Russian Railways (RZD) and Russian Post, have agreed to transport mail between China and Europe by interstate rail transport, the railways company reported earlier this month.
The agreement, which was signed in the form of a roadmap at Sochi-2016, an international investment forum, on September 30, aims to address the growing demand for international shipping of letters and parcels.
“In the last few years we have seen a significant increase in e-commerce between China and Russia. Since this business is particularly sensitive to delivery terms, we are offering a new service that will not only reduce the time of parcels in transit, but also reduce transport costs in comparison with other modes of transport,” said Oleg Belozerov, president of Russian Railways.
“This service will ultimately be profitable both to suppliers and their customers. The participation of our partner Russian Post will allow us to implement the principle of a one-stop solution and make deliveries easy and fast for customers,” Belozerov added.
“A strategic task”
On his side, Dmitry Strashnov, CEO of Russian Post, underlined that it is “the first time in history that a direct rail transport corridor for mail will connect China and Western Europe” will see light.
This link is no less than “a strategic, if not geopolitical task,” he stated.
This new mail route will provide e-commerce players with “a good alternative to air delivery, both in terms of delivery times and quality.”
Strashnov added: “For us, it is important not only to provide a convenient transit corridor for freight traffic between East and West, but also to establish favourable conditions for Russian exports […] in both directions, both to China and to European countries.”
A test run using an international postal wagon as part of the Beijing – Moscow train took place in April 2016. Delivery time from Harbin was 5 days, reported Russian Railways.
Operations with international mail are carried out at Harbin, Manchuria, Zabaykalsk and Moscow-Yaroslavl stations.
Cross-border sales still growing fast
Foreign retailers’ online sales of physical goods to Russia have grown considerably over the past few years. The market reached around $3.4 billion in 2015, up from some $2.2 billion in 2014 and $1.3 billion in 2013, according to figures from industry association NAMO cited in EWDN’s Russian E-Commerce Report.
In total last year, Russian citizens made 85 million orders from foreign sites and received 130 million parcels and small packages from them, according to Russian consultancy Data Insight. At least 80% of these parcels and small packages came from China.
For the past few years, AliExpress has asserted itself as the leading marketplace on the Russian e-commerce scene, while several strong Chinese players, including JD.COM and LeEco, entered the Russian market.
Cross-border sales are still growing fast this year. From January to June 2016, Russian Post handled 98.7 million international shipments with goods or products — more than twice as many as in the first half of 2015, according to data cited by the official website of Russian railways. This number includes import, export and transit of parcels and small packages, as well as dispatches of Express Mail Service (EMS).
NAMO believes that the e-commerce cross-border sales market could exceed 350 billion rubles (about $5 billion) in 2016. This would represent a substantial fraction of total online sales of physical goods in the country (around $13-14 billion, according to EWDN), but less than 1% of Russia’s retail market, according to the association.
