor (associated it is important to agree upon common standards with transport infrastructure, transport, trade, Cus- for the design and construction of transport infra- toms, inspection agencies, laws and regulations); structure. A minimum requirement is that countries knowledge institutions; financing institutions; regional inform neighbouring countries about their transport and subregional organizations; and business sectors infrastructure plans, not only for the core network along working in the field of transport infrastructure and the transport corridors, but also for the development transport operations, trade, Customs and inspections. of the ancillary network. Countries are also encouraged They should all: to cooperate in looking for financing opportunities • Build consensus amongst involved public to plan and carry out infrastructure works together. and private parties operating both within the countries and between the partner countries; Studies. If the partner countries of a transport • Promote and monitor the creation of an corridor wish to cooperate to further develop the enabling legal environment by improving domestic corridor, studies will be needed that look at the status legislation and regulations, harmonizing traffic and of the corridor and its possible future development. transport regulations between partner-countries along The terms of reference for these studies should be the corridor, and signing and implementing bilateral coordinated between the countries to account for their
197 One of the most comprehensive studies on the various models for corridor management and corridor governance is “Governance of Transport Corridors in OIC Member States: Challenges, Cases and Policy Lessons”; COMCEC Coordination Office; February 2018; 191 p.; Geert Smit (Ecorys), Rene Meeuws (STC-NESTRA), Arnaud Burgess (Panteia), Thomas Kok (Ecorys), Ivo Hindriks (Panteia); Available at
opinions on criteria, standards and methodology. As a may set-up a public website to disseminate information first task, an inventory of existing studies concerning and report about progress. The website should also the transport network should be compiled and the contain basic information on transport regulations; conclusions of these studies should be made available technical standards; immigration procedures and visa to all parties concerned, upon request. Countries’ own regimes; border-crossing procedures; transit regulations resources should be used for the financing of these and guarantee systems; Customs; inspection regimes; studies, but joint applications may also be prepared relevant tax systems and road user charges, and for co-financing and be submitted to bilateral and should preferably be available in three languages (the multilateral development and cooperation institutions, national language, English and Russian). This exchange and banking institutions. of information may also result in the production of new information on the operational performance of Exchange of information. Exchange of information the transport corridor, and allow for progress reports amongst the partner countries of an international to be made. transport corridor is an absolute requirement for the success of its operation. All partner countries Technical standards and interoperability. The should commit to making available to each other efficient operation of a transport corridor requires on an ongoing basis, the information relevant to the a common set of technical standards to secure the development, use and operation of the transport optimum interoperability of all its sections, including network. This information would include the state of interoperability between the various transport modes. the infrastructure on the transport corridor and the Such technical standards would cover electrification, ancillary transport network; transport and traffic flows; gauge and communications for the rail part of the waiting times at borders; cross-border activities and transport corridor; axle load capacity and signalling inspections; plans for new construction, maintenance, systems for the road and rail part of the transport reconstruction, rehabilitation and upgrading; and other corridor; safety regulations, environmental requirements measures planned or undertaken in areas such as regarding fleet and cargo; and road user charges, environment, transport and traffic safety, security, toll systems and traffic management. Internationally etc. The exchange of information envisaged would accepted technical and operational standards for also cover the legal and regulatory framework for the various transport modes should be adhered to private participation in the development, use and as appropriate, to secure interoperability with other operation of the transport corridor, and relevant relevant technical systems. economic and social data. Exchange of information on the financial resources allocated or to be allocated to Border crossing and Customs cooperation. the development of the transport corridor from public Since excessive waiting times at border crossings or private sources, will be particularly important for may impede improvements that result from the ensuring regional coordination, cooperation and the development of the transport corridor, the partner harmonization of investment planning. Also, information countries of a corridor should commit themselves should be shared concerning the national transport to encouraging and promoting – through coordinated strategies, regional and national transport plans and action with the competent authorities – the installation national logistics strategies of each participating of joint border crossing posts and joint or shared country. The results of these studies and exchanges controls, as well as coordination and cooperation of information should be systematically compiled by and the integration of Customs services to minimize a permanent Secretariat. This permanent Secretariat waiting times for rail and road traffic, thus reducing Operational solutions to enhance connectivity along the corridors 101
transport costs and enhancing overall transport signing this MoU – and senior representatives of other cost efficiency. Partner countries should promote participating international organizations – might decide joint studies on the infrastructure and organizational to hold meetings in order to review progress and, if measures required to achieve this, and agree on necessary, to consider changes related to cooperation timetables for the implementation of the measures, or the objectives or coverage of the memorandum. which would form part of a transport corridor action Such meetings should normally be convened by the plan. Countries should comply with standards set by Steering Committee chairperson. international agreements in this area. Steering Committee. A Steering Committee Framework for participation of economic and composed of high-level representatives of the partner social partners. The success of a transport corridor’s countries should be established, to coordinate joint work development depends very much on commitment under this MoU. Each partner country should appoint and cooperation between all important stakeholders, one representative and one deputy representative to namely the project’s economic and social partners. the Steering Committee and notify all other partners. Every attempt should be made to ensure the maximum Steering Committee members should normally be senior involvement of the business sector in the development, civil servants who have the authority to represent operation and use of the corridor. To this end, dialogue their administrations, and who are also able to provide with the business sector and international financial the continuity of commitment that a political minister institutions should take place during the planning may not be available to give. The Steering Committee and implementation stages of project studies. The will meet as often as necessary. It should decide on business sector should be kept informed of actions its rules of procedure unanimously and should elect planned or undertaken and its comments should a chairperson to guide its activities and represent be taken into account, by granting active observer it in international forums. Representatives from the status to representatives of the business sector business sector, international financial institutions in a Steering Committee, or by way of regular meet- (IFIs) and other institutions, social partners and oth- ings between the business sector and a corridor er relevant actors and experts related to corridors, Secretariat. Likewise, the partner countries should could be invited to its meetings as observers, as also recognize the important role to be played by appropriate. The Steering Committee may consider social partners (civil society; NGOs; consumer organi- creating sub-committees or ad hoc working groups zations; organizations in the areas of safety, security, for specific tasks in order to increase the potential environment, labour, social conditions, etc.) in the for achieving the goals of the MoU. The Steering implementation of the transport network, and commit Committee will report regularly on its work to the themselves to a structured social dialogue with the partner countries of the MoU. relevant organizations, to ensure they are involved in the processes of change and development that Implementation. The information exchanged will accompany the implementation of the agreed and studies carried out by the partner countries will transport corridor concept. form the basis for defining the priorities, budgets and time horizons for the specific measures needed Ministerial meetings. If the partner countries to coordinate the development of the transport of a transport corridor wish to sign a Memorandum corridor. A Corridor Transport Observatory (CTO) could of Understanding (MoU) on the development of the be established. The CTO would have a permanent corridor, ministers from the countries or organizations Secretariat and be self-sustainable in the long run, and 102 Operational solutions to enhance connectivity along the corridors
would support the Steering Committee by facilitating Many UNESCAP member States are already communication between participants and preparing involved in multiple regional cooperation agreements and updating the annual and multi-annual rolling plan related with infrastructure and the operation of the for the implementation of transport corridor projects. international ESCAP Eurasian Transport Corridors, and It would also set the priorities for achieving the many cooperation mechanisms are already in place. maximum cost efficiency of scarce funds and would In an attempt to better streamline all regional collect data on the core network. The work plan could bilateral and multilateral initiatives related to the start with an inventory of the transport network, using development of the ESCAP Eurasian Transport the results from the project Comprehensive Planning Corridors, the proposal is to come to one governance of Eurasian Transport Corridors to Strengthen the model of corridor development where all affected Intra- and Inter-Regional Transport Connectivity, countries will be represented. A realistic option seems other relevant studies, and above all other information to be the formation of regional corridor development supplied by the partner countries. It should develop, bodies at the level of the three main ESCAP corridors: under the guidance of the Steering Committee and the Eurasian Central Corridor, the Eurasian Northern of the ministers, a set of jointly agreed regional Corridor and the Eurasian Southern Corridor. objectives and priorities and a rolling programme of projects for achieving them. The Secretariat would also have the responsibility of maintaining close and regular contact with the relevant international agencies and donor or lending organizations active in the region. The Secretariat would, in addition, be responsible for cooperation with all relevant national and international institutions and organizations, and is expected to work towards a comprehensive exchange of information and experiences with other relevant corridor secretariats to ensure total compatibility between transport corridor and transport network development. The partner countries undertake to examine all possibilities for providing such additional resources as may be necessary to assist the Steering Committee and Secretariat in carrying out their responsibilities (including, for example, resources for assisting in project preparation, and collecting and analyzing transport and traffic data via a regional transport observatory). Operational solutions to enhance connectivity along the corridors 103
Sample Template
Draft Memorandum of Understanding on the Development of the Eurasian Northern Corridor
The signatories to the present Memoran- countries and their immediate neighbours in which dum of Understanding, in the following named the Eurasian Northern Corridor is situated; “Participants”; Desiring furthermore to develop adequate Desiring to enhance regional connectivity and interconnections with other relevant corridors in promote the international and national transport of the region; goods and passengers along the Eurasian Northern Corridor consisting of routes linking Northeast Conscious of the fact that infrastructure Asian ports in the Russian Federation, China and development is a long-term process, requiring the Korean Peninsula to Europe via China, the sustained commitment and planning on the part Russian Federation, Mongolia and Kazakhstan; of all concerned;
Considering that sections of the Eurasian Welcoming the actions already undertaken Northern Corridor are the object of international in the region by the countries concerned; cooperation for connectivity improvement within multiple frameworks – including the United Nations Welcoming in particular the role played by Economic Commission for Europe (UNECE) and United UNESCAP in the region drawing on its experience Nations Economic and Social Commission for Asia in facilitating the development of international and the Pacific (UNESCAP) joint project Euro-Asian transport corridors; Transport Linkages (EATL); Intergovernmental Organisation for International Carriage by Rail (OTIF); Acknowledging: Organisation for Cooperation between Railways (OSJD); Central Asia Regional Economic Cooperation • Resolution 73/4 on the Implementation of (CAREC); and Greater Tumen Initiative (GTI) – and the Ministerial Declaration on Sustainable Transport that the entire corridor is part of the UNESCAP Connectivity in Asia and the Pacific issued at the Asian Highway, Trans-Asian Railway, and Dry Ports United Nations Economic and Social Commission of International Importance networks known under for Asia and the Pacific Ministerial Conference the name “Eurasian Northern Corridor”; on Transport 3rd session on 5-9 December 2016 in Moscow, and adopted at its 73rd session in Considering the fundamental importance of May 2017; regional and inter-regional cooperation as a basis for • the principles of the Regional Strategic the further strengthening of the Eurasian Northern Framework for the Facilitation of International Road Corridor, providing the essential pre-condition for the Transport (2012) and the Regional Cooperation development of appropriate road and railway links, Framework for Facilitation of International Railway waterways, ports and airports for the benefit of Transport (2015); 104 Operational solutions to enhance connectivity along the corridors
• the need to increase regional and inter- ture as well as its operations and use with a view regional cooperation among the countries of the to fostering the most sustainable transport modes Eurasian Northern Corridor and to foster the (efficient; environmentally friendly; and safe and conditions for peace, stability and economic secure) on a regional scale. Thus, both infrastructure growth; and related operational services along the corridor • the need to accompany investment and at border crossings, including administrative programmes in the region by increased coopera- and regulatory procedures, are within the scope tion in the field of regulatory and administrative of this Memorandum. procedures in order to improve the flow of transit traffic and intra-regional traffic; The Memorandum of Understanding further- more envisages close cooperation among partic- Recognizing that the present document is ipants on the harmonization and standardization, an expression of firm political intent, although not wherever feasible, of technical standards and amounting to legally binding obligations on the regulatory or administrative provisions affecting part of participants or observers; the flow of transport in and across the region, in accordance with internationally agreed standards. AGREE ON THE FOLLOWING MEMORAN- This includes coordination and cooperation in DUM OF UNDERSTANDING AS A FURTHER and, where possible, harmonization of Customs STEP TOWARDS A COMMON OBJECTIVE OF and border-control procedures. This coopera- REGIONAL COOPERATION IN THE REGION OF tion will include a commitment to carry out any THE EURASIAN NORTHERN CORRIDOR: institutional reforms needed for efficient transport management in the region (including measures 1. Aim to eliminate corruption or malpractice relating to administrative or tendering procedures), and an The aim of this Memorandum of Under- undertaking to exchange information on a regular standing is to cooperate on the development basis concerning the progress of the reforms. of the main and ancillary infrastructure on the multimodal Regional Transport Network, of the The Memorandum also commits the partici- Eurasian Northern Corridor, including border pants jointly to develop and implement an annual crossings and safe and secure parking places and multi-annual rolling action plan (covering a along the corridor (hereinafter the ‘Network’) period of 4-5 years) agreed by all participants in and to enhance policies in this area which order to provide a platform for most efficient use facilitate such development. The development of of funds and know-how provided by public and the Network should include maintenance (including private sources. regular maintenance, preventive measures and ad hoc repair), reconstruction, rehabilitation, upgrading Finally, this Memorandum seeks to promote and new construction of the main network; border and enhance local capacity for the implementation crossings; safe and secure parking places of the of investment programmes, management and Eurasian Northern Corridor; and ancillary infrastruc- data collection and analysis in the countries of the region. Operational solutions to enhance connectivity along the corridors 105
2. Definition of the Network Participants further intend to explore opportuni- ties to cooperate in looking for financing options The multimodal Transport Network of the to plan and implement transport infrastructure UNESCAP Eurasian northern, central and southern projects together. corridors is defined as per the maps included in annex I. 4. Studies
It shall be considered as referring not only to The Participants wish to cooperate on the the road and rail alignments, but also to any inter- studies needed to put this Memorandum of Under- connection or transshipment facilities, in particular standing into effect, and in particular to implement, combined transport infrastructure and (dry) ports. or update, the action plan mentioned above. It shall also include ancillary installations such as signalling, installations necessary for traffic The terms of reference for these studies management or toll charges, access links, bor- should be coordinated between the Participants der-crossing stations, service stations, and freight as far as criteria, methodology and other aspects and passenger terminals on the routes of the covered by this Memorandum of Understanding are Network, as defined above. concerned, using for this purpose the staff and facilities provided by the permanent Secretariat The Network may need to be modified over and Transport Observatory. time for other purposes. Any such modification shall be agreed by the participating signatories on As a first task, an inventory of existing studies the basis of a reasoned analysis and justification concerning the Network should be compiled and submitted by the Network Steering Committee. the conclusions of these studies should be made Any modifications shall be reflected in the maps available to all Participants concerned, upon request. mentioned above and in the relevant sections of The reports and presentations produced under the action plan. the Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Inter-Regional 3. Planning and financing of investments for Transport Connectivity (UNESCAP, 2017) are the transport infrastructure essential basis for this inventory.
For the international transport corridor to The Participants shall commission further become efficient, safe, secure and reliable, the studies, as necessary, relating to the infrastructure Participants agree to strive for applying common and/or operations and services of the Network, and standards for the design and construction of shall make the results of these studies available transport infrastructure. The Participants agree to to the Network Secretariat. inform neighbouring countries about their trans- port infrastructure plans, not only for the core The studies should be carried out according network along the transport corridors, but also to best international practice, taking due account for the development of the ancillary network. The of the requirements of the business sector and 106 Operational solutions to enhance connectivity along the corridors
citizen organizations and any other relevant information concerning the national transport institutions involved during the different stages strategies, regional and national transport plans of planning, implementation, operation and use and national logistics strategies of each partic- of the infrastructure and facilities. ipating country.
The Participants are prepared to cooperate on The exchange of information envisaged the question of financing the necessary studies as would also cover the legal and regulatory frame- appropriate. Tenders for studies should be launched work for private participation in the development, pursuant to international procurement rules and use and operation of the Network, as well as the regulations and agreed between all the parties relevant economic and social data. involved. Participants declare their readiness to take all the necessary steps to ensure that the studies The results of these studies and exchanges can be carried out efficiently with full support of of information should be systematically compiled by the signatory countries, such as providing all the the permanent Secretariat and made accessible requisite assistance and information. to Participants in the Steering Committee and to other institutions or organizations, which have 5. Exchange of information demonstrated substantial interest in contributing to the development of the Network. The Participants are ready to make the information relevant to the development, use The permanent Secretariat shall set-up a and operation of the Network available to each public website, linked to the UNESCAP website, other on an ongoing basis through the permanent to disseminate information and report on prog- Secretariat. ress. This website should also contain basic information on transport regulations; technical This would include the detailed data required standards; immigration procedures and visa regimes; for the establishment of an action plan, such as border-crossing procedures; transit regulations and the state of the infrastructure on the Network; guarantee systems; Customs; inspection regimes; transport and traffic flows; waiting times at relevant tax systems; and road user charges, borders; cross-border activities and inspections; etc., preferably in three languages: national plans for new construction, maintenance, recon- language, English and Russian. struction, rehabilitation, upgrading; other measures planned or undertaken in areas such as environ- 6. Technical standards and interoperability ment, transport and traffic safety, security, etc. Exchange of information on the financial resources The Participants are prepared to work towards allocated or to be allocated to the development a common set of technical standards needed to of the Network from public or private sources will secure the optimum interoperability of all sections be particularly important in order to ensure regional of the Network, including interoperability between coordination, cooperation and harmonization of the various transport modes. Such technical investment planning, as will the sharing of full standards would cover electrification, gauge and Operational solutions to enhance connectivity along the corridors 107
communications for the rail part of the Network, The Participants intend to provide for maxi- axle load capacity and signalling systems for mum business sector involvement in the develop- the road and rail part of the Network, safety regu- ment, operation and use of the Network. To this lations, environmental requirements regarding fleet end, dialogue with the business sector and the and cargo, road user charges and toll systems and international financial institutions should take place traffic management. during the planning and implementation stages of project studies. The business sector should be Internationally accepted technical and kept informed of actions planned or undertaken operational standards for the various transport under this Memorandum of Understanding and its modes should be adhered to as appropriate in comments should be taken into account as far as order to secure interoperability with other relevant possible, either by granting active observer status technical systems. to representatives of the business sector in the Steering Committee or by way of regular meetings 7. Border crossing and Customs cooperation between the business sector and the Secretariat.
Since excessive waiting times at border The Participants jointly aim to create the crossings may impede any improvements legal and financial conditions necessary for busi- resulting from the development of the Network, ness sector participation in the development and the Participants commit themselves to encour- operation of the Network. aging and promoting, through coordinated action with the competent authorities, the installation Participants will examine the possibility of of joint border crossing posts and joint or shared setting up common bodies or regional platforms to controls as well as cooperation between Customs carry out actions necessary to develop the Network. services in order to minimize waiting times for rail Taking into account the constraints of national and road traffic, thus reducing transport costs law, they agree to investigate the possibilities of and enhancing overall transport cost efficiency entrusting the achievement of the relevant goals in the region. of this Memorandum of Understanding at least in part to the business sector. Participants undertake to promote joint studies on the infrastructure and organizational Likewise, the Participants recognize the measures required for this purpose and to important role to be played by the social partners, agree timetables for the implementation of the (civil society, NGOs) in the implementation of the measures, which will form part of the Network Eurasian Northern Corridor transport network, action plan. Standards set by international agree- and commit themselves to a structured social ments in this area should be complied with. dialogue with the relevant organizations in order to ensure that they are involved in the processes 8. Framework for participation of economic of change and development that will accompany and social partners implementation of the Network. 108 Operational solutions to enhance connectivity along the corridors
9. Ministerial meetings The Steering Committee may consider creating sub-committees or ad hoc Working Groups Ministers of the countries or organizations for specific tasks in order to increase the potential signing this Memorandum of Understanding, for achieving the goals of this Memorandum of and senior representatives of other participating Understanding. international organizations, agree to hold meet- ings (frequency to be agreed) in order to review The Steering Committee will regularly report progress and if necessary to consider changes in on its work to the Participants in this Memorandum the basis of cooperation or the objectives or of Understanding. coverage of the Memorandum. Such meetings shall normally be convened by the Steering Com- 11. Implementation mittee chairperson. The information exchanged and studies 10. Steering Committee carried out by the Participants, together with the extensive information provided by UNESCAP and A Steering Committee to be composed of other sources (for example, the proposed Trans- high-level representatives of the Participants will port Observatory), will form the basis for defining coordinate the joint work under this Memorandum priorities, budgets and time plans for the specific of Understanding. Each Participant should appoint measures needed to coordinate the development one representative and one deputy represen- of the Network, facilitate this essential task and tative to the Steering Committee and notify all comply with similar undertakings agreed in the other Participants. Steering Committee members context of the Corridor chairperson’s meeting. A should normally be senior civil servants with the Eurasian Northern Corridor Transport Observatory, authority to represent their administrations, and (NCTO), will be established. It will be located in at the same time be able to provide the continuity [location to be agreed], where appropriate office of commitment which may not be available from space will be made available. a political minister. The NCTO will have a permanent Secretariat The Steering Committee will meet as and will be self-sustaining in the long run, which necessary, but at least [frequency to be agreed]. will support the Steering Committee by: facilitating It should decide on its rules of procedure by communication between the participants; preparing unanimity, and should elect a chairperson to guide and updating the annual and multi-annual rolling its activities and represent it in international plan for the implementation of Network projects forums. Representatives from the business and priorities, in order to achieve maximum cost sector, the social partners, other relevant corri- efficiency of scarce funds; and collecting data dors, the international financial institutions (IFIs) on the core network. This Permanent Secretariat and other institutions, as well as experts, could would preferably be managed by ESCAP as it is a be invited to its meetings as observers, as neutral body accepted by all its member States, appropriate. has been involved in the development of the ESCAP Eurasian Transport Corridors for a long time, and Operational solutions to enhance connectivity along the corridors 109
has extensive knowledge and databases in this The Participants undertake to discuss and respect. This would also institutionally facilitate rapidly resolve any issues of difficulty which may coordination with the other transport corridors. arise out of the operation of these monitoring tools, in a spirit of full cooperation and transparency. The work plan should commence with an inventory of the Network, using the results from 12. Closing remarks the project Comprehensive Planning of Eurasian Transport Corridors to Strengthen the Intra- and Cooperation in the context of this Memo- Inter-Regional Transport Connectivity (UNESCAP, randum of Understanding is based on a voluntary 2017), other relevant studies and above all other commitment and will continue until the objectives information supplied by the Participants. It should of the initiative have been achieved. Where any develop, under the guidance of the Steering Com- of the Participants so request, this Memorandum mittee, and of the Ministers, if necessary, a set of Understanding shall be reviewed and may be of jointly agreed regional objectives and priorities amended by common consent on the basis of and a rolling programme of projects for achieving a proposal submitted to the Participants by the them. Further details on the proposed action plan Steering Committee. are provided in annex II. In any event, a review of the continuing The Secretariat will also have the responsibility relevance and efficiency of the arrangements of maintaining close and regular contact with the contained in this Memorandum shall be conducted relevant international agencies and donor or lending no later than five years after it comes into effect. organizations active in the region. The Secretariat will, in addition, be responsible for cooperation with This Memorandum of Understanding does not representative organizations from the Central contain obligations governed by international law. and Southern Corridor and other relevant national and international institutions and organizations. This Memorandum of Understanding shall The Secretariat is expected to work towards become effective on the date of its signature a comprehensive exchange of information and by the last of the Participants listed below. experiences with the other Corridor Secretariats, to ensure total compatibility between Corridor and Done at […], on […] Network development. For Country A The Participants undertake to examine all possibilities for providing such additional resources as For Country B may be necessary to assist the Steering Committee and Secretariat in carrying out their responsibilities For Country C (including, for example, resources for assisting in project preparation and collecting and analyzing For Country […] transport and traffic data via a regional Transport Observatory). For UNESCAP 110 Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode
IV. Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode
In this final chapter we will present some notes on the development of international trade between the Korean Peninsula, China and the Russian Federation, and modes of transport that are being used to facilitate this trade. We will also explore opportunities for using the ESCAP Eurasian Transport Corridors for moving goods by rail from the Korean Peninsula to Europe. Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode 111
IV.1 Trade flows between China and the Korean Peninsula
An enormous amount of trade flows between much more modest: exports from China to Democratic China and the Republic of Korea. The value of Chinese People’s Republic of Korea increased from USD 2.277 exports to the Republic of Korea increased from USD billion in 2010 to USD 3.195 billion in 2016, while 88.698 billion in 2010 to USD 95.741 billion in 2016. Chinese imports from Democratic People’s Republic Chinese imports from Republic of Korea increased of Korea increased from USD 1.194 billion in 2010 in value from USD 138.348 billion in 2010 to USD to USD 2.564 billion in 2016 (see the tables and 159.023 billion in 2016. The level of Chinese trade figures below). with the Democratic People’s Republic of Korea is
Table 13 Exports and imports of China with Democratic People’s Republic of Korea and Republic of Korea (USD, million)
Source: Transport Planning and Research Institute (TPRI). 112 Connectivity along the Eurasian Northern Corridor
Figure 35 Trade trend between China and Republic of Korea
Source: Transport Planning and Research Institute (TPRI).
Figure 36 Trade trend between China and Democratic People’s Republic of Korea
Source: Transport Planning and Research Institute (TPRI). Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode 113
The table below shows the transport modes used for China and Republic of Korea is transported by sea trade between China and Democratic People’s Republic and the remaining 3 per cent by air. Only 3 per cent of Korea, and between China and Republic of Korea. As of the cargo moving between China and Democratic there are no operational railways, roads or pipelines People’s Republic of Korea is transported by rail, while connecting Democratic People’s Republic of Korea and 87 per cent travels by road, 9 per cent goes by sea Republic of Korea, 97 per cent of the cargo between and 1 per cent moves by pipeline.
Table 14 Transport modes used for trade between China and Democratic People’s Republic of Korea and Republic of Korea, 2016 (per cent)
Source: Based on data from China Customs.
IV.2 Trade flows between the Russian Federation and the Korean Peninsula
Trade and transport flows between the Russian exports to Democratic People’s Repub- Russian Federation and Democratic Peo- lic of Korea include oil and derived products; mineral ple’s Republic of Korea fuel; chemicals; fibres; foodstuffs and agricultural raw materials; machinery, equipment and vehicles; timber, The 2016 trade turnover between the Russian pulp and paper products; fish and shellfish, oil seeds Federation and Democratic People’s Republic of Korea and fruit; products of the flour and cereals industry; came to USD 76,846,277, a decrease of 8.93 per cent furniture; sugar; and various finished products. Imports (USD 7,538,450) on 2015. The Russian Federation to the Russian Federation from Democratic People’s exported USD 68,050,627 of goods to Democratic Republic of Korea include products of inorganic chem- People’s Republic of Korea in 2016, down by 13.14 istry; fish and shellfish; essential oils; caoutchouc, per cent (USD 10,291,349) on the previous year. rubber and related products; paper pulp products; Imports into the Russian Federation from Democratic textiles; clothes and accessories; electric machines People’s Republic of Korea in 2016 amounted to USD and equipment; and products from ferrous metals.198 8,795,650, a 45.56 per cent increase (USD 2,752,899) compared to 2015. 114 Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode
Trade and transport flows between the 10,027,147,248, a decrease of 25.71 per cent (USD Russian Federation and Republic of Korea 3,470,669,428) on the previous year. The level of imports into the Russian Feder- In 2016, the trade turnover of the Russian ation from Republic of Korea in 2016 amounted to Federation with Republic of Korea amounted to USD USD 5,113,263,495, an increase of 12.13 per cent 15,140,410,743, a decrease of 16.16 per cent (USD (USD 553,229,812) from 2015. This can be seen in 2,917,439,616) from 2015. Exports from the Russian the table below. Federation to Republic of Korea in 2016 came to USD
Table 15 Dynamics of Russian foreign trade with the Republic of Korea, 2011-2016
Source: Federal Customs Service of Russian Federation.
Russian exports to Republic of Korea are meat; Volume of cargo transport with the Repub- fish and shellfish; dairy products; vegetables, fruits, lic of Korea through the Russian railway and nuts; coffee and tea; cereals; products of the network flour and cereals industry; oil seeds and fruits; sugar; cocoa; tobacco; salt and sulfur; ores, slags, and ashes; In 2016, the volume of cargo transported be- mineral fuel, oil and derived products; pharmaceuticals; tween the Russian Federation and Republic of Korea fertilizers; plastic materials and products, rubber; by rail through the Russian railway network amounted paper pulp products; clothes and accessories; ferrous to 12.4 million tons, an increase of 3 per cent from metals; tools; equipment; railway locomotives; spare 2015, when the Russian Federation exported 11.8 parts for cars, ships, and boats; and various finished million tons of cargo. The Russian railway network products. Russian imports from Republic of Korea brought in 0.3 million tons in 2016, from Republic of are fish and shellfish; living trees and plants; fruit, Korea and other countries.200 coffee and tea; cereals, fats and oils; mineral fuel, The main Russian seaports dealing with the oil and derived products; organic chemical products; transport of cargo to and from Republic of Korea were wood and timber; chemical fibres; glass and ceramics; Vostochny (41 per cent of the total cargo volume), electric machines and equipment;199 and toys, games Nakhodka (33 per cent), Vanino (17 per cent) and and sports equipment. The Republic of Korea plays Vladivostok (4 per cent). a significant role in the foreign trade of a number of subregions in the far east of the Russian Federation.
198 “Foreign Trade of Russia”, 2014-2016. Available at
IV.3 Competitiveness of the ESCAP Eurasian Transport Corridors in comparison to the Asia-Europe sea route
At present, most of the trade flow between have also helped to reduce border delays. Asia and Europe is served by maritime transport. Among the three ESCAP Eurasian Transport This transport mode is slow but has the advantages Corridors, the northern and central corridors are well of low costs and minimal border crossings, as cargo positioned to serve the trade flows between Asia only undergo export/import related formalities in the and Europe. countries of origin and destination. Only air transport With its extensive railway network connecting can compete in terms of export/import simplicity, China, Mongolia, Kazakhstan, the Russian Federation but high prices and volume/weight constraints are a and the Korean Peninsula, the Eurasian Northern serious limitation. Inland transport, notably railways, Corridor can offer a high level of performance and allows cargo to be delivered to the same destinations acts as the most seamless transcontinental route. over shorter distances and with a shorter duration. For the full integration of this railway network, the However, these modes are often hindered by multiple further development of the Transport-Korean Railway border crossings that when coupled with inefficient System is necessary. procedures can reduce the time gain to zero. Two traditional maritime routes connect Asian and European ports: one goes all the way south and Comparison of railway and sea shipping then back north along the coast of Africa, and one The situation has been changing in recent years, uses the Suez Canal (see table 16 below). Maritime with railway transport becoming an increasingly attractive transport, however, is much slower than railway trans- option for transcontinental shipments. This change has port. On average, 4-6 weeks are required to transport come about due to the growth of the railway network goods between Asia and Europe. But maritime shipping in Asia; advances in railway technologies allowing for is also cheaper than railways. Research carried out greater speeds and loads; and a reduction in times by the Eurasian Development Bank showed that for for the coupling/decoupling of wagons. Improvements the Shanghai – Rotterdam route, sea shipping costs in the legal environment – such as the creation of a were 10 US cents per ton per mile, while railway Customs Union between Armenia, Belarus, Kazakhstan, shipping costs were 30 US cents per ton per mile.201 Kyrgyzstan and the Russian Federation within the The low costs are partly due to economies of scale: scope of the EAEU, the introduction of the common the same study calculated that a new Maersk Triple CIM/SMGS consignment note, and the adoption of E Class container ship carries an equivalent of 170 advance- and electronic-document exchange, etc. – container trains.202
201 Vinokurov. “Transport Corridors of the Silk Road Economic Belt Across the Eurasian Economic Union: Preliminary Estimates for Trans- portation Capacity and Investment Needs.” 202 Vinokurov. “Transport Corridors of the Silk Road Economic Belt Across the Eurasian Economic Union: Preliminary Estimates for Trans- portation Capacity and Investment Needs.” 116 Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode
Table 16 Asia – Europe sea routes
Source: Transport Planning and Research Institute (TPRI).
The biggest advantage railway transport has over maritime transport is the duration of the journey: block trains take 12-15 days to travel from East Asia to Europe, or vice versa (see table below).
Table 17 Transport distance and travel time of selected block trains between China and Europe
Source: Transport Planning and Research Institute (TPRI). Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode 117
The following table presents a time/cost comparison of sea and land alternatives for 40-foot containers travelling from Tianjin to Antwerp, and from Lianyungang to Rotterdam.
Table 18 Time/cost comparison of sea and land alternatives in illustrative cases203
Source: Transport Planning and Research Institute (TPRI), and references in footnotes.
When time is an important factor due to higher suitable for sea shipping or, in the case of oil and goods value, the nature of goods, manufacturing liquified gas, for pipelines. needs or consumer preferences, such time savings A wide network of regular scheduled container outweigh the increase in costs, making overland railway routes between Asia and Europe would transport more attractive. Liquid bulk, large bulk and provide freight forwarders and cargo owners with other massive but lower-value cargoes are more more advantages over maritime shipping lines. These include:
203 Source: “Tianjin Port. Joint establishment of the China - Europe block train between Tianjin Port and China land Bridge will allow to share profits from the development of the ‘One Belt - One Road’ (天津港(集团)有限公司. 共建天津港大陆桥中欧班列 共享 ‘一带一路’发展红利 (J)).”; 鞠海涛, 王从旻, and 张新语, “哈萨克斯坦总理马西莫夫考察连云港 ‘连云港—哈萨克斯坦—欧洲’国际班列开行(J).”; 交通运输部水运科学研究院, “中欧陆海快线发展概要分析(R).” 118 Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode
• For manufactures, access to the railway The joint International Road Transport Union stations may be cheaper and closer than using (IRU) and Economic Cooperation Organization (ECO) a seaport. These gains are more important when study, ECO RMT/NELTI-3, found that travelling by truck combined with a stable, reliable schedule, meaning along the Khorgos – Bishkek – Astana – Bugristoe/ that products will not stack up at production sites; Kaerak – Moscow route (using sections of the routes • A large number of container train services N2 – N1 of the Eurasian Northern Corridor) in 2011 and multiple logistics terminals along railways provide required 10 days (Bishkek to Warsaw took 12 days) a range of options when choosing shipping routes, to cover 4,590 km. Maximum costs per trip were USD although for this advantage to be fully realized more 7,677.204 This data should be treated with caution regular scheduled train services are needed; and when making a comparison with the above train and • The development of solutions for loads of sea route costs (see table 18). However, it can be less than one container allows for bigger time savings, observed that road transport is comparable with rail as there is no need to wait for the consolidation of transport in terms of time, but the transport costs cargo for train operations. are higher. The main advantage of road transport is The role of railways as an alternative to the its high flexibility when it comes to route planning: maritime shipping is increasing, and the amount of a driver can make a choice of BCP and road section empty backhaul runs on railways is slowly but steadily based on the situation in hand, and is limited more by decreasing. the agreements of BCPs and which roads are open for international transport than by existing infrastructure. Comparison of road and sea shipping In comparison, a train is bound to the tracks. Road transport along the ESCAP Eurasian Transport Corridors is mostly used for relatively short distances. The routes have the potential to be used for transcontinental haulage, especially if the TIR carnet is used, which allows a sealed container to pass borders without physical inspection. However, a lack of data makes it difficult to analyze the costs and time involved in shipping cargo between Asia and Europe by road.
204 “ECO Regular Monitoring of Trucks in Partnership with IRU NELTI-3. Final Report.” 205 Moon, Kim, Lee. “A Study on Competitiveness of Sea Transport by Comparing International Transport Routes between Korea and EU.” The Asian Journal of Shipping and Logistics; Volume 31, No. 1, March 2015; pp. 001-020. Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode 119
Case study on international transport routes between Korea and the European Union In 2015, Moon, Kim and Lee published an between Korea and the EU.205 The figure below shows interesting study on the competitiveness of maritime the international transport routes studied between transport by comparing international transport routes Busan in Republic of Korea and Berlin in Germany.
Figure 37 International transport routes between Busan and Berlin
Source: Moon, Kim, Lee. “A Study on Competitiveness of Sea Transport by Comparing International Transport Routes between Korea and EU.” 120 Notes on international trade and transport flows between the Korean Peninsula and Europe; opportunities and challenges in selecting the best transport mode
Figure 38 Distance, time and costs of six international transport routes between Busan and Berlin
Source: Moon, Kim, Lee. “A Study on Competitiveness of Sea Transport by Comparing International Transport Routes between Korea and EU.” Note: TKR: Trans-Korean Railway; TSR: Trans-Siberia Railway.
The study shows that Route 1 via the Trans- Korean Railway and the Trans-Siberian Railway costs the least and is the second-fastest in terms of transport time. The study also found that this route is the safest, the most reliable and the route which provides the most information for the shipper and other stakeholders. Bibliography
• A.B. Bardal’ (2018). “New Silk Road, Problems of Economic Transition.” 60:1-3, 65-76. • Aleksandr Bykov (2016). “Eurasian Integration, its Prospects and Possibilities, Problems of Economic Transition.” 58:4, 285-305. • Asian Development Bank. “CAREC Corridor Performance Measurement & Monitoring Annual Report 2015.” Mandaluyong City, Philippines: CAREC Program, July 2016. • Beifert, A., Shcherbanin, Y., & Vinokurov, E. (2018). “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space. Trans-Eurasian Land Transport Corridors: Assessment of Prospects and Barriers.” (March). Available at
Transport Division United Nations ESCAP Bangkok, Thailand Email: [email protected]